After years of dropping, housing prices have suddenly begun to increase. In fact, some of you may finally no longer be underwater and are considering selling your house. The question is: Is now the time to sell? I’ve read a bunch of articles about this and many of them point to the same things, that the current rise in housing prices will be short lived. That is not a scare tactic to try to get you to sell today. Prices aren’t going to drop like they did back in 2008. But, they most likely won’t continue to rise either.
The Reason for The Gain in Housing
There are a few factors working together that helps explain why housing prices are increasing:
- First, there are few homes on the market. Banks aren’t listing all of their foreclosure properties because of the glut of them on the market was keeping housing prices low.
- Of the foreclosures that banks have put on the market, investors are buying. Investors are looking for super low prices on homes to either keep as investment properties or flip them for a profit like what was done back in the early 2000’s.
- Spring is typically the height of the real estate market. During the spring, buyers come