Even though activity in the housing market has slowed from the frenzy we saw over a year ago, today’s low supply of homes for sale is still a sellers’ market. But what does that really mean? And why are conditions today so good if you want to list your house or buy your first or next home?
It starts with the number of homes available for sale. The latest Existing Home Sales Reportfrom the National Association of Realtors (NAR) shows housing supply is still astonishingly low. Today, nationally, we have a 2.6-month supply of homes at the current sales pace. Locally, in the 13-county Minneapolis-St. Paul metro area, the supply is half that at a 1.3 month supply! Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market in which there are enough homes available for active buyers (see graph below):
What Does This Mean for You as a Seller?
When the supply of homes for sale is as low as it is right now, it’s much harder for buyers to find one to purchase. That creates increased competition among purchasers and keeps upward pressure on prices. And if buyers know they’re not the only one interested in a home, they’re going to do their best to submit a very attractive offer. As this happens, sellers are positioned to negotiate deals that meet their ideal terms. Lawrence Yun, Chief Economist at NAR, says:
“Inventory levels are still at historic lows. Consequently, multiple offers are returning on a good number of properties.”
Right now, there are still many buyers who are ready, willing, and able to purchase a home. If you list your house right now in good condition and at the right price, it could get a lot of attention from competitive buyers.
There are other considerations to ponder as sellers make their decision to sell. A recent survey from realtor.com asked why homeowners are thinking about selling their houses this year. Here are the top two reasons (see graphic below):
Let’s break those reasons down and explore how they might resonate with you as a seller.
1. I Want To Take Advantage of the Current Market and Make a Profit
When you decide to sell your house, how much you’ll make from the sale will likely be top of mind. So, here’s some good news: according to the latest data, the average seller can expect a strong return on their investment when they make a move. ATTOM explains:
“The $112,000 profit on median-priced home sales in 2022 represented a 51.4% return on investment compared to the original purchase price, up from 44.6% last year and from 32.8% in 2020.”
Even though home prices have declined slightly in some local markets, they’re still much higher overall than they were just a few years ago. To understand what’s happening with home prices in your neighborhood and the current value of your house, please get in touch with us. We are currently winding down our first quarter offer for a free, no obligation Annual Equity Review of your home. This can give you critically necessary information to help you make a decision to sell this year or to help with your overall financial planning, too.
2. My Home No Longer Meets My Needs
The average person has been in their house for ten years. That’s a long time when you think about how much may have changed in your life since you moved in. And typically, those changes have a direct impact on what you need in a home. Whether it’s more (or less) space, different features, or a location closer to your work or loved ones, your current house may no longer check all the boxes of what feels like home to you. If that’s the case, feel free to contact us to discuss your options!
Today’s sellers’ market holds great opportunities for homeowners ready to make a move. Listing your house now will maximize your exposure to serious, competitive buyers.
What Does All of This Mean for You as a Buyer?
Over the past year, home prices have been a widely debated topic. Some have said we’ll see a massive drop in prices and that this could be a repeat of 2008 – which hasn’t happened… and most experts and statistical data project won’t happen. For 2023, many have forecasted a real estate market that could see slight appreciation or slight depreciation depending on the area of the country. As we head into the spring real estate market, experts are continuing to review data and re-forecast what they believe will happen with home prices this year and beyond.
Selma Hepp, Chief Economist at CoreLogic, says:
“While 2023 kicked off on a more optimistic note for the U.S. housing market, recent mortgage rate volatility highlights how much uncertainty remains. Nevertheless, the continued shortage of for-sale homes is likely to keep price declines modest, which are projected to top out at 3% peak to trough.”
Additionally, every quarter, Pulsenomics surveys a panel of over 100 economists, investment strategists, and housing market analysts regarding their five-year expectations for future home prices in the United States. Here’s what they said most recently:
So, given this information and what experts are saying about home prices, the question you might be asking is: Why should I buy a home this spring? Here are a number of reasons you should consider making a move:
- Buying a home helps you escape the cycle of rising rents. Over the past several decades, the median price of rent has risen consistently. The bottom line is, rent is going up.
- Homeownership is a hedge against inflation. A key advantage of homeownership is that it’s one of the best hedges against inflation. When you buy a home with a fixed-rate mortgage, you secure your housing payment, so it won’t go up like it would if you rent. And, if interest rates go down, you can look at the benefits of refinancing your mortgage to a lower rate.
- Homeownership is a powerful wealth-building tool. The average net worth of a homeowner is $255,000 compared to $6,300 for a renter. Homeownership is considered the #1 wealth-building tool for most Americans.
- Potential discount pricing for 2023. Experts are projecting slight price depreciation in the national housing market this year, followed by steady appreciation each of the next four years. So, home prices will be at a potential “low” point in 2023 and, by purchasing this year, you won’t miss a projected 14% of appreciating value in the next few years!
With all this data, you may be wondering if you should be moving ahead with planning to buy or sell a home this spring or sometime this year. The decision is best made when you make it knowing all the facts and having an expert on your side. Let’s connect so you can make the most informed decision possible about your next move.
Real Estate | Your@HomeTeam 