© . FILE PHOTO: A “For Sale” sign is posted outside a residential home in the Queen Anne neighborhood of Seattle, Washington, US May 14, 2021. REUTERS/Karen Ducey
By Chris Taylor NEW YORK () – For the past few years, Lee Adler has been watching the US real estate market, and things just kept going up and up. So it seemed like an optimal time to sell his home in the state after Adler moved abroad to Nice, France, shortly before the pandemic started. His single-family home in West Palm Beach, Florida was sold within a month. “I felt like I was in the driver’s seat,” says Adler, 71, who publishes websites like Liquidity Trader and the Wall Street Examiner. “I got a cash offer without contingencies at my asking price. The sale price was 40% higher than I could have gotten a year ago.” The sweltering housing market may not be great news for buyers, but it’s great for sellers. The S&P CoreLogic Case-Shiller Index recently reported an 18.8% rise in the national house price for 2021, much higher than even the red-hot inflation figures. For owners who are unsure whether to sell, it may be time to strike. In fact, Realtor.com’s website has a very specific suggestion on when to list: the week of April 10-16. The current mix of eager buyers, frugal offers, healthy prices and (historically) still relatively low mortgage rates means that many factors tip the scales in favor of sellers. “In mid-April, sellers will hit the market just before a big surge in listings in May,” said Danielle Hale, chief economist at Realtor.com. “That way they can take advantage of a large buyers audience that is not happy with the houses for sale.” Looking ahead, there are many reasons to believe that the current market will cool down. Higher interest rates have consequences for the affordability of homes. Average monthly mortgage payments are already much higher than they were a few months ago, Hale says. If mainstream buyers can’t afford that much per home, investors — who accounted for a record 18.4% of the market in Q4 2021, according to real estate broker Redfin (NASDAQ:) — probably won’t be too interested. Current projections for house price growth in 2022 are a more modest 2.9%, Hale says. “This year, buyers came out early to get ahead of rising mortgage rates, so this is an excellent time to sell,” said Daryl Fairweather, Redfin’s chief economist. Some thoughts on getting the deal right: BENEFIT FROM THE SPRINGUSH Spring is the busiest season for buyers and sellers: Parents don’t like to move families after the school year starts in the fall, and many people — especially in colder climates – are not fans of moving in the winter. “Get started right away, as there are likely improvements you’ll want to make to make sure your home is in the best light,” advises Hale. PRICE IS RIGHT Your eyes may be wide with dollar signs right now, given the massive surges in the real estate market in recent years. But if the price of a house is too high for the market and it stands for a while, it gets old. So the continued rise in interest rates may bite you again. A better strategy is to “be careful and price it too low, because well-priced homes are now getting multiple offers,” Fairweather says. “But if mortgage rates go higher next week, there’s a real risk if you’re overpriced and the market is spinning.” USE YOUR LEVERAGE All real estate is local, as the saying goes. If you’re in an area where demand is high and inventory is low, that works to your advantage when it comes to establishing the terms and conditions of the deal. About 15% of deals currently have waived contingencies for things like inspections or financing, Fairweather says — a much higher level than before the pandemic. Deals are closing fast too, some 17 days faster than the same period last year, Hale says. THINK ABOUT THE NEXT STEPS Even if you’re selling for a great price, the reality is that you still have somewhere to live. Rents have also risen sharply, as have house prices. As a result, a big move makes the most sense for those into real estate arbitrage: perhaps an empty nester downsizing, or someone taking advantage of the work-from-home trend to lower the cost of living. “The real winners in this housing market are those who sell in an expensive area and move into more affordable homes,” Fairweather says.