Before you ask, the answer is YES! (just not for everyone)
One of the most frequent questions I’m asked as a real estate broker is, “Is this
a good time to buy (or sell)?” But I’m not being asked that much these
days... This January, Fannie Mae released the results of their Home Purchase
Sentiment Index – and it wasn’t good. A survey record low of only 1 in 4
respondents reported that it’s a good time to buy, with younger households
being especially pessimistic. Now this pessimism is understandable: home
prices continue to escalate, inflation is on the rise, as are interest rates and, as
a result, many buyers (especially first-time buyers) are ‘boxed out’ of the
market.
So, Rick, how can you say it’s a good time to buy and sell??
Because I've done this long enough to know the correct answer to the question
is always that it’s the best time to buy or sell when it’s right for you. Stick with
me – I'm going somewhere...
The current real estate market seems complicated: record low interest rates
(but rising), record increases in home values (but slowing), the end of two
years of mortgage forbearance (but record low foreclosures), a third year of a
global pandemic, and yet the real estate market remains very strong! Nothing
makes sense until you consider the driving force behind the continued strong
market – historically low inventory.
This is not a bubble; this is basic economics – supply and demand – and right
now (and in the foreseeable future) there is an extreme shortage of houses for
sale! There are lots of reasons this situation exists (for another blog!), but
considering those reasons, this won’t end anytime soon, and everyone needs
to live somewhere...
If not a good time for everyone, for whom is it a good time?
Anyone who owns a house right now should be asking themselves if they are
ready for a change. Growing family and need more room? Empty nester and
need to downsize? Time for a higher paying job out of town? Bloomberg
reported that US homeowner equity increased 31% last year. That’s an average
of a $56,700 gain per homeowner - In. One. Year! Selling right now allows you
to tap into that equity, and tapping into that equity gives you the cash buying
power to prevail in this incredibly competitive buying market. The timing can
be unnerving, and you’ll need an experienced professional team around you,
but it may be the best possible time to take advantage of what you’ve earned.
But if you’re a first-time homebuyer - I’m not going to lie - this is a tough
market. Cash is king, and for most first-timers, cash is short. Well qualified
you may be, but you will likely need an appraisal shortfall guarantee to
compete – and that can take substantial cash! Although not an easy question to
answer, I do have quite a few ideas and resources (also for another blog!). In
the meantime, Mom and Dad, cash-out refinancing or a HELOC might be the
way to reclaim your basement and help your Millennial start their journey
towards the American Dream - just sayin...