Inventory is low across the board; here in northeast Florida, we’ve experienced a 39.3% drop over last year’s inventory levels. Zillow asked homeowners why they aren’t selling their homes, and one of the primary responses was that they wouldn’t be able to find or afford a new home. They anticipated a more favorable home sale price if they waited.
Bear in mind the fact that interest rates are as low as they’ve ever been. The Federal Reserve also doesn’t seem to have a plan for raising them anytime soon, either.
Beyond that, another factor to consider is whether we’re going to have an avalanche of foreclosures in the future. New data was recently released and it doesn’t support a foreclosure crisis. They are saying that the default notices and auctions have dropped by 12% to 27,016 between the second and third quarters of 2020, and they’re down by 81% over a year ago. So is now a good time to sell and buy a house?
Let’s say you owned a $300,000 house that you wanted to sell in order to buy, but you’re thinking about waiting for the market to change so you could get more money from the house. Last year, prices went up 10% across the board, and if that holds steady, your home would go up to $330,000.
There are two routes you could take: You could sell your home to buy a less expensive one, or you could use the proceeds to buy a more expensive home.
Scenario No. 1: Selling your home to buy a less expensive one. If your $300,000 home rose by 10%, then so did that $200,000 home you plan to buy. In this scenario, you made $10,000 by waiting a year.
Scenario No. 2: Selling your home to buy a more expensive one. A 10% increase would take a $500,000 home and turn it into a $550,000 home. Your current home will have gained $30,000 in value, but since the more expensive home also went up, you’ll have lost $20,000 by waiting.
So in the end, whether or not you should sell your home now depends on whether you want to up- or downgrade. Personally, I wouldn’t wait—there’s a lot going against that decision.
If you have questions about today’s topic or anything else to do with real estate, don’t hesitate to reach out to me. I’d love to speak with you.