Hughes: No time like the present to buy, sell home
We’ve all heard rumors of the Federal Reserve raising interest rates in June. It’s been looming ahead as if to push all of us into either buying or selling, depending on which side of the coin our position falls.
Even a 0.5 percent increase in mortgage rates can have a large effect. After studying the market, I’ve come across three other reasons you should sell your house before June, and it might be just what the entire market needs right now.
Current Mortgage Situation
Fluctuating from week to week, the current mortgage situation can best be described by your mortgage advisor. I reached out to Karen Jackson, Mortgage Advisor for Waterstone Mortgage to get her feel on the market this week. She remarked that, “rates improved by an eighth (as) Chairwoman Yellen was softer in her remarks about rate hikes, indicating that decision (to raise rates) would be ‘data driven.’ There are many experts, though, who are still expecting a rate hike in June, so there are still many reasons to take advantage of today’s market and lean to the conservative in a rate lock decision. Right now, the 30 year fixed rate for a high credit score buyer is running around 3.625 percent (3.75 APR).”
Selling Before June Gains More Potential Buyers
If you are considering selling, it might be advantageous to do so as soon as possible and take advantage of buyers looking to purchase before the potential rate hike. Melissa Parietti of Investopedia says, “Home sellers should consider which factor is more important to them: getting a lower rate on a new home or the selling price of the old home. Since an increase in interest rates is likely to cause the demand for homes to decrease, the purchasing and selling price of homes will fall along with demand.” If you are selling a home with the intent to purchase a new property while rates are still low, you are likely to benefit from a fixed-rate mortgage and lock in favorably low rates before June. With the uncertainty of how much the rates could potentially rise, locking in now is paramount.
Selling After June Could Spell Lower Home Sale Price
Selling Immediately after the rate increase is likely not to be in the best interest of home sellers. Parietti states that “after the increase of the nation’s interest rate, rising mortgage rates are likely to place pressure on decreasing home prices to maintain the level of affordability in homes across the United States. Increasing mortgage rates along with increases in home prices could cause a housing bubble and freeze the buying and selling of homes again.” If home sale prices decrease, sellers might be forced to reduce their listing price to appeal to a wider net of home buyers, in lieu of an environment of higher rates.
Overall Improvement From Influx of Homes Before June
With so many buyers on the hunt for their next home, those who have been waiting to sell should jump on the opportunity to seize the last few months of low interest rates. The potential influx of homes on the market would encourage more sellers to list because inventory would look for promising as they themselves become buyers. In turn, the looming interest rate hike could help to promote a rising inventory and solve the lacking issues we are currently encountering.