Question: When is the best time to sell my home?
Oh, how I wish that I had a crystal ball to predict the real estate market. I would certainly be a wealthy man — and quite popular, I might add. Unfortunately, no such crystal ball exists. And I say that all of the time. People always ask me, “What do you think the market will be like in the fall?” or, “If we wait a year, will be able to sell for more?”
My typical response is that I don’t have the power to predict the real estate future. Sure, I can acknowledge current trends and speak to seasonal trends of the past, but as we have learned through the shift in the market, values are a moving target.
So let’s talk about timing. The first contributing factor to affect the timing of selling a home is seasonality. Here in beautiful Kansas City, we have a pretty predictable pattern when it comes to home sales. January starts the year out timidly. Typically the homes sales increase by about 20-25 percent from January to February. Then maybe another 15 percent from February to March. As most of you would predict, April and May are really strong months. This is the heart of the spring market. Flowers are blooming and home buyers are hitting the streets. At the same time, home sellers are doing some spring cleaning and listing their homes. Over the last six years, the inventory coming on in the spring has far exceeded the number of active buyers. As a result, the market stalled and we would have a short spring season.
Not this year. This year the inventory cannot keep up. Homes that are priced right and in great condition are being gobbled up. The average days on market in the Prairie Village area right now is 67 days. This same month last year it was 92 days. And the supply of homes is down over 38 percent Unbelievable! The number of homes that sold in March is up 32 percent compared to 2012. Sounds like a good time to sell to me.
The next factor when it comes to timing is affordability. I recently shared with you that affordability at the end of 2012 was at 12.9 percent (an all-time low). Several things affect affordability, but let’s focus on one for this column: interest rates.
Some sellers don’t realize the impact that interest rates have on their chances of selling. Let me give you an example. When we consult our buyer clients, we teach them that for every 1 percent interest rates go up, a buyer will lose on average 10 percent of their buying power. So if a buyer’s max purchase price at 3 percent was 250K, then at 4 percent their max purchase price would be 225K. So if your home is listed at 250K, the market just took away a potential buyer.
Don’t underestimate the power of interest rates. Additionally, please don’t fool yourself into believing that the investors behind our mortgage industry are going to allow rates to stay so low. After all, they are in business to make money. Last week we talked about the strong signs of our housing recovery. These signs are not a secret. Rates will go up. Mark my words. Please don’t wait it out.
To tie it up with a pretty little bow, it is always a great time to sell a home that is priced competitively in relation to its competition and its condition. The only real estate market that we interpret with 100 percent accuracy is the market of today.
This weekly sponsored column is written by Chad Taylor of the Taylor-Made Team and Keller Williams Realty Key Partners, LLC. The Taylor-Made Team consistently performs in the top 3 percent of Realtors in the Heartland MLS. Please submit follow-up questions in the comments section or via email. You can find out more about the Taylor-Made Team on its website. And always feel free to call at 913-825-7540.