Low inventory, driven by years of under-building by the construction industry along with population and job growth, has been one of the top real estate stories for almost the last four years.
Of course, high demand leads to strong price surges. The national median home price for existing homes rose 6% between the fourth quarter of 2015 and 2016. According to the National Association of REALTORS®, the national median sales price has risen for 59 straight months.
The inventory issue is facing additional challenges because some homeowners who want to put their homes on the market and buy another home are feeling stuck. They are worried they won’t be able to find and buy another property so instead of selling, they stay put. Instead of taking advantage of the strong price growth and tapping into their equity to invest in another property, they are tapping into that equity to remodel their current home. Furthermore, interest rates have begun to creep up which will further complicate our inventory problem since some homeowners may be reticent to trade in their historically-low interest rate on their mortgage for a higher interest rate mortgage on a new property.
So what should you do? Should you compete with other buyers in the market and buy now or should you wait until the market calms down? It depends! Here are some things to keep in mind:
- The price you pay in the future will almost assuredly be higher than the price you would pay today, even with multiple offers.
- The inventory problem is not expected to be remedied until the new construction industry can catch up on years of negative housing starts – which may take years.
- Growing interest rates will also eat into buying power.
Therefore, if your housing situation isn’t working for you now and it is not expected to get better, now may still be a great time to move, despite having to compete to buy a house. While most buyers might cringe at the price they may have to pay if competing in a multiple offer situation, they could possible cringe more if they waited to buy and interest rates and prices continue to rise. But the decision to sell should focus on the actual need to sell rather than on speculation and playing the market.
It can be difficult to determine what to do. But I am happy to help you evaluate all the pros and cons of selling now and play out different future scenarios to help you reach the best-fitting conclusion. That might indeed be selling and finding a home that meets your needs. Or it might mean staying and making some adjustments. Let’s talk! Please give me a call (206) 790-0081 or send me and email. Let’s set up an appointment to discuss your options and make a plan.