Half as many listings compared to pre-pandemic levels indicate we’re still in a seller’s market. You can read more about how much housing supply is needed to maintain a balanced market here.
“There are simply not enough homes for sale. The market can easily absorb a doubling of inventory,” Lawrence Yun, National Association of REALTORS® Chief Economist, says.
If you’re thinking about selling your house, limited listings offer you several advantages:
- Your home will stand out. Though listings are scarce, homebuyers are still active. Buyer traffic is returning to typical, seasonal patterns and “remains elevated above pre-pandemic levels,” ShowingTime reports. With fewer homes to choose from, your listing should gain traction.
- You may get multiple offers. Recent surveys show that the typical home seller is receiving 3.5 offers.** Likewise, more than a third of listings are selling above asking price. Because supply is so limited in contrast to demand, your home may sell competitively and at a profit.
- You could close quickly. In competitive markets, homebuyers are more likely to get pre-approved* first to help their offer get noticed. This can help to expedite the closing process. Currently, most contracts are closing in around 30 days.**
- You may not have to negotiate. How flexible you’ll have to be will depend on your local market. If your home draws multiple offers, you may not have to make (many) repairs or agree to concessions. However, concessions can still be a strong selling tool if you want to sell fast.
Does it make more sense to trade up or downsize?
Contact your local Academy Loan Officer for guidance.
Even with these benefits, there are several reasons homeowners may feel cautious about selling. Namely, anxiety about finding a new home in a tight market and reluctance to take on a higher rate. Redfin confirms, based on Federal Housing Finance Agency (FHFA) data, that the majority of homeowners have a below-market mortgage interest rate.
Still: “It’s worth noting that for some homeowners, the fact that home prices soared throughout the pandemic means they have enough equity to justify selling and taking on a higher rate,” Dana Anderson, Redfin data journalist, states.
Mortgage rates are tough to predict, but many forecasts anticipate them dropping. Even so, this drop isn’t likely to be drastic. The rock-bottom rates seen in the pandemic simply weren’t sustainable. Today’s rates are closer to a “new normal” and remain below the historical average.
All the while, home prices may continue rising.*** One incentive to sell and buy another home now is to beat these rising prices. If mortgage rates drop significantly in the future, you have the option to refinance.
As for the second concern—securing a new home amidst an inventory crisis—there are strategies that can help you do this. Many homebuyers are expanding their search radius to include different home types, such as new builds and condos, as well as different regions. If you’re working remotely, you may be able to relocate to a more affordable city or state.
Some homebuyers are finding success by searching outside city limits and considering fixer-uppers. USDA Loans are available for those purchasing in rural and some suburban areas, offering reasonable rates and requiring no money down. An all-in-one Renovation Loan can be used when buying a fixer-upper, combining purchase and renovation costs into a single closing and monthly mortgage payment.
Let’s not forget how much equity you’ve probably gained. Recently, the average homeowner’s equity soared to a record high of nearly $300,000. This growing prosperity provides you with an opportunity. You could use your equity gains to cover some or all of a new home’s down payment.
And while home prices aren’t expected to surge again, they also aren’t expected to depreciate.*** This means that you can count on further equity growth, even after selling and purchasing a new house.