Have you heard from clients who want to delay listing their home until the season begins? Because sales and prices tend to peak in the spring and summer, it's a common request in many markets.
However, this year is different, and the conventional wisdom of waiting for spring and higher prices isn't correct this winter. Conventional wisdom in real estate holds that sellers should time the market to maximize their price. Why? Because home sales are extremely seasonal: They peak in spring and summer, when prices peak as well. That’s why in most markets, most years, the optimal time to list is in the spring, so that the maximum number of potential buyers view the home.
But we’re in an era in which conventional wisdom is becoming an ever-sketchier concept. So why should real estate be immune from all this topsy-turviness? This year, the conventional wisdom of buying and selling may need to change.
Here’s why: At the beginning of 2017, inventory levels plunged to multiyear lows. Sellers are currently facing very little competition and therefore prices are spiking.
Mixed with that, buyer demand is abnormally strong for the off-season. “The climb in mortgage rates that started in October and accelerated in November and December has created a sense of urgency among buyers.”
2017 is also expected to bring more economic growth and even higher interest rates. And with consumer confidence at a 15-year high, buying competition is likely to get fierce.
While not everyone can move up their plans for the spring and summer; even so, the months of winter and early spring will likely be much busier than usual. Therefore, sellers could benefit less from timing a spring listing for a summer sale this year.
But the most important reason to consider selling early this year is the same reason most people want to sell in the first place: so they can buy again. We estimate that more than 85% of sellers are planning to buy another home. The endgame is not necessarily getting the maximum price on the house being sold, but rather taking the best path to the next home.
With interest rates largely forecasted to move higher this year, buyers are more in a rush to lock in a low rate sooner. Plus, your sellers may have to worry about lending rates as well; Smoke estimates that 85 percent of sellers are planning to buy another home after they sell.
So here’s the best tip for your sellers: “If you are thinking of selling and buying in 2017, the early bird may get the worm. And the best new nest.”