Sellers might be wondering if putting their home on the market in the winter will result in a sale. Though the snowy months are generally a slow time for home sales, this past year has been anything but typical. So, should you try to sell your home now?
Why winter home sales could prove strong
Danielle Hale, chief economist of Realtor.Com, predicts that this winter will be different. “Sellers can expect to see plenty of buyers.” The pandemic lockdown is one factor driving a stronger than normal winter housing market.
The normal spring rush, winter lull rhythm was completely overturned because of COVID-19, creating a demand for homes that is still strong heading into what is usually a slow time for home sales.
“Compared to past winter seasons, this winter season’s sales activity will be stronger,” agrees Lawrence Yun, chief economist at the National Association of Realtors®. “This winter, there will be more sales compared to pre-pandemic winters going back all the way to 2006,” he said.
Low home numbers
With a low inventory of homes, they are selling fast. Sure, there may be marginally fewer homebuyers this winter than in the spring and summer, however, these homebuyers are serious, so homes should still sell more quickly, Hale said.
So just how fast can sellers expect? According to Realtor.com data, homes spent an average of 45 days on the market in October, about a week less than last year. In the most competitive metro areas, it was significantly less than the median 39 days.
Home prices may have peaked
With home prices at record highs, sellers who want to sell their homes may want to cash in this winter. Home prices are up 9% over last year, according to Realtor.com data. But these high prices seem to be leveling off locally. See our monthly market report for more details.
Sellers can expect that they will get much less than what has occurred in the past 12 months, Yun said. Prices will likely be lower compared to the summer market, though a bit higher than a year ago, he added.
Interest rates are creeping up
Interest rates are on the rise, so the low rates over the preceding 20 months are likely to impact a sale. According to Freddie Mac, rates were 2.98% for a 30-year fixed-rate loan in early November, but those rates could be increasing.
The Mortgage Bankers Association predicts that rates will increase to 4% by the end of 2022, which translates to less purchasing power for buyers and their ability to earn top dollar for their home if they are selling.
By next spring, more homes will likely hit the market, but if interest rates are on the rise, buyers may be limited in how much they can spend on a home.
Where will you live if predictions hold true?
Slightly more than a third, or 36%, of home sellers are looking to buy a different home after they sell. However, with a limited inventory and high prices, this could create a problem. The bottom line is you will need to have a game plan – you should know where you’ll go once your home sells.
But don’t despair: the inventory, though lower, will still be higher than the 20- to 30% drops in inventory seen since the pandemic started. There are still homes available, and with less competition, you will still have an opportunity to land a home of your choice.
You might also consider adding a “home of choice” contingency that allows you find another home before the sale of your present home goes through. It’s one way to avoid finding yourself homeless, however, few buyers are willing to accept such a contingency and be left hanging themselves. It is one option that could fly in the face of the present seller’s market.
Our Homes and Lakeshore team is your best resource when selling. We know the market and can advise you on the best strategy to sell your home. Contact us here.