If the housing market were a grocery store, the shelves would be sparsely stocked. In many ways, this is an opportunity for sellers to get top dollar for their property.
A huge part of why housing inventory is so low is because prospective sellers worry that the current interest rates will keep buyers from paying top dollar. So, they just keep waiting for interest rates to drop. Another reason for the low inventory is that current homeowners who would like to sell feel trapped by their low mortgage rate. Imagine you’d like to downsize or move to a new area, but the interest rate on your current mortgage is 2.5%. If you sell today, you’ll have to borrow money at 7% or more. These two factors have minimized the number of single-family homes available for sale for quite some time.
But here’s some food for thought. Although mortgage rates aren’t as low as they once were, they are no longer rising, and the low housing inventory makes this a sellers’ market. The law of supply and demand states that when supply is limited and demand remains unchanged, prices will rise. Right now, the buyers looking for a home to buy don’t have much to choose from, which could make your property stand out. Plus, it’s spring—the perfect time to showcase your property’s best features.
If you’re a seller willing to price your property in line with market expectations, you can get a quick sale, especially if your house is in good condition, all the inspections are done (e.g., pest and fungus, sewer lateral or septic, roof, home, well, HVAC, etc.), and all the disclosure reports and ready to share (e.g., fire safety, natural hazards report, agent visual inspection, and transfer disclosure statement). It always amazes me when sellers wait until the last minute to get these things done because they can delay or even derail the escrow process.
Sometimes sellers get greedy and list their property beyond what the market will bear. No matter how few homes are on the market, overpriced properties rarely sell. Especially in today’s world, it’s easy for buyers to compare prices online, and buyers with competent Realtors will be steered away from overpriced options. Two things lead to a quick sale: price and exposure to the market. The seller controls one and the Realtor controls the other. You need both for a quick sale.
If you’re wondering whether it would be more cost effective to build, given how few houses are on the market, think again. Inflation has made it cost-prohibitive to build. Even though real estate prices are up significantly in last decade, they haven’t kept pace with housing construction costs.
All this to say, if I were a homeowner, I’d be in the mood to sell. More buyers are coming into the market as we speak. It’s spring and buyers have adjusted to the new, higher interest rates as the norm.
Because people cannot wait forever to sell, the pent-up inventory will start to come on the market. Sometimes, they have personal or financial reasons to sell. Other times, they simply get tired of waiting for market conditions to cooperate, so they decide to take the leap. People have been waiting for quite some time, so if you want to get ahead of the curve, you might want to list your property now.
A final reason to sell now as opposed to later this year is because of market uncertainty in an election year. Although people’s personal reasons to enter the housing market typically overshadow market uncertainty, the housing market (and most financial markets) become more volatile when major political change may be afoot. If you get settled in your new home before November, that could be a good thing.
If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.
Dick Selzer is a real estate broker who has been in the business for more than 45 years. He is the president-elect of NORBAR, but the opinions expressed here are his and do not necessarily represent NORBAR.