Are you thinking of selling your home, but unsure about the state of the housing market? The housing supply directly affects the sellers market when it comes to real estate, but the landscape is currently confusing. Here’s what today’s housing supply means for home sellers.
The housing supply is tight. What does this mean for you as a hopeful home seller? Find out what supply and demand are doing in this unique real estate market, and how you should react.
What is the current home supply?
The supply of homes for sale in January 2022 totaled 6.5 million units, up 6.7% from December. Despite this, there is still record-low inventory across the nation, which was down 16.5% in January 2022 from the same month last year.
That means that demand is outstripping supply, which is traditionally good news if you want to sell your home. Large numbers of potential buyers are creating a sellers market, but is it being artificially inflated, and will it last? The market is expected to hold in this pattern for the foreseeable future.
How are outside forces affecting the real estate market?
While demand may be high, there are many factors affecting the perceived lack of homes on the market, and they can affect your ability to sell your home.
How people see “family” is changing
With adults waiting later and later to start families, and having fewer children, the demand for specific types of single family housing is shifting. However, there is also a rising practice of home sharing especially among younger generations.
Supply chain issues are holding up new builds
Lack of materials has stalled many new builds in their tracks, and getting the industry back up to speed takes time. This can reduce the number of new homes available on the market, and slow older homes going up for sale.
Investment buys are taking houses out of the supply funnel
As more and more homes get snapped up by domestic or international real estate investors for use on the long-term or short-term rental market, fewer are left to be bought and sold directly. This causes housing shortages and raises home rental rates.
Is now a good time to sell a house?
If you want to sell your house right now while the demand is high and the supply is low, you’ll also benefit from the fact that house prices are at record highs. Most of the country is still a seller’s market, and even where the home supply is starting to increase it’s still well below balance.
Equity may have bounced in your home even if you are still decades away from paying it off, and a new appraisal could deliver a happy surprise. However, conditions won’t remain this competitive forever, and you may have other factors that make selling your home now even more attractive.
Potential buyers are plentiful with the emotional euphoria of the pandemic not having yet worn off. You might even see a bidding war break out if you strike while the iron is hot and take advantage of demand in the housing market.
Mortgage rates are also at near-record lows, and if you’re looking to upsize or downsize now is the time. You can lock in a rate and settle into a new-to-you home after you sell your house, and enjoy having a lower mortgage payment.
However, if you need major work done before you can sell your home, the materials and labor costs may outweigh the benefits. The same goes if you don’t want to buy a home that you would plan to stay in for a number of years; since there’s not much room for rates to go down, they’re likely to go up, meaning moving in a few years could be harder if you’ve just bought a new home.
Tips for leveraging a sellers market
If you have the chance to sell your home in a tight housing supply, here’s how to maximize your profits:
First, minimize how much you spend to get your house “market ready.” Drop some money on new paint and landscaping for maximum curb appeal and a good first impression, throw a pan of cookies in the oven, and pop a vase of fresh flowers on the mantle. It’s your market, and you don’t have to go to extreme lengths to renovate in preparation for a home sale.
Second, if you get a glut of offers, consider tossing out the ones with contingencies attached first. This leaves you with serious buyers who won’t walk away if their own home is slow to sell or a home inspection turns up a bad floorboard or two.
Third, consider asking for an appraisal gap guarantee, so a prospective buyer agrees to pay a certain amount between the appraisal and market price. This helps ensure your window shoppers have the cash to plunk down if the numbers don’t match up perfectly (common in a seller’s market.)
Buying in a sellers market
Finally, a word on being a buyer in a sellers market: if you’re planning on selling your home and buying a new one almost simultaneously, you should be aware that other sellers are in the same position. Your potential buyers are your own competition when housing supply is tight. Get preapproved to gain an edge over your competition, and be prepared to pay a premium for the home you really want.
Why Choose Sammamish Mortgage?
At Sammamish Mortgage, we can get you preapproved and ready to shop in a sellers market, helping you navigate bidding wars and secure your dream home even in a tight housing supply.
Sammamish Mortgage has been in business since 1992, and has assisted many homebuyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help you get preapproved. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon, and Washington.
Contact a loan officer if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.