Ten years ago, the bottom fell out of the housing market, leaving many homeowners nationwide underwater with their mortgage and numerous others in foreclosure situations. Today, buyers’ confidence in residential real estate has skyrocketed across the country, especially in Silicon Valley, including areas like Palo Alto, Sunnyvale, Saratoga, Los Gatos, and Mountain View. Sellers are reaping the rewards thanks to near rock-bottom interest rates and exceptionally low inventory.
Sellers are receiving a mind-blowing number of offers and walking away with tens if not hundreds of thousands of dollars above list price. If you’re a buyer, you’ll do almost anything to purchase a house and if you’re a seller, the world is seemingly your oyster.
But, that gleaming window of opportunity maybe be sliding closed in the near future. The market is showing signs of shifting so if you want to sell your home and maximize your profits, now is the time to take action.
1. Interest rates are low but are on the uptick
Though home loan interest rates aren’t as deeply discounted as in the recent past, buyers can still secure a 30-year fixed mortgage for about 4%. Experts confirm that mortgage interest will remain affordable for the majority of 2018. This means that potential purchasers still have great buying power, which will continue to spur the aggressive seller’s market.
But rates are slowing creeping upward, estimated to reach around 5% by the end of this year. Today’s buyers are savvy. They know the longer they wait, the more they will pay in interest so they are motivated to buy now.
As a seller, it benefits you to sell sooner versus later to take advantage of this increased purchasing power as buyers race to close on a house. And, if you’ll be buying another home after selling, you will also benefit from the lower interest.
2. Inventory is still low and buyer demand is high
There continues to be significantly more people wanting to purchase a home than there are houses to purchase. At the beginning of 2018, there were less than 350 homes available for sale in Santa Clara County and inventory wasn’t much better in Santa Cruz County.
The shortage of homes on the market is predicted by Realtor.com to remain tight through the beginning of 2018, with a 4% year-over-year decline by March. But experts are forecasting a rise in inventory in the last quarter of this year as more people put their homes up for sale. The first gain in inventory since 2015, this could very well spark an influx of homes on the market, resulting in fewer offers for each home and in turn, the possibility of sale prices declining since buyers won’t have to battle as fiercely to get their offer accepted.
Sellers who wish to take advantage of the current low inventory can expect multiple offers and minimal to no contingencies or repair requests. With inventors comprising 20% of all home sales in October 2017 and 22% in November 2017, all-cash offers well above asking are a distinct possibility
3. Buyers have more disposable income
Consumer confidence, low unemployment and mindboggling stock market gains (despite even the recent dips) are at all-time highs. And, thanks to the recent tax legislation, many people will receive a break on their taxes, giving them even more money in their pockets.
According to the National Association of REALTORS®, existing home sales are at their strongest pace in about eleven years, with sales increasing 5.6% in November 2017.
This all equates to homebuyers having more cash on hand that they are ready and willing to spend on a home. If you want to take advantage of this influx of buying power, now is indeed the time to sell!
4. Home prices are continuing to rise
Across the United States, sale prices for residential real estate continues to trend upward but experts at Realtor.com believe these gains are starting to slow. In 2017, home sale prices increased 5.5% year-over-year but that number is anticipated to decline in 2018 to 3.2%.
To get the best price from the sale of your home, the sooner you get your home on the market, the more you can expect to profit.
5. Millennials are ready to buy
2018 marks the first time that millennials will enter the housing market with a vengeance. Many of these people, now in their 30s, are ready to ditch renting for the benefits of owning a home. Realtor.com authorities agree that this group could make up an impressive 43% of those taking out a home loan this year, a 3% year-over-year uptick.
For years, the residential real estate market has benefitted the seller. But, things are poised for a change. Interest rates are creeping upward as are home prices and even inventory. Millennials are primed to enter the realm of home ownership and many buyers are flush with cash. Experts agree that homeowners who sell in early 2018 will gain the biggest advantage from the current market.