Should I Sell My House Now?
Is now a good time to sell a home? It's a topic that many potential house sellers are pondering, especially following last year's rapid increase in home values. It might be tempting to delay the sale for an additional year or two but the majority of real estate experts think yes, this is a good time to sell your house. There are several causes for this, including persistent buyer demand and a lack of available homes. The mortgage rates are increasing in 2022 and show no indication of slowing in the near future.
Some first-time buyers may be compelled to leave the market as mortgage interest rates continue to rise. In other words, if you are considering whether to sell a house now or wait until 2023, it may be prudent to do so before interest rates close. The intense competition for housing results in fewer options, higher prices, and faster sales. In a seller's housing market, there are more interested buyers than available homes and that makes it a difficult time to buy a house, especially for first-time buyers.
According to the NAR, the national median price for existing homes sold in October was $379,100, up 6.6% from the same month in 2021. This is the longest streak of year-over-year growth ever recorded, spanning 128 months. “Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers,” Yun added. “In October, 24% of homes received over the asking price. Conversely, homes sitting on the market for more than 120 days saw prices reduced by an average of 15.8%.”
Is it a Good Time to Sell a House in 2022?
Fannie Mae released a nationwide housing survey for October that revealed that 51 percent of respondents believe it is a good time to sell a house in 2022.
The percentage of respondents who say it is a good time to sell a home decreased from 59% to 51%, while the percentage who say it's a bad time to sell increased from 33% to 42%. As a result, the net share of those who say it is a good time to sell decreased 17 percentage points month over month.
Realtor.com’s stats for the week ending November 24 showed home price growth continued to ease, albeit more modestly than in recent weeks, while fewer homeowners put homes up for sale. Despite the pullback in new sellers, the number of homes on the market rose again and time on the market increased as fewer shoppers could contend with 7% mortgage rates. New listings, a measure of sellers placing homes on the market, decreased by 17% from one year ago.
This is the twentieth consecutive week of year-over-year declines in the number of homeowners putting their property for sale, an indication of the continuing decline in seller confidence. As the housing market rebalances to a degree of equilibrium, the price rise is moderating moderately due to the considerable withdrawal of potential sellers and the reduction in production by home builders. In other words, supply is decreasing in tandem with diminishing buyer demand, preventing an imbalanced surplus that could accelerate a price correction.
Active inventory continued to grow, increasing 49% above one year ago. Inventory accelerated again, notching a sixth straight week of growth in the yearly trend roughly at or above 2%–in this case nearly double. The median listing price grew by 11.0% over last year. Growth in the typical asking price of for-sale homes was little changed from last week and continues to exceed last year’s level by double-digits, marking a 47th straight week at a double-digit pace. However, this week is also the 6th consecutive week of slowing price growth, a trend that has been present in fits and starts since June.
Despite record levels of equity, sellers are less eager to participate in today's market because nearly three out of every four potential sellers would also need to purchase a home, and rising mortgage rates, which have more than doubled in the past year, have reduced sellers' ability to trade up without increasing their monthly housing costs.
Active inventory grew 49% year-over-year. More homes for sale than a year ago are shifting the housing market's seller-buyer equilibrium. The market's inventory is still below pre-pandemic levels. According to Realtor.com’s October Housing Trends Report, the inventory of homes actively for sale on a typical day in October increased by 33.5% over the past year.
This amounted to 189,000 more homes actively for sale on a typical day in October compared to the previous year. The growth rate of inventory increased compared to last month’s growth rate of 26.9% and has just surpassed 2020 levels. Despite this improvement in the number of homes actively for sale, active listings still lag behind their pre-pandemic levels. The number of homes actively for sale in October was 40.4% lower than the pre-pandemic 2017-2019 average.
The total number of unsold homes nationwide—a metric that includes both active listings and listings in various stages of the selling process that are not yet sold—increased by only 0.5% year-over-year. Growth decelerated from last month’s 0.7% positive growth rate as the count of pending listings and newly listed homes fell further on a year-over-year basis.
Home listings are spending more time on the market which is a bad sign for the sellers. The typical home spent 51 days on the market this October which is 6 days more than last year. Slower inventory turnover is primarily fueling the growth in actively listed homes but homes still spent 20 fewer days on the market this October than typical 2017 to 2019 timing. The share of homes having their price reduced grew from 10.6% last October to 20.9% this year.
The share is now well above 2017 (18.1%) and 2019 (17.0%) levels but is just below the share of price reductions in October 2018 (21.2%). It indicates that the housing correction has already begun, and sellers appear to have gotten the message. If sellers hesitate to enter the market due to a diminishing perception that now is a good time to sell, the housing market might be slowed, and it could take longer for equilibrium to recover. With home equity at a historic high, homeowners on the fence about selling should realize that they are likely in a good position.
Before beginning to look at properties, purchasers should have their finances in order and be pre-approved for a mortgage in order to be able to act swiftly on the market. However, while the most desirable properties will continue to sell rapidly, buyers will have a bit more time to decide on other properties.
Bottom Line: Don't Wait Until 2023 to Sell Your House
With persistent supply constraints and moderate buyer demand, now is a good time to sell your house. And with borrowing rates on the rise, it may be preferable to sell sooner rather than later; if rates go substantially more, prospective buyers may abandon their property search. But carefully evaluate your motives for selling. The typical asking price of for-sale homes continues to exceed last year’s.
If you're merely attempting to time the market and don't have a concrete plan for after you sell your house, it may be prudent to wait. Typically, rising mortgage rates result in fewer purchasers and a narrower pool of buyers able to give the price you desire. It costs money to sell a home, so if you cannot optimize your price, you may prefer to wait until 2023.
Find a good broker to sell your house now. A skilled real estate agent's assistance may be vital, especially in a hot housing market. Take the time to explore many possibilities and ask friends and family members to recommend agents with whom they have had positive experiences. Getting solid real estate agent referrals from individuals you know is another excellent alternative, provided you know people who have recently purchased or sold a house in your neighborhood.
According to NAR’s most recent Profile of Home Buyers and Sellers, 90 percent of sellers worked with an agent, and it’s easy to see why. NAR data shows that the typical home sold with the help of a real estate agent in 2021 went for $318,000, while homes without an agent on board went for $260,000. Agents have access to the multiple listing service (MLS), which organizes listings for real estate professionals and web portals like Zillow. An agent can assist distinguish between serious buyers and those who are just looking. You can buy your next house without a real estate agent no matter how you sell your present one.
Sources:
- https://www.fanniemae.com/
- https://www.realtor.com/research/reports/
- https://www.bankrate.com/real-estate/should-i-sell-my-house-now-or-wait/
- https://www.realtor.com/research/october-2022-data/
