In the early 2000s, home prices were skyrocketing and many people tried to time the market, buying more house than they could afford believing that the equity in their homes would continue to upswing. It was a gamble that went too far and the housing market crashed in 2006 leaving many in financial ruin. Lesson learned: there could be a very high cost to pay for financially strapped homeowners who are holding out on selling their home to get that ultimate high offer.
The fact is that no one is able to correctly forecast trends in the real estate market all of the time, but there are some factors that can help homeowners determine what factors influence the sales price of their homes:
Location. Location. Location. It’s an age-old real estate mantra that still applies. Good schools, shopping, proximity to major roads and highways, and community amenities are some of the reasons why where your home is situated plays a major role in how fast your home sells. Buyers determine the rate of demand. Basically, a home can only be sold when there is a qualified buyer willing to purchase it.
Interest rates can greatly affect a home’s affordability because lower interest rates mean lower mortgage payments. Although The Federal Open Market Committee (FOMC) of the Federal Reserve (The Fed), which sets and regulates interest rates, decided to forego an immediate interest rate hike as of November 2, 2016, interest rate hikes can happen at any time. The Fed knows that the US economy is progressing at a moderate pace and that inflation rates are running below the Fed’s target range of two percent over the long-term. What this means for home sellers is that interest rates are clear to increase at any time, which can mean less home buyers. Less home buyers means less demand and ultimately, a lower sales price.
One of The Fed’s biggest responsibilities is to balance the strength of labor markets and pace of inflation with interest rates. Currently, labor markets are improving with strong job gains reported so far into the last quarter of 2016. The economy has now added approximately 15 million jobs since 2010, with 161,000 being added in October alone. Since wages remain lower-than-optimal, job growth has not contributed to higher inflation. Again, the steadying of the US economy means it can likely sustain interest rate hikes—all the more reason why the Fed will probably opt for interest rate increases as this trend continues.
Generally, government incentives naturally affect supply and demand. Tax credits, rebates and affordability programs can nudge the appeal of new homeownership. When data trends suggest that home sales have slowed and legislation is put in place to remove barriers to homeownership, more buyers can qualify for mortgages. This is good news for home sellers looking to sell to a healthy pool of qualified buyers.
All kinds of timing issues can affect home sales—some are personal in nature and some can be supported statistically. The time of year a home is being offered for sale (as in month/season), a real estate or home seller’s plan/timeline for marketing the home and whether or not the seller has a specific deadline for selling the home (as in a foreclosure or estate situation) are just a few such issues. Data suggests that the best time to sell your home in Delaware County, PA is between May 1 and May 15 of any given year. This trend also extends into surrounding areas for homeowners looking to sell a home in Montgomery County, PA and Chester County, PA. Unfortunately, this time period is also when the most homes are being offered—thus increasing supply. Increased supply means increased competition for the same pool of buyers.
Whether you decide to sell your home or not, it’s important to remember that no one can time the housing market. While there are some factors that affect the salability of your home, the decision to sell should depend most heavily on your own individual circumstances and financial situation. If your home needs repairs and/or you need to sell your home in 7 days or less, Delaware Valley Home Buyers may be a good option for you. Please call 610-787-0921 to set up a free, no-obligation consultation.