Why you should sell your home in 2019
March 8, 2019 | Dwell JC
With mortgage rates dropping to 12-month lows, the prospects for the real estate are looking up. Although it may not be as crazy as the summer of 2017, relatively speaking, 2019 might be the best time to sell your home. Especially if you’re on the fence about selling this year or next, Nick Ron, CEO of House Buyers of America, recommends moving forward in 2019.
“I think it’ll be better than 2020 and 2021 – who knows what’s going to happen in those years,” Ron says.
Downtown Jersey City saw home sales slow in the second half of 2018, with fewer buyers entering the market, at least partially due to rising interest rates, changes in the tax code and a local tax revaluation. In 2019, sellers can expect home buyers to re-enter the market as interest rates drop and remain low as the seasonal market heats up.
If you bought your house in the last year or two, still love it, and don’t want to part with it, go ahead and wait another five to ten years before revisiting the thought of selling. But if you’re weighing your options and considering selling this year, don’t play the waiting game.
Here are four reasons to sell your house in 2019:
- New buyers are still entering the market.
- Interest rates are still on the lower end.
- You have high equity.
- Selling now will be better than waiting till 2020.
New Buyers Are Still Entering the Market
As interest rates fall, more buyers will enter the market leading to increased buyer activity and increased sales. And if your house is at the higher end of the price range in your market, you should expect more buyer interest than before.
But with available housing inventory remaining low and interest rates falling, buyers who are ready to make a purchase will be entering the market this Spring. The biggest wave of new homebuyers will be among millennials, who are mostly first-time buyers. In a Harris Poll survey of 2,000 U.S. adults commissioned by real estate information company Trulia, more than one-fifth of Americans between ages 18 and 34 said they plan to buy a home within the next 12 months. Already, millennials make up the largest share of homebuyers at 36 percent, according to the National Association of Realtors, which released the number in March 2018.
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The bottom line: While we have seen some homes stay on the market for longer than average compared with 2017 when the market was super-hot, buyers are entering the market and it’s still possible to profit from your home sale.
Interest Rates Are Still Low
Mortgage interest rates have been on a bit of a bumpy road over the past year (see chart). Interest rates for a 30-year, fixed-rate mortgage reached their highest level in over seven years in November 2018, when they hit 4.94 percent, according to Freddie Mac. As of the end of February 2019, however, interest rates are down to 4.35 percent, according to Mike Sudol ant Load Depot, a 12-month low. While it’s reasonable to expect mortgage rates to continue to climb gradually throughout the year, they’ll remain much lower than the historic high of more than 18 percent in 1981.
It’s important to keep in mind that while mortgage rates tend to mirror the Fed’s interest rate activity, mortgage rates are based on the market in that moment, your financial status and the property you’re looking to purchase.
Just because the Fed raises rates at one meeting doesn’t mean mortgage rates will follow that exact pattern. “Not every Fed increase is passing on (to) a mortgage rate,” says John Pataky, executive vice president and chief consumer and commercial banking executive at TIAA Bank.
A sudden leap in mortgage interest rates is unlikely in 2019, though Pataky notes that you should be ready to see rates continue to climb. “We do expect over the next 12 months that mortgage rates will continue to drift higher,” he says.
If you’re looking to get the lowest interest rate possible on your next house, you should sell your home sooner rather than later.
You Have High Equity
Homeowners who bought during the recession or shortly after benefitted from historically low interest rates and, up until around 2015, lower home prices that were still in recovery mode. If you fall into that category, your home equity has risen with nearly every mortgage payment, each renovation you made to the house and all the other houses on the block that sold for a higher price.
The higher your equity in your home, the more you net from the sale, which can easily go toward the down payment on your next house. The larger your down payment, the better you look to lenders and the lower your interest rate will be, and the less likely you’ll need to increase monthly payments with private mortgage insurance.
Selling in 2019 vs. 2020
If not selling your home in 2019 means putting your house on the market in 2020, the sooner option is the best one. In a survey of 100 U.S. real estate experts and economists by real estate information company Zillow, released in May, almost half expect the next recession to occur in 2020. Another 14 percent believe the recession will hold out until 2021, while 24 percent of panelists expect the recession earlier – sometime in 2019.
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Whether you believe the recession is imminent or a long way off, current real estate patterns indicate this year will be a stable and profitable market. Real estate markets tend to operate on a cycle of their own, the length of which varies by market but can be between 10 to 16 years fluctuate from a seller’s to a buyer’s market with a period of balance in between. I believe we are heading toward a period of balance, which is still a great time to sell your home.
“It doesn’t look like there’s anything on the horizon that’s going to cause a big spike in home prices or increase demand dramatically,” Ron says.
Contact me today for a Free Home Evaluation.