Considering selling your home or real estate investment?
Projected economic and job growth coupled with an anticipated rise in interest rates (toward the end of this year and into the future) means that this spring and summer is the perfect time to sell your home. High demand and low housing inventory has made the first half of 2018 a seller’s market in the majority of the top housing markets in the United States.
This is a rare opportunity for sellers— you may get more than your asking price. Buyers are eager to close before the anticipated rise in mortgage payments; and the market is competitive, leading to bidding wars that are raising sales to well above listing prices, increasing your profits.
OUR ECONOMY: According to real estate economists, the economy will continue to grow over the course of the next 3 years, with 2.8% projected growth in 2018. Although the forecast is looking good for long-term growth, the anticipated surge may slow to 2% by 2020.
INVESTMENT ACTIVITY AND HOME PRICES: An economic rise featuring continuous job growth is expected to generate a boost in investment activity, making 2018 a perfect time to sell. “It appears that the forecast for strong economic growth may lead to higher levels of investment activity. According to urbanland.uli.org, survey respondents increased their expectations for transaction volumes for 2018 and 2019 (up $23 billion in 2018 and up $11 billion in 2019).” Alongside the increased investment activity, we will likely see a continuous rise in prices of homes over the course of 2018. Home prices will continue to surge until 2020, but at a decreased pace (5% in 2018 and 2.3% in 2020).
INFLATION AND INTEREST RATES: There is some anticipation that inflation rates will be on the rise until 2020 (resulting from the GDP growth rate). As inflation progresses, interest rates also increase leading to higher mortgage payments. We have already begun to witness the widespread anxiety that stemmed from an initial increase in interest rates— the stock market swing in early 2018.
So what does this mean if you are selling your home or property?
Buyers will likely feel a growing sense of urgency to invest now, before rates surge even higher. Lingering fear from the housing collapse a decade ago may prevent potential buyers from investing as they see interest rates continue to climb. Although the fear is understandable, the average mortgage payment (adjusted for inflation) still falls approximately 36% below what we were paying back in 2006. Nonetheless, we may see some buyers leaving the market.
There is low housing inventory and buyers are ready to find their homes… But don’t wait too long, because your perfect buyers may decide to wait out this next cycle of economic uncertainty and the advantageous bidding wars that can escalate your returns $50k-300k will disappear with them.
*Economic data taken from the most recent ULI Real Estate Economic Forecast