By: Chrystal Caruthers
Spring is a wonderful season. The snow melts, flowers bloom and new listings hit the housing market. Yes, spring is the make or break season for real estate industry professionals. But it’s also good for homeowners. Those who list in the spring make more money on their home sale. Given that there are more buyers out there searching for homes than inventory available to satisfy demand, prices are up. Way up. That means sellers are walking away with a hefty profit positioning them for the next purchase. Low mortgage interest rates mean that move up home may be within reach. All things considered, now is the perfect time to list. Still need convincing, read our list of reasons then call your agent immediately.
April sales spike
Flowers aren’t the only things that bloom in the spring; home sell faster and for more money in April and May respectively, according to new research from Zillow. Real estate agents have always taken great pains to prepare for the “Spring Market.” It’s a time when more listings hit the market and open houses dot every other block on weekends. It’s the prime time of real estate sales. What’s new is the data to back up the hype. Nationwide, homes listed in early May sold for about 1 percent more than expected or about $2,100 higher than the national average, according to Zillow. May listings also sell 6 days faster than average.
However, the Zillow report shows homes listed in April sell a full week faster than any other time of year. Why the flurry of spring home shopping? Homebuyers tend to follow the school calendar. They want to get a house under contract in spring in hopes of moving during the summer when kids are out of school. So, spring is coming. Check with your local real estate agent to determine which month this spring is the best time to list. For instance, in San Jose, late April is the best time to list. Those homes sold at a 2.1 percent premium which in that market, the most expensive in the country, account for about $24,400. In the Twin Cities, it’s best to list in early May where a 2 percent premium earns those sellers an extra $9,500. Another nugget from Zillow: Make sure your house hits the MLS on a Saturday. It’s day when new listings get the highest page views on the home search site.
For most homeowners, their home represents their largest asset. It’s also a source of wealth for many. Home equity has been on the rise since the Great Recession. As home prices increase year-over-year, homeowners benefit. With every increase in home value, homeowners gain equity first because each mortgage payment lowers the amount they owe, and secondly because the value rises causing appreciation, or equity: the difference between what’s owed and what it’s worth. Homeowners have seen their equity increase by nearly $457 billion , or more than 5 percent year over year, according to CoreLogic Homeowner Equity Q3 2019 report. That means homeowners are sitting on a pile of cash.
The National Association of Realtors crunched the numbers in 2018 and found that homeowners who purchased in 2013, the bottom of the housing market crisis, would have typically gained $79,488 in equity, or wealth. Most of that due to home price appreciation, not paying down the mortgage principal. So, it begs the question, what should homeowners do with all that equity? Sell! Take the money and buy another property, invest in a new business, send your kids to college or travel the globe. It’s your money, do whatever you want with it.
Pent up demand
Buyers are out there and they want your house. There are simply not enough houses for sale to satisfy demand, but we’ll get to that later. We know that buyers are seeking homes to purchase because foot traffic is up. In January, buyer showings increased 6.2 percent from the prior month and was unchanged from January of 2019, according to NAR. Still not convinced? Let’s look at the rate of mortgage applications; also up 1.5 percent for the week ending February 21st, according to the Mortgage Bankers Association. Buyers are getting pre-approved at a rapid clip. They’re preparing themselves to buy, but they need more houses to choose from.
With a low unemployment rate and rising incomes, the majority of people surveyed, 63 percent, say now is a good time to buy a home, according to NAR.
There’s a shortage of homes available to purchase in real estate speak, we’re in a low inventory market. There are fewer active listings for buyer to choose from. Total inventory at the end of January was 1.42 million properties for sale, up slightly from the December slow season, but down overall. In fact, inventory levels are down more than 10 percent from January 2019 making it the lowest level since 1999. With such low inventory levels, and so many buyers anxious to own or move up, houses are selling faster, 43 days on average nationally from list date to sold date.
In a healthy market, there should be six months worth of active listings for sale to achieve moderate price appreciate. We’re in a three-month supply environment and that means prices are rising faster because demand is outpacing supply. The median existing home price in January was $266,300, up nearly 7 percent from last January’s $249,400. That marks 95 months in a row of year-over-year price increases, according to NAR. “Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” said Lawrence Yun, chief economist at NAR.
Low mortgage rates
You’re a homeowner, why should you care that mortgage rates are at the lowest level in three years? Because money is cheap and now is a good time to buy, not just for first time home buyers, but everyone. With rising prices, ample equity and low mortgage rates, homeowners are sitting on the perfect trifecta of economic indicators signaling now is the time to sell and move. Mortgage interest rates averaged 3.45 percent for a 30-year fixed-rate mortgage for the week ending February 27th, according to the Freddie Mac Primary Mortgage Market Survey. Those opting for a shorter 15-year mortgage could score a 2.95 percent rate. Low interest rates help to offset rising home prices. It helps to make those monthly payments more affordable. By selling, then buying, you can take advantage of today’s demand, at the best rates.
Since the Great Recession, home tenure has ticked up. People have hunkered down and made do with their current situation. Even though that home was supposed to be a starter home, it has become their “forever home” by default. The average homeowner lived in their house for a little over eight years before selling, according to a report from ATTOM Data Solutions. That’s up from 7.95 years in the fourth quarter of 2018 and the longest tenure since the first quarter of 2000 when ATTOM started measuring tenure, according to the report. But times are changing. While many want to “age in place” there are those who also know now is the time to get to a better school district or upgrade to a newer home. And the truth is, there has never been a better time than this spring.
Brought to you by Treasure Realty, the Trusted Local Experts