2 Reasons to List your home BEFORE Spring 2014
Waiting until spring to sell your home? Don’t let the cold weather deceive you—there are more serious buyers looking during the winter months.
Here are 2 main reasons why you should list your home ASAP:
1. Interest Rates Will Go Up in Spring
Interest rates are still low, but all indications point to them rising by spring. When interest rates rise, affordability decreases for buyers, which in turn hurts sellers. According to Dr. Lawrence Yun, the Senior Economist at the National Association of Realtors®, rates have been increasing slowly since their historically low levels earlier this year. By the end of 2014, Yun says mortgage rates are expected to rise to over 5.5%.
Another factor that could affect rates in the coming year is that Fannie Mae announced this month it would raise the fees it charges to lenders. Lenders, in turn, would pass these fees on to borrowers. Incoming director of the agency that oversees Fannie Mae, Congressman Mel Watt, said he plans on delaying these increases when he is sworn in on January 6th. Although there’s uncertainty when exactly these fee increases will take place, it is likely it will happen before the end of 2014. The amount of these fee increases will depend on factors such as credit scores and the amount of the down payment.
In addition to that, the Federal Reserve announced that it will begin tapering their bond buying program in January. In response to this announcement, interest rates will go up. With this said any seller who is thinking of listing their home for sale in March, April, or May should instead do it in January or February.
As interest rates go up, buyers can afford less. For instance right now the average conventional rate is at 4.65%, so a monthly payment on a $350,000 loan would be $1,805. By the end of 2014 when rates may reach 5.5%, the monthly payment for that same house could jump to $1,987, a $182 increase per month compared to now.
Buyers have more purchasing power when rates are low right now.
2. Low Inventory = Less competition
Housing inventory is very low right now. As of today there are just 17,907 homes on the market. Last year at this time there were 18,926, a difference of 5%. With fewer homes on the market, your home will get more attention from buyers. Low inventory and higher demand also drives up prices. This chart below show how housing inventory now is the lowest for the month of January since 2004.
By spring we expect many more homes to be on the market because more sellers have more equity than they did in years past. In addition there will be many more new construction homes on the market in the spring of 2014 than in many years.
We compiled data showing monthly housing inventory levels in Massachusetts for the past 10 years. As you can see from this chart, inventory levels generally begin to rise again in the spring months, so sellers should take advantage of the low inventory and list their home now.
For more extensive information on inventory levels in Massachusetts, read Why Home Sellers Should Take Advantage of the Low Housing Inventory Now