Sellers: Don’t Let These Two Things Hold You Back
For many homeowners in today’s market that are thinking about selling their homes, there are two key aspects that are holding them back. These two points are feeling locked in by today’s high mortgage rates and worrying they won’t be able to find a new home with the low inventory. Let’s dive into each of these reasons and explore ways to overcome these obstacles.
Reason #1: The Reluctance to Take on a Higher Mortgage Rate
The graph below shows statistics from the Federal Housing Finance Agency (FHFA) that the average interest rate for current homeowners is less than 4 percent.
However, in today’s market, the typical 30-year fixed mortgage rate offered to buyers is closer to 7 percent. Due to this, many homeowners are opting to stay in their current home instead of moving to the new home that they desire. This situation is called the mortgage rate lock-in effect.
Advice: Waiting May Not Be Beneficial
While experts in the industry are predicting that mortgage rates will gradually fall throughout the year as inflation cools down, that doesn’t necessarily mean that you should wait to sell. Even for the experts, mortgage rates are notoriously hard to predict. Plus, currently home prices are back on the rise. If you move now rather than later, you’ll at least get a head of the rising home prices when you buy your next home. And, if the rates do fall after you move, you can always refinance down the road to bring down your monthly payments.
Reason #2: The Fear of Not Finding a New Home
With many homeowners reluctant to take on a higher interest rate, fewer homes are going to come onto the market. This means that the overall inventory will stay low. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) explains that:
“Inventory will remain tight in the coming months and even for the next couple of years. Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years.”
While the limited housing supply will help make your house stand out to eager buyers, it may also make you hesitant to sell because you don’t want to have to struggle to find a new home that makes it worth selling your current one.
Advice: Broaden Your Search
If you are worried about not being able to find a new desirable home to move into, remember to consider all of your options. Looking at all housing types including condos, townhouses, duplexes, and even newly built homes will give you a bigger variety to choose from. Plus, if you work fully remote or even hybrid, you can search in areas you haven’t previously considered. If you are able to move further away from work or your child’s school, then you may find more affordable and desirable options.
Rather than focusing on the challenges, focus on what you are able to control. Reach out to award winning realtor Dianne Anderson today to help you navigate the waters and find the perfect new home for you and your family.