Spring home sales should be speedier
Here’s a quick recap of why selling can be a smart move this spring:
- Springtime normally shows an influx of buyer activity. But with rates still around record lows, homebuyer demand is even greater. It’s an ideal time for sellers to take advantage. NAR’s recent Existing Home Sales report shows that pre-spring home sales were up 23.7 percent from the year before.
- Sellers who may have been reluctant to list in the past few years are now considering it. The fact that housing inventory is at record lows has driven up prices – and potential profits — by 14.1 percent. Increasing prices also indicate increasing home values, allowing a seller to tap into thousands of dollars in equity gains.
- Spring is a favorable season for move-up buyers. This is especially true among millennial homeowners (now ages 25 to 40) who have a golden opportunity to trade up in 2021, “with many having owned their first homes long enough to see substantial equity gains.”
In a seller’s market — where the number of homebuyers outnumbers the number of houses for sale, as it does right now — buyers have to do whatever they can to grab a seller’s attention.
This includes getting prequalified for a mortgage early so a buyer is prepared to act before they start hunting. For sellers, this uptick in early approvals may make the selling process simpler and quicker. It can also reduce the odds of an offer falling through; sellers typically pick prequalified buyers as a stronger bet in a multi-offer scenario.
Find out more about the benefits of selling this spring.
If you’re considering selling, it can also be comforting to know that we’re not anywhere near housing bubble territory.
Compared to the bubble seen a decade before, housing demand is legitimately strong, and inventory is very limited. Back then, buyer demand was temporarily fueled by what’s been called “irrational exuberance,” but current optimism in today’s housing market is backed by data.
Mortgage lending standards are also much more stringent than they were in the boom of the mid-2000s. The Mortgage Credit Availability Index (MCAI) now sits at 124.6 in contrast to the all-time high of 868 seen in 2006. A lower number reflects the difficulty of getting a mortgage.
Unlike 2006, housing demand in 2021 is real and not manufactured; the pandemic, and the low rates that came with it, have caused many households to rethink their need for stable housing and more functional indoor and outdoor spaces.
A conservative approach to refinancing in the past three years — again, because of lessons learned from the previous housing crisis — has helped to create unprecedented levels of home equity. Thirty-eight percent of owner-occupied homes, according to the Census Bureau, are owned without a mortgage, or “free and clear.”
Not only that, but 17.8 million residential properties in the U.S. are officially equity-rich, occurring when the combined loan amounts of these homes falls to 50 percent or less of their estimated market value. If you’re among the one in three homeowners who’s rich in equity, you’re in a prime position to sell.
Want to move even faster?
Prequalify before you list. It’s that easy. Once you find a new home you love, your loan officer will be ready and waiting to fast-track your loan to closing.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources deemed reliable but not guaranteed.