Dear Ray,
I want to sell my house, but I’m hesitant. Is this a good time to sell, or should I wait a year?
— S.M.
It’s probably the question I get asked most often: Should I sell now, or should I wait? Perhaps you should ask yourself, What am I waiting for? Home values to rise? Lower interest rates? A seller’s market?
Right now, home values are up, interest rates are near an all-time low and the inventory of listed homes is down to a one-month supply. Translation: It’s a seller’s market.
Let’s start with some facts: Historically, March is the month that records the highest volume of closed sales. Since 2008, market patterns have been less predictable, but as a rule, the first quarter of the year is the busiest real estate season. January through April is an excellent time to sell your home.
In the first quarter of the year (January through April), you’ll find the “innovators” and “early adopter”-type buyers are more active. Innovators comprise about 2 percent of the population, and they are the most venturesome personality and often have higher education and incomes.
The early adopters are the next group, and they make up about 14 percent of the population; they may be best described as curious and adventurous. An early adopter starts using a product or technology as soon as it becomes available — these are the people who buy the latest iPhone.
The innovators and early adopters are buying homes in January and February. The data shows that these buyers tend to pay a bit more for a home.
Get in while you can
The 2015 real estate market actually launched a month early. December home sales increased nearly 11 percent from one year earlier, and in the four-county Puget Sound region, sales volume was the highest since 2005 — before the recession.
Right now, the inventory of available homes is at a record-low. According to the Northwest Multiple Listing Service, listing volume is down more than -8 percent from one year ago. There is about a one-month supply of listings in King County; normal listing inventory is a six-month supply, which creates a healthy balance in the market.
With the inventory of homes at a record-low, the seller is in the driver’s seat. You can expect bidding wars over homes in the popular neighborhoods. Clearly, now is a good time to sell if you want to receive top-dollar for your home.
If you’re waiting for interest rates to go lower, that would be foolish. Rates are already hovering near the all-time record-low. The glut of oil on the global market has resulted in plunging oil prices. Declining oil stocks is driving more investors to the bond market, pushing interest rates lower.
For anyone trying to sell, the low interest rates will bring you more potential buyers for your current home. If you’re planning to buy, low mortgage rates will make your next purchase more affordable. But this dip in interest rates is temporary. If you delay, you’ll miss out on the lowest rates of the year.
If you sell in 2015, will you miss out on additional home-price appreciation? Yes, but the rate of appreciation has been slowing for nearly a year, and the Seattle area won’t see home prices rising as they did in 2014. This year home price appreciation is forecast to be 3.5 to 5.5 percent (down from 8 percent in 2014).
There could be more downside in waiting a year to sell. A year from now, the market conditions could be entirely different. Interest rates will be higher next year; higher interest rates tend to cool the real estate market, usually resulting in fewer sales and softening of prices.
Improving market
In 2015, we’re experiencing an improving housing market. Who could have predicted gas prices would be $1.99 or less in Seattle, and interest rates would be back under 4 percent? It’s a safe bet both gasoline and mortgage rates will be higher a year from now, and that will impact consumer confidence, which affects real estate sales.
With home-price appreciation slowing, a record-low inventory of listings and a real estate market fueled by low interest rates, I’d say 2015 is a great year to sell your home. So, back to my question: “What are you waiting for?”
(Consumer tip: For those who aren’t planning to sell, take advantage of the low interest rates by refinancing your mortgage, taking out a loan to remodel or make a major purchase, such as a new car. These low rates are an unexpected gift to consumers, but interest rates are forecast to rise later in 2015. Make plans accordingly.)
RAY AKERS is a licensed Realtor for Lake & Co. Real Estate in Seattle. Send your questions to ray@akerscargill.com or call (206) 722-4444.