There have been many recent stories on television and in the paper talking about how many homes are for sale now, how it is taking longer to sell, and how some sellers are giving concessions to get the deal closed.
Some sellers are considering waiting to sell their homes in belief that the housing market will improve. Yes, the market is definitely in the buyer’s favor right now but this is the beginning of a multiyear trend. The number of houses for sale has increased each year for the last four or five years, and will probably continue to rise for at least another year. Houses that are priced correctly do sell relatively quickly. As interest rates slowly rise, this will put further chill on the market. Many of the homes that have had to reduce their prices were priced based on 6%, 8% or more appreciation over last year. In fact, appreciation is 1%-4% and will likely average 2%-3% each year for the next several years. So on $250,000, some of the houses listed are $10,000 or $20,000 high because the sellers think there should be higher appreciation than there really is. Prices may decline slightly but we are not seeing signs of any dramatic price depreciation… just flat or slight appreciation.
The competition that’s in the market means you do need to be competitive with others for sale, and that includes price, location, style, amenities and condition. So if you price the house with others that have newer appliances, roof, windows, furnace, flooring, etc then you would also need to have those features to be competitive.
As a seller it is tougher, but as a buyer you are more in the driver’s seat. Though you may not get quite a much for your current home, your next home will also be priced lower than it would be otherwise. If you’re planning a move to a higher price range, it should actually be in your favor. Additionally, interest rates are expected to rise .5% to 1% over the next 6-12 months, which can take 7%-15% of your buying power away because of the higher monthly payments.
So my suggestion would be that if you are planning to move in the next 18 months, then I would strongly consider moving now to take advantage of the good interest rates. If you’re comfortable for another couple years or more, then I wouldn’t worry about trying to time the market and just move when you’re ready to.