If you’ve been thinking of selling your home, you’re probably eager to get the timing down right. The last thing you want to do is sell at the wrong time and end up limiting your profits.
This holds true whether you’re trying to sell a home you live in yourself, or whether you’re a real estate investor who’s been thinking of unloading an income property to free up cash for other ventures. Either way, you want the largest profit possible. And to meet that goal, you may want to list your home now rather than wait. Here’s why.
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1. There’s not so much competition
In August, the inventory of unsold existing homes fell to 1.28 million, representing a 1.5% decrease from July, according to the National Association of Realtors (NAR). Until August, home inventory had been steadily ticking upward for five months. Now that it’s dropped a bit, sellers have a prime opportunity to get into the market at a point where there’s less competition.
In fact, all told, as of the end of August, there was only a 3.2-month supply of available homes for sale. It normally takes a good four- to six-month supply of homes to meet buyer demand, so it pays to sell before real estate inventory starts creeping upward again.
2. Rising mortgage rates could drive buyers away
On Sept. 21, the Federal Reserve raised its benchmark interest rate by another 0.75%, marking the third consecutive rate hike that high. The Fed is on a mission to slow the pace of inflation, and it plans to continue moving forward with aggressive rate hikes until living costs start dropping to more moderate levels.
The Fed doesn’t directly set mortgage rates. But continuous rate hikes on its part could drive the cost of borrowing for a home up substantially. That could, in turn, push buyers out of the real estate market. That’s not a good thing for sellers. So you may want to list your home now, before mortgages get even more expensive.
3. A recession could hit
For months on end, economists have been warning that the Fed’s rate hikes could drive the U.S. into a recession. The Fed is hoping that rising borrowing costs will result in a modest pullback in consumer spending — just enough to bring inflation down. But instead, consumer spending could decline sharply, leading to a period of widespread economic distress.
When people are worried about job loss, they’re less likely to go out and take on a giant new expense like a home. And when people lose their jobs, they lose the ability to buy a home until they’re gainfully employed again.
There’s no guarantee we’ll be in a recession next year. But you may want to sell your home now rather than wait, in case a downturn hits.
Act quickly
Right now, the housing market still very much favors sellers. But we can’t say that that will be the case in 2023. So if you want to walk away with as much profit as you can, now’s really the time to sell.
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