If you’ve been thinking about selling your home, but have concerns about the current real estate market, now may be your time to make the most from your home’s value. Since the 2012 rebound, buyers have been on the prowl for a home while lenders have liberalized lending standards. Interest rates are also low enough to really expand purchasing power. Now, the missing ingredient has arrived — decent prices that sellers have been waiting for.
Encouraging News From Case-Shiller
Recent statistics from Standard & Poors Case-Shiller Index illustrate the degree to which the residential real market has strengthened. First of all, the Case-Shiller Index was established by Standard & Poors in 2000 to specifically measure the selling prices of existing single family homes in the twenty largest metro areas in the nation.
In March 2013, the combined index of all twenty markets showed a dramatic increase of 2.5-percent compared to the previous month. To put that in perspective, that’s a $5,000 increase in the value of a $200,000 home — in just one month. That is the largest single-month price increase that has occurred anytime in the 13-year history of the index. The annual, year-over-year numbers were also impressive. April 2013 prices were 12.1-percent higher than they were the April before. This was the best performance in residential real estate nationally in seven years.
Record Low Cost Of Money
There are a number of reasons for this impressive strength in home selling prices. Low mortgage interest rates were an important factor. Many more buyers could afford much better homes as a result. Rates have been so low that buyers who like certain properties tend not to negotiate as firmly as they might have in the past. A $10,000 price swing on a house with a 30-year mortgage in the “threes” is not going to have a dramatic effect on the monthly payment.
However, the long-predicted upward tick in mortgage rates has now begun. 30-year mortgages that carried, on average, 3.3-percent rates now carry, on average, 4.0-percent rates. To put that seemingly innocuous change into perspective, consider this: on an average-priced home, the difference in buying power at those two levels is $12,000. Should interest rates climb much further, the number of buyers that no longer qualify to even consider your Destin home will grow. Therefore, the time to sell is now, when interest rates are still attractive for buyers.
Home Sales High In Number
Another reason to sell now is that homes are selling at such a brisk pace that the supply of buyers may actually dwindle in the near future. In May of 2013, single family homes in the U.S. sold at an annualized rate of 476,000. This represented a dramatic year-over-year increase of 29-percent. Such numbers underscore just how much pent-up demand existed after buyers were virtually shut out of the market by tight lending standards that first arose in 2008.
The good number of buyers happily borrowing at low interest rates has helped to drive the price of Destin homes back up. However, 29-percent annual gains in home sales are not sustainable. The current glut of buyers could change into a shortage of buyers in the next few seasons. Again, the time to sell is now, while a good supply of buyers maintains demand.