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Don’t Let These Two Concerns Hold You Back from Selling Your House
If you’re debating whether or not you want to sell right now, it might be because you’ve got some unanswered questions, like if moving really makes sense in today’s market. Maybe you’re wondering if it’s even a good idea to move right now. Or you’re stressed because you think you won’t find a house you like.
To put your mind at ease, here’s how to tackle these two concerns head-on.
Is It Even a Good Idea To Move Right Now?
If you own a home already, you may have been holding off because you don’t want to sell and take on a higher mortgage rate on your next house. But your move may be a lot more feasible than you think, and that’s because of your equity.
Equity is the current market value of your home minus what you still owe on your loan. And thanks to the rapid appreciation we saw over the past few years, your equity has gotten a big boost. Just how much are we talking about? See for yourself. As Dr. Selma Hepp, Chief Economist at CoreLogic, explains:
“Persistent home price growth has continued to fuel home equity gains for existing homeowners who now average about $315,000 in equity and almost $129,000 more than at the onset of the pandemic.”
Here’s why this can be such a game-changer when you sell. You can use that equity to put down a larger amount on your next home, which means financing less at today’s mortgage rate. And in some cases, you may even be able to buy your next home in cash, avoiding mortgage rates altogether.
The bottom line? Your equity could be the key to making your next move possible.
Will I Be Able To Find a Home I Like?
If this is on your mind, it’s probably because you remember just how low the supply of homes for sale got over the past few years. It felt nearly impossible to find a home to buy because there were so few available.
But finding a home in today’s market isn’t as challenging. That’s because the number of homes for sale is growing, giving you more options to choose from. Data from Realtor.com shows just how much inventory has increased – it’s up almost 30% year-over-year (see graph below):
And even though inventory is still below pre-pandemic levels, this is the highest it’s been in quite a while. That means you have more options for your move, but your house should still stand out to buyers at the same time. That’s a sweet spot for you.
It’s important to note, though, that this balance varies by local market. Some places may have more homes for sale than others, so working with a local real estate agent is the best way to see what inventory trends look like in your area.
Bottom Line
Renting vs. Buying: The Net Worth Gap You Need To See
Trying to decide between renting or buying a home? One key factor that could help you choose is just how much homeownership can grow your net worth.
Every three years, the Federal Reserve Board shares a report called the Survey of Consumer Finances (SCF). It shows how much wealth homeowners and renters have – and the difference is significant.
On average, a homeowner’s net worth is nearly 40 times higher than a renter’s. Check out the graph below to see the difference for yourself:
Why Homeowner Wealth Is So High
In the previous version of that report, the average homeowner’s net worth was about $255,000, while the average renter’s was just $6,300. That’s still a big gap. But in the most recent update, the spread got even bigger as homeowner wealth grew even more (see graph below):
As the SCF report says:
“. . . the 2019-2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record.”
One big reason why homeowner wealth shot up is home equity.
Equity is the difference between your home’s value and what you owe on your mortgage. You gain equity by paying down your mortgage and when your home’s value goes up.
Over the past few years, home prices have gone up a lot. That’s because there weren’t enough available homes for all the people who wanted one. This supply-demand imbalance pushed home prices up – and that translated into faster equity gains and even more net worth for homeowners.
If you’re still torn between whether to rent or buy, here’s what you should know. While inventory has grown this year, in most places, there’s still not enough to go around. That’s why expert forecasts show prices are expected to go up again next year nationally. It’ll just be at a more moderate pace.
While that’s not the sky-high appreciation we saw during the pandemic, it still means potential equity gains for you if you buy now. As Ksenia Potapov, Economist at First American, explains:
“Despite the risk of volatility in the housing market, homeownership remains an important driver of wealth accumulation and the largest source of total wealth among most households.”
