The motivation for buying and selling a home should always focus on your personal circumstances, rather than try to time the market in the hope it will deliver a better home or cheaper deal.
Today’s market illustrates how property moves in more ways than boom and bust cycles. And while volatile mortgage rates may leave you scratching your head, it’s best to double down on your own numbers and work out what you can personally afford.
As an experienced agent, I’ve found the most successful buyers and sellers concentrate on the tasks they have set for themselves and treat everything else as background noise.
Let me sum up the current market to save you the trouble.
- Mortgage costs have risen as the Federal Reserve brings post-pandemic inflation back to a 2-3% range, having topped out at more than 9%.
- The Fed’s rate increases have squeezed those who recently purchased homes and buyers trying to get on the property ladder or upsize.
- Consequently, properties are spending an average of 13 days longer on the market than 12 months ago, according to Freddie Mac.
- Further, owners with attractive mortgage rates don’t want to lose that advantage. So, they’re not seeking new financing to move. That’s caused a sharp decline in properties for sale. Inventory is down -20% on a 10-year historical average across the US.
- This lack of supply has bolstered values because there are still more buyers than homes on the market.
Below are some tips if you’re buying or selling.
Buyers
- Be patient and diligent: Research neighborhoods and target properties. Use your agent to stay informed.
- Negotiate effectively: Pick an agent with experience in this type of market. Don’t ask the agent to lowball everything. This is a time to work your strategy, not try to force a bargain.
- Off-market opportunities: Ask your agent to work their contacts and find out what’s about to hit the market. Create every advantage you can.
- Be ready to go: Have your finances lined up. You may need to move quickly in a competitive situation.
Sellers
- Be realistic: Inventory may be low, but buyers face high costs and are super-cautious. Work with your agent to arrive at a reasonable asking price that gives you an upside but doesn’t price you out of the market.
- Prepare properly: Untidy homes and those needing upgrades don’t sell or have to be discounted. Don’t let this happen to you. Fix your place so it looks great.
- Think smart: Identify the demographic most likely to buy your property and focus your marketing efforts on them.
- Be flexible: You’ll find a buyer at the right price if you can be flexible on issues such as closing dates, contingencies and any other details, such as including furniture, that will help seal a deal.