Real estate agents are urging their clients to go and sell their homes now, or risk missing out on the golden opportunity that the current seller’s market presents.
“A lot of people are missing the best market now by waiting,” said Kris Lindahl, Chief Executive Officer and founder of Kris Lindahl Real Estate in the Minneapolis area, told MarketWatch.
With the current high market demand for homes and slim housing inventories, sellers have far more negotiating power than they’ve had in a long time, real estate experts say. The supply of existing homes for sale is at a record low of just 1.9 months, far below the six-month supply that experts consider to be a healthy balance between buyers and sellers.
That combination of factors has sent home prices sky rocketing. The median price for a three-bedroom home was $303,900 in January, according to data from the National Association of Realtors, up 14% from one year before. The S&P CoreLogic Case-Shiller Home Price Indices meanwhile, revealed that home prices nationally jumped by 10.4% in December alone, the strongest annual growth rate in over six years.
At the same time, homeowner’s equity has grown too. Figures from ATTOM Data Solutions show that 30% of U.S. homes with a mortgage are now considered to be “equity rich”, which means that the combined estimated amount of loans secured on the property is 50% or less of its estimated market value.
The other advantage is that homes are selling faster than ever too.
“‘Give me four or six hours, and I’ll sell your house,” said Marc J. Jenkins of Prime Property Partners in Atlanta. “At this point, I’m telling my sellers, ‘Pick a Saturday,’” he added.
Still, a lot of people who’re interested in selling their homes are holding off, experts told MarketWatch. The problem is that the market works both ways, and the majority of sellers will have to buy a replacement home to move into. Many of them are struggling to find a suitable home to buy. And some are concerned that if they do sell, they’ll have to pay even more to find a new home, even if they downsize. As such, many sellers might be unsure of what to do next.
But real estate agents say people in that situation still have options. Sonia Figueroa, a real estate agent with EXP Realty in Chicago, said one option is to buy first as that means they can take their time to find a suitable home. People who do this “are not feeling rushed, and they’re not just going to jump into any house just because they need to hurry up and move out,” Figueroa said.
However, that may not be an option for everyone as they will need to get preapproved for the mortgage on the new home while still paying off the debt on their current property.
Other possibilities exist though. For one, sellers could list their home and accept an offer that’s contingent on them finding a suitable home to buy. So whoever buys their home has to agree to wait a while to conclude the deal. Sellers might find people willing to do that, as they have much more negotiating power now.
In addition, sellers may try to negotiate a rent-back agreement with the buyer to give them more time to shop for a home.