But prices and inventory are going to vary by area. So, lean on a local real estate agent. They’ll be able to give you the local trends and speak to the other financial and lifestyle benefits that come with owning a home. That crucial information will help you decide the best move for you right now. As Bankrate explains:
“Deciding between renting and buying a home isn’t just about cost — the decision also involves long-term financial strategies and personal circumstances. If you’re on the fence about which is right for you, it may be helpful to speak with a local real estate agent who knows your market well. An experienced agent can help you weigh your options and make a more informed decision.”
Bottom Line
If you’re not sure if you should rent or buy, keep in mind that if you can make the numbers work, owning a home can really grow your wealth over time.
And if homeownership feels out of reach, let’s connect so we can explore programs that may make buying possible.
Avoid These Top Homebuyer Mistakes in Today’s Market
No one likes making mistakes, especially when they happen in what’s likely the biggest transaction of your life – buying a home.
That’s why partnering with a trusted agent is so important. Here’s a sneak peek at the most common missteps buyers are making in today’s market and how a great agent will help you steer clear of each one.
Trying To Time the Market
Many buyers are trying to time the market by waiting for home prices or mortgage rates to drop. This can be a really risky strategy because there’s so much at play that can have an impact on those things. As Elijah de la Campa, Senior Economist at Redfin, says:
“My advice for buyers is don’t try to time the market. There are a lot of swing factors, like the upcoming jobs report and the presidential election, that could cause the housing market to take unexpected twists and turns. If you find a house you love and can afford to buy it, now’s not a bad time.”
Buying More House Than You Can Afford
If you’re tempted to stretch your budget a bit further than you should, you’re not alone. A number of buyers are making this mistake right now.
But the truth is, it’s actually really important to avoid overextending your budget, especially when other housing expenses like home insurance and taxes are on the rise. You want to talk to the pros to make sure you understand what’ll really work for you. Bankrate offers this advice:
“Focus on what monthly payment you can afford rather than fixating on the maximum loan amount you qualify for. Just because you can qualify for a $300,000 loan doesn’t mean you can comfortably handle the monthly payments that come with it along with your other financial obligations.”
Missing Out on Assistance Programs That Can Help
Saving up for the upfront costs of homeownership takes some careful planning. You’ve got to think about your closing costs, down payment, and more. And if you don’t work with a team of experienced professionals, you could miss out on programs out there that can make a big difference for you. This is happening more than you realize.
According to Realtor.com, almost 80% of first-time buyers qualify for down payment assistance – but only 13% actually take advantage of those programs. So, talk to a lender about your options. Whether you’re buying your first house or your fifth, there may be a program that can help.
Not Leaning on the Expertise of a Pro
This last one may be the most important of all. The very best way to avoid making a mistake that’s going to cost you is to lean on a pro. With the right team of experts, you can easily dodge these missteps.
Bottom Line
The good news is you don’t have to deal with any of these headaches. Let’s connect so you have a pro on your side who can help you avoid these costly mistakes.
Why Your House Will Shine in Today’s Market
Even though there are more homes available for sale than there were at this time last year, there are still more buyers than there are houses to choose from. So, know that if you’ve got moving on your mind, your house can really stand out.
There are several key reasons why there aren’t enough homes to go around and understanding them will help you see why the market is working in your favor if you’re ready to make a move.
What’s Causing the Shortage?
1. Underproduction of Homes: For years, the industry hasn’t built enough homes to keep up with demand. As Zillow explains:
“In 2022, 1.4 million homes were built — at the time, the best year for home construction since the early stages of the Great Recession. However, the number of U.S. families increased by 1.8 million that year, meaning the country did not even build enough to make a place for the new families, let alone begin chipping away at the deficit that has hampered housing affordability for more than a decade.”
2. Rising Costs: Building materials, labor shortages, and supply chain disruptions caused by the pandemic have all made it harder and more expensive to build homes. This can either limit or stop new home construction in some areas.
