Thinking of selling your home in the Bay Area? Here are 6 very good reasons why it makes sense to list your home in 2013!
1. Demand Is High
Homes are selling at a pace not seen since 2007. The most recent Existing Home Sales Report by the National Association of Realtors (NAR) showed that annual sales in 2012 increased 9.2% over 2011. With the continued depression of returns in the traditional investment markets, money continues to find its way into the real estate market again. Hence, the number of cash sales around the country. Yield-starved investors are looking for a better return to at least stay ahead of real cost-of-living numbers (closer to 6%). As we enter a phase of stagflation (what you own is worth less, what you need costs more), economic uncertainty will continue to play out for the foreseeable future.
2. Your Requirements Have Changed
This holds especially true for boomers that find themselves in more house then they need. The equity in your home may be the key to recapturing wealth lost in the past few years. It’s time to unlock those funds and make better use of them. At the same time, moving to an area that will provide a lower cost of living and better quality of life is are compelling factors motivating many to sell. Northern Nevada has seen a 20%+ increase in relocating boomers seeking just that.
3. Supply Is Low
The monthly supply of houses for sale is at its lowest point (4.4 months) since May of 2005. The current month’s supply is down 21.6% from the same time last year. Historically, inventory increases dramatically in the spring. The ‘X Factor’ this year is the release of backlogged bank-owned (REO) property as well as short sales and foreclosures increasing due to modifications in the process as well as legal settlements with banks over practices related to MERS. Selling now when demand is high and supply is low may garner you your best price.
4. New Construction Is Coming Back
Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. New homes will again become competition as they are an attractive alternative to many purchasers. Many home builders with empty lots got to write off the costs of the lot and the improvements in the past few years. This allows them to very competitive with resale homes, as their current costs are vertical (cost of the build itself) and marketing. Though this supply will eventually dwindle, there is ample supply in many developments caught up in the crash.
5. Interest Rates Are Projected to Inch Up
The Mortgage Bankers’ Association has projected mortgage interest rates will inch up approximately one full point in 2013. Whether you are moving up or moving down, your housing expense will be more a year from now if a mortgage is necessary to purchase your next home. In addition, as prices and interest rates move up, the appetite of both investor and first-time home buyer will curtail as ROI will decrease and ability to qualify is reduced.
6. Timelines May Be Shorter
The dramatic increase in complicated transactions caused many challenges to the process of buying or selling a home in 2012. Banks are handling these transactions better, meaning timetables on each component of the home buying process may be less time-consuming. As stated above, banks are coming out of their collective constraints on dealing with delinquent mortgages as well as REO inventory, but any additional hits to our national economy could quickly dampen current enthusiasm. The current buying frenzy, as in the past, is fueled by fickle emotion.
As with any major life decision, seek the advise of the financial professionals you trust around you. Your CPA and financial advisor should be part of the conversation.
For additional advice or to speak with Bruce Specter directly, contact: