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Confidence The Sale Will Go Through
Buyers are in for the best deal of their lives, in terms of the low, low interest rates available to them right now. Though this does not impact sellers directly, what it does do is to almost ensure that their home will be sold. Looking back to the late 1980s when interest rates peaked at an all-time high of about 18%, many sellers had their plans set on moving contingent upon their home being sold, only to be smacked with the buyer’s offer being rescinded. The reason for this was that by the time buyers finalized their loan, the interest rates climbed yet again – leading to an unprecedented high cost of mortgages and their inability to afford them. On the flip side, today sellers are now confident that their sale will indeed go through as a result of the great rates and low home prices available to buyers.
More House – More Gain On Investment
Given that housing prices are down at the present time, current homeowners who are considering moving up and buying a better home are able to realize this because of the reduced housing values. They are comparing the choice to either remain in an existing home, wait until the market rebounds and the existing property appreciates again – with selling now and buying a new home worth more right now that will also appreciate once the market recovers. Looking at an example of a $100,000 home that is currently worth $80,000 in the down market – if the homeowner was to remain in the home and wait until it gained its lost value, it could take anywhere from five to ten years. Similarly, if the homeowner opted to sell the existing home for $80,000 and move into a $200,000 home currently valued in the down market at $160,000 – in the same five to ten years, the gain would be $40,000 – twice as much as the first home. Adhering to this philosophy, many homeowners are jumping on the real estate bandwagon again and buying up into new homes after selling their existing ones.
Shadow Inventory
Shadow inventory is the homes that aren't yet on the market, they are either going through foreclosure or delinquent on their loans. Currently we have about 8-10 months of shadow inventory that is coming onto the market. Sellers know the situation so they're going price their properties aggresively so they can avoid that wave of shadow inventory which is coming.
General Economic Outlook
Politics aside our country's economy is not doing very well and personally I am not sure that the prospects for where this country is headed is going in the right direction either. This is just a general sentiment that is affecting the real estate market. Sellers again are reacting to the emotional need to selling their property in this economic environment setting it up well for buyers.
Exhausted Patience Waiting For Market Rebound
Many homeowners have been sitting the market out, waiting for recovery since the beginnings of our current real estate down market. Five years later, they are seeing no change in the market and in fact can see home prices that have not yet hit rock bottom. These homeowners have come to realize that it is a better choice to sell now and avail the opportunities that present themselves with low interest rates and the potential to incur significant gains on their real estate upgrades within the next five or ten years.
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Each individual situation is a different one so it is highly advisable to consult with an experienced Realtor who can guide you and help you determine whether it makes sense for you to hold on to your property a bit longer to join the masses who are selling now to reap benefits later.