3. Regional Imbalances: Some markets are more affected by the shortage of homes than others. Popular and more desirable areas have more people moving in faster than new homes can be built. The number of new building permits issued doesn’t always keep pace with job growth in these regions, and that leads to even tighter markets and higher prices.
How Big Is the Problem?
According to estimates from Real Estate News, the U.S. is facing a housing shortfall of roughly 3.3 million homes, based on an average of several expert insights (see graph below):
This shows there’s a significant number of homes that need to be built just to meet current demand from buyers. But what about future demand?
According to John Burns Research and Consulting (JBREC), over the next 10 years, the U.S. will need about 18 million new homes to meet projected demand, including homes for new households, second homes, and replacements for aging or unusable homes.
So, even though more homes are on the market compared to last year, there still aren’t enough of them to go around. This is where you can really win if you’re ready to sell your house.
What You Need To Remember
If you’re thinking about selling, the shortage of homes for sale means your house is likely to get some serious attention from buyers. It’ll take years to climb out of this inventory deficit, and the market is still very tight. So, when buyers are competing for relatively few homes like they are right now, that creates more interest in the houses that are on the market, putting upward pressure on prices and ultimately working in your favor.
And since every market is different, it’s important to work with a real estate agent who understands local trends. They can help you price your house right and create a strategy to attract the right buyers.
Bottom Line
While there are more homes for sale than there were at this time last year, there’s still a shortage overall. And this puts you in the driver’s seat as a seller. Let’s connect so you have someone who can help you take advantage of today’s market.
The Benefits of Using Your Equity To Make a Bigger Down Payment
Did you know? Homeowners are often able to put more money down when they buy their next home. That’s because, once they sell, they can use the equity they have in their current house toward their next down payment. And it’s why as home equity reaches a new height, the median down payment has too.
According to the latest data from Redfin, the typical down payment for U.S. homebuyers is $67,500—that’s nearly 15% more than last year, and the highest on record (see graph below):
Here’s why equity makes this possible. Over the past five years, home prices have increased significantly, which has led to a big boost in equity for current homeowners like you. When you sell your house and move, you can take the equity that gives you and apply it toward a larger down payment on your new home. That’s a major opportunity, especially if you’ve had concerns about affordability.
Now, it’s important to remember you don’t have to make a big down payment to buy your next home—there are loan programs that let you put as little as 3%, or even 0% down. But there’s a reason so many current homeowners are opting to put more money down. That’s because it comes with some serious perks.
Why a Bigger Down Payment Can Be a Game Changer
1. You’ll Borrow Less and Save More in the Long Run
When you use your equity to make a bigger down payment on your next home, you won’t have to borrow as much. And the less you borrow, the less you’ll pay in interest over the life of your loan. That’s money saved in your pocket for years to come.
2. You Could Get a Lower Mortgage Rate
Providing a larger down payment shows your lender you’re more financially stable and not a large credit risk. The more confident your lender is in your credit score and your ability to pay your loan, the lower the mortgage rate they’ll likely be willing to give you. And that amplifies your savings.
3. Your Monthly Payments Could Be Lower
A bigger down payment doesn’t just help you reduce how much you have to borrow—it also means your monthly mortgage payment may be smaller. That can make your next home more affordable and give you a bit more breathing room in your budget.
4. You Can Skip Private Mortgage Insurance (PMI)
If you can put down 20% or more, you can avoid Private Mortgage Insurance (PMI), which is an added cost many buyers have to pay if their down payment isn’t as large. Freddie Mac explains it like this:
“For homeowners who put less than 20% down, Private Mortgage Insurance or PMI is an added insurance policy for homeowners that protects the lender if you are unable to pay your mortgage. It is not the same thing as homeowner’s insurance. It’s a monthly fee, rolled into your mortgage payment, that’s required if you make a down payment less than 20%.”
Avoiding PMI means you’ll have one less expense to worry about each month, which is a nice bonus.
