Should You Sell Your Home In This Market?

Written By: Bruce Nemovitz – Realty Executives Integrity

By now, everyone reading this article has heard about the hot real estate market. But what does that really mean to you, a homeowner? When the topic of real estate comes up when I meet folks, the first thing I hear is, “you sure are lucky to be in real estate in this crazy hot market…must be great!”. Now, ask anyone actually in real estate and they will tell you how exasperating it is, and how difficult it is to find a buyer a home. Here is an example: A couple of days ago, a past client who is thinking of downsizing called me to look at a home in Waukesha County. It had just come on the market a day earlier, so we wanted to get there as soon as possible. When we arrived, we noticed on the counter the business cards of the Realtors who had shown that home in the last 24 hours. There were at least 20 cards and I was told the listing already had 6 offers! Add to that the home would have sold in 2008 for about $300,000; now it was over $500,000! What is cause of this overheated market?

First, let’s examine the potential group looking to purchase these homes. For the most part, they are the millennials age 27-39. This group has delayed forming a family due to college debt and their desire to see the world before settling down. Very different from the baby boomers, who married much earlier and had children about 10 years before this millennial group. This group is now ready to move out of their apartments and have a home for their new family. That has always been the desire of every family once that first child is born…move from their apartment into a single-family home.

Second, interest rates due to Covid have fallen to an all-time low, from 2.5% at the bottom to now about 4%, which is still extremely low when looking at historical rates. Remember in 1981, interest rates peaked at 20% and the boomers were still buying homes!

Third, I believe Covid has changed our society in ways we don’t quite understand at this point. Because of isolation, apartments have become somewhat claustrophobic for this generation. They have had so much time to think about their future and have decided that purchasing a home is at the top of their priorities.

Due to the above reasons, purchasing a home today is currently a nightmare for this young group. However, it can’t get any better for would-be sellers. If you are thinking of selling, now is the time…or is it? For those of you thinking about downsizing and purchasing a condo or single-family home, you must be prepared to compete with a multitude of buyers and have to sacrifice when thinking about your offer and contingencies. Contingencies are events that must happen to get to a closing, such as financing, home inspection and appraisal. Don’t even think of putting in an offer subject to the sale of your home. If you have a home sale contingency, your offer will most likely fall to the bottom of the pack of offers. Also, be prepared to offer way over asking if the home is priced competitively. The offers I have seen on my listings averaged about 10%-15% OVER the asking price. Also, many are waiving the home inspection, which we never recommend.

Here is my advice based on everything I just said. If you are thinking of purchasing a condo or single-family home and are prepared to offer way over the asking price with few or no contingencies, and can purchase without the sale of your home, then go for it now. Many or most of you will probably not fall into this category.

If you are moving into a senior apartment complex or senior community, I would sell as soon as possible, as it will never favor the seller more that right at this time. Why gamble? With the latest news, rising interest rates and home prices, this will come to an end at some point. Changes in the real estate market usually happen fairly quickly. I would not risk the market falling when you know you are most likely going to move in the next year.

If you want to purchase a home and then sell your home, but do not wish to compete with so many would-be purchasers, I would wait to purchase until November through January. That is typically the best time to buy as so many want to wait until spring, which is the worst time to buy no matter what the market is doing. You could buy in those off months, then put your home on the market in early spring and get the best of both worlds!

I always try to stay away from politics or religion, which has proved to be critical to a positive career in real estate. But this one time, I want to offer my prayers for the people in the Ukraine. I pray for their safety and well-being in such a horrible situation. I think of my family, my country and how truly blessed we all are to live in freedom and relative safety. We can’t take this for granted. I am writing this in early March 2022, and my hope is that there will be some resolution in the near future.

These times put into perspective our daily activities and choices for future plans. A roof over your head, in whatever form that may be, is the greatest blessing. My team at Realty Executives Integrity would be honored to be your guide through this decision making process.