When is a Good Time to Buy or Sell

The question, “Is this a good time to buy or sell a house ?” almost always has a subjective answer. Although there are local housing market and economic factors that can influence the perceived attractiveness of either buying or selling, the benefit of doing so is fundamentally dependent on your situation.

If you need to move to a new city for a higher-paying job, it’s likely a good time to sell your current house and buy a new one – even if market forces are less than ideal. The same can be said if your youngest child has headed off to college or moved out and you’re an empty nester with a house that’s way too big, or you’re about to have another child and you simply don’t have adequate space for your growing family.

There are all types of situational factors that should drive your decision just as much if not more than market or economic factors. That being said, there are variables that influence whether it is a “buyer’s market” or “seller’s market” in your city, as well as nationwide economic factors to consider.

What Makes a Market a Buyer’s Market or Seller’s Market?

A buyer’s market is one in which market conditions are good for buyers, and a seller’s market is the inverse.

Buyer’s markets are those in which:

• Housing inventories are high, meaning there are more homes for sale than there are buyers. This means buyers have a wide selection of homes to choose from and more leverage in negotiations with home sellers.
• Homes stay on the market longer.
• Home prices are lower due to surplus inventory, leading to home sellers reducing prices to attract buyers and sell more quickly.
• Buyers have more negotiating power and can leverage market conditions to get better purchase terms or concessions from the seller – like getting them to pay for maintenance or home improvements prior to closing.

Seller’s markets are essentially the opposite. A shortage of homes for sale means multiple buyers may be putting in offers on the same home, starting a bidding war and driving up prices. Homes are more likely to sell quickly – even homes that may have unattractive attributes or be in disrepair. These market pressures typically drive up prices across the area. 

Current market conditions are often determined based on the months of supply metric. This is an estimate of how long the current inventory will last at current sales rates assuming no new listings are added. A balanced market – one in which neither buyers nor sellers are overly favored – typically has a supply of five or six months.

Interest Rates

Interest rates can make a big difference in the long-term cost of purchasing a home – but homebuyers often overemphasize their importance. There are several reasons why you shouldn’t base your decisions to sell your current home and buy a new one on interest rates:

• Interest rates fluctuate, and high interest rates typically don’t last.
• Paying your mortgage on time is a fast way to improve your credit rating, enabling you to qualify for lower rates in the future.
• You can refinance your mortgage when interest rates go down.
• Homeowners always have the option to sell their home and buy a new one whenever the need arises. There’s no rule that you must stay in the home you just bought for decades. You may end up moving again relatively quickly and get a new mortgage with a lower rate. 
• The equity you build or realize through appreciation may more than make up for the interest you pay on your mortgage while you own the home.

Even fixed-rate mortgages are not permanent thanks to the ability to refinance. You also have the opportunity to get an adjustable-rate mortgage if you feel confident interest rates are going to decrease in the future.

While it’s true that you may have qualified for lower interest rates five or 10 years ago, interest rates today are still low compared to those available to borrowers in the 20^th century. There’s also nothing that requires you to keep your mortgage for the entire term.

Economic Indicators and Home Appreciation

Real estate has historically increased in value. Housing markets have and will continue to fluctuate – but the long-term trend has been up. Although there are many questionable investments, from risky stocks and cryptocurrencies to precious metals and collectibles, homeownership is one of the few that most economists and investment experts will agree is a good bet.

Each dollar of principal payment builds your equity – meaning you’ll get that value back when you eventually sell. You don’t build any equity when you pay rent to a landlord – that money is simply gone. From the standpoint of your financial future, virtually any time is a good time to become a homeowner.

Get Help Selling Your Home for the Best Possible Price

At 72SOLD, we are committed to getting home sellers top value for their investment regardless of market conditions. Our real estate professionals leverage proven marketing strategies and a network of real estate industry partners to get home sellers exceptional offers that are higher than average for their MLS in eight days or less. Find out why we’re the nation’s trusted home seller agents.