Bottom Line
Down payments are at a record high, largely because recent equity gains are putting homeowners in a position to put more money down.
If you’re thinking about selling your current house and moving, let’s work together to figure out how much home equity you have right now, and how it can boost your buying power in today’s market.
How Much Does It Cost To Sell My House?
If you’re toying with the idea of selling your house, you’re probably wondering how much it’ll cost. To be honest, the final number will depend on several factors like the offer you accept, if you help with your buyer’s closing costs, how many repairs you tackle, and more.
So, to give you a ballpark of what to expect, here’s some information on a few of the expenses you’ll want to be ready for (see graph below):
But here’s something that puts those costs into perspective. Most homeowners today have a substantial amount of equity built up in their homes, and that means they stand to make significant gains when they sell. Chances are, you do too. This can help quickly recoup these selling costs. You may even have enough equity leftover to put some toward your next home purchase too.
Let’s dive into a few of the costs from the graph above, so you have a bit more context on what they include and where you may be able to save some money, when it makes sense.
Closing Costs and Commission
These are the fees you’ll pay at the closing table to cover various aspects of the sale. You’ll have your own closing costs and you may even offer to pay some of the buyer’s as a concession. As U.S. News Real Estate explains:
“Closing costs are fees that are paid to finalize the transaction and transfer ownership of the home to the buyer . . . Sellers can expect to pay 2% to 4% of the sale price of the home in fees and taxes on top of the agent commission. Based on the national median home sale price, this means that closing costs in 2023 for sellers are about $7,740 to $15,480. . .”
Taxes are going to vary by state and agent commissions depend on what you agree upon upfront. And keep in mind, that the numbers in the chart above are just an example, not exact figures. Not to mention, if you put money toward things like your property taxes, mortgage escrow, etc. as part of your current mortgage payments – there’s a chance you’ll get a credit back at closing that can help offset some of these selling expenses.
Pre-Listing Inspection and Repairs
One optional step some sellers take is having a pre-listing inspection. It gives you an idea of what may pop up later on in the buyer’s inspection – because those are the items a buyer may ask you to toss in a credit (or concession) to cover later on.
This allows you to get a jump on any repairs and tackle them before you list, so your house is set up to impress from the start.
Again, if you want to skip this step, an agent can help. They’ll be able to give you advice on things like paint colors, small cosmetic repairs, what buyers are looking for, and whether it’s worth tackling anything else ahead of time. This will help make sure you’re spending money on things that are most likely to net you a solid return on your investment.
Home Staging
As inventory grows, you may want to take a few extra steps to make sure your house stands out. Staging is an optional way to make sure your house shows well. It can include bringing in rental furniture if the house is vacant or art to warm up the walls. Some staging can even be done virtually once the photos are taken. But, in general, how much does it cost? According to Bankrate:
“Home sellers typically pay somewhere between $782 and $2,817 in home staging costs . . . but the price tag can vary widely.”
If you want to skip this step, you could opt to lean on your agent’s advice for what looks good and what may feel cluttered. A great agent will suggest things like removing a chair to open up the flow of a room, laying down a rug to add warmth to a space, or taking down photographs to de-personalize strategic areas.
Why Leaning on an Agent Is Key
If you’re looking to cut down on your costs, you have options. But be careful of where you trim. You may be able to skip staging or a pre-listing inspection since those are optional, but you don’t want to skimp and sell without a pro.
An agent is your go-to expert throughout the transaction. They’ll offer customized advice every step of the way, including how to stage the house and what repairs to tackle. This can help you avoid hiring an outside stager or having to pay for a pre-listing inspection.
But that’s not the only way your agent adds value. They’ll also create tailored marketing and pricing strategies that’ll highlight the house’s best assets and any work you did to get the home show ready. And that can actually help your house sell for more in the long run.
Bottom Line
Want a better picture of what you should expect when you sell your house? Let’s have a conversation and walk through it together.
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