Sell My Home Now or Wait?

BY BILL BUDLER

A senior homeowner recently asked me, “Should I sell my home now, or wait for an even higher price?” She is blessed with good health and feels she can stay in her family home for a while longer. Like many, the equity in her home represents a large portion of her retirement resources.

The booming real estate market has driven home values to new heights. Historically, low interest rates over the last five years have allowed buyers to qualify for larger mortgages. The pandemic has more people working from home, creating the need for home office space or a place for a remote classroom. Low interest rates and an increased demand have fueled a seller’s market and higher prices.

The pandemic and the economy have contributed to unsustainable, high inflation rates not seen in over 30 years. To combat this, the Federal Reserve’s only weapon is to raise interest rates.

Most buyers are borrowing money. Higher mortgage interest rates make for higher payments and reduces the price range for most buyers. Current mortgage rates have been hovering around 3% APR. Let’s say a buyer today qualifies for a $250,000 home. With just a couple of points higher interest rate, that same buyer may only qualify for a $200,000 home. The higher rates can push buyers into lower price range homes, or out of the market all together. Reducing the number of qualified buyers can have a calming effect on a seller’s market.

So, to answer my senior homeowner’s question to sell now or wait? With complete accuracy we can see what the real estate market has been like. And we have a pretty good idea what it’s like today. But nobody knows exactly what the future holds.

Yes, now is a good time. Wait? Only time will tell.