Sell now or wait a year? What Home Sellers Should Do To Make A Rich Profit
If you’re considering selling your home, you’re probably anxious to find the right time. The last thing you want to do is sell at the wrong time and limit your profits.
This is true whether you’re trying to sell yourself a home you live in or you’re a real estate investor considering getting rid of an income property to free up cash for other projects. Either way, you want the biggest profit possible. And to achieve that goal, you might want to list your home now rather than waiting. Here’s why.
1. There isn’t much competition
In August, the inventory of unsold existing homes fell to 1.28 million, down 1.5% from July, according to the National Association of Realtors (NAR). Until August, the inventory of homes had been steadily increasing for five months. Now that it has come down a bit, sellers have a great opportunity to enter the market at a time when there is less competition.
In fact, in total, at the end of August, there was only inventory of homes available for sale for 3.2 months. It normally takes a good four to six month supply of homes to keep up with buyer demand, so it pays to sell before real estate inventory starts to climb again.
2. Rising mortgage rates could scare off buyers
On September 21, the Federal Reserve raised its benchmark interest rate an additional 0.75%, marking the third consecutive rate hike this high. The Fed is on a mission to slow the pace of inflation and plans to continue moving forward with aggressive rate hikes until the cost of living begins to decline to more moderate levels.
The Fed does not set mortgage rates directly. But continued rate hikes from them could drive up the cost of borrowing a home significantly. This, in turn, could push buyers out of the real estate market. This is not a good thing for sellers. You might want to list your home now, before mortgages get even more expensive.
3. A recession could hit
For months, economists have warned that Fed rate hikes could push the United States into a recession. The Fed is hoping higher borrowing costs will cause consumer spending to pull back slightly, just enough to bring inflation down. But instead, consumer spending could decline sharply, leading to a period of widespread economic distress.
When people fear losing their jobs, they’re less likely to go out and take on a giant new expense like a house. And when people lose their jobs, they lose the ability to buy a house until they find gainful employment.
There is no guarantee that we will be in recession next year. But you may want to sell your home now rather than wait, in case a downturn occurs.
Currently, the housing market is still very much in favor of sellers. But we can’t say that will be the case in 2023. So if you want to walk away with as much profit as possible, now is definitely the time to sell.
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