Most people who are considering selling their home usually have reasons other than trying to sell at the peak of the market, and need to sell right away or in the near future.
For those homeowners who want to move, but don’t have a specific timeframe, it can be hard to decide whether they should sell now, or wait another year. After all, home prices are still going up, and if they wait until next year, their home value will be higher than it is today. That may be true, but there are other factors to consider than just the increasing sales price to determine when the best time is to sell.
Here are some other factors to consider:
Buying Your New Home In The Same Market
If you are planning on selling and buying another home in the same area, selling now or waiting a year becomes irrelevant. Both homes are in the same market, and if prices increase on one, they will increase on the other. If you wait another year for your home value to go up, the house you are buying also is going to increase in price at the same rate. The only difference is if you are purchasing a higher priced home, it actually will go up a little more. Selling now or waiting a year really doesn’t make any difference as far as the net profit goes if you are buying again in the same market. If you are moving out of state, it can make a difference, but only if the market where you are buying is increasing at a slower pace than here in Arizona.
Interest Rates Can Have The Biggest Impact
After seeing record low interest rates over the past few years, rates have now started to increase, and they are expected to continue to go up. This can have the biggest impact on whether to sell and buy now or wait a year. The chart below estimates the home price increase of 15 percent, a down payment of 20 percent, current interest rate of 4 percent with an increase to 5.5 percent in a year. As you can see, the sales price is slightly impacted, but the biggest difference is your monthly mortgage payment. With interest rates on the rise, now is the best time to make your move.
Selling and Buying Today
Sale:
$350,000 Sale price of current home
$450,000 Purchase price of new home
$100,000 More to purchase new home
Purchase:
$450,000 Purchase price of new home
$360,000 New loan, 20% down, 4% interest rate
$1,719 New monthly mortgage payment
Selling and Buying in a Year
Sale: 15% increase in home prices
$402,500 Sale price of current home
$517,500 Purchase price of new home
$115,000 More to purchase new home
Purchase:
$517,500 Purchase price of new home
$378,500* New Loan, 20% down, 5.5% interest rate
$2,150 New monthly mortgage payment
By waiting a year, you will pay an additional $15,000 to purchase the new home and your mortgage payment will be $431 higher a month.
*This includes a 20% down payment plus remainder of funds from higher sales price of previous home
Low Inventory Means Less Competition
With the housing market making a recovery, homebuyers are ready to jump back into the housing market again. The only problem is there just aren’t enough homes for them to buy with inventory at a record low for more than eight years. New homebuilders virtually stopped building during the housing crisis, and now can’t build them fast enough. Bank-owned foreclosures and short sales have decreased significantly over the last year. Low inventory means a great opportunity for sellers, as there is very little competition. Next year, the supply and demand may have leveled out, the builders will have replenished their inventory, interest rates will be higher, and it may not be the seller’s market it is today.
Contact Lorraine Ryall today for your current home value. Cell: (602) 571-6799, e-mail: Lorraine@Homes2SellAZ.com.Web site: www.Homes2SellAZ.com. Get an Instant Home Value Report at www.InstantHomeValueAZ.com.