Midweek Insight: Is selling your home now a smart move?
“Should I sell now or wait for prices to go even higher?” This is the question that most sellers ask and to tell the truth, nobody really knows the answer. The best I can give you is an educated guess which is based on what I see happening in the market today and my experience on what went on before.
The good news is that prices are starting to go up but the bad news is this might not last. So to answer the question, yes this might be the best time to sell but you only have a window of six months.
First let me explain why it is a good time to sell. The lowest fixed-rate mortgage rates in a half-century, first time home buyers incentives, and loan modification efforts to stem foreclosures are finally having an effect in reducing the inventory and raising prices.
1. The average interest rate for a 30 year mortgage dropped to 4.71 percent last week, which is a record low This means more buyers could afford higher priced homes. according to Freddie Mac since the company started tracking the data in 1971.
2. First time home buyers incentive in the form of the $8,000 tax credit (which was extended to April 2010) spurred more buyers to action. Also, a $6,500 credit for a move up buyer is now creating more movement.
3. Loan modification efforts are limiting the houses that go on foreclosure resulting in fewer market inventories.
These three reasons are enough to create an upward trend on home prices; more qualified buyers and fewer inventories means bidding wars and higher prices.
Now, let me explain why this will not last.
1. Since interest rates are record low, they have nowhere to go but up. When interest rates go up, prices then would go down.
2. Incentives will eventually end. Yes, they might be extended again but with the building national debt, the government will need all the taxes it can collect … so figure the odds
3. The efforts to stop foreclosures can not be sustained. The government will eventually run out of TARP funds and banks would have no choice but to get rid of non performing assets. There is a massive and growing backlog of latent foreclosures and according to the Center for Responsible Lending, there is a tsunami of new foreclosures that looms over California, ready to swamp any “green shoots” of an economic recovery.
Homeowners, if you have equity and need to sell in the near future, do not wait much longer or you will miss this window of opportunity.
If you need to sell now, know of someone that does, or need more information, you can contact me at 619-944-4524 or Bel@GreenMeansGrow.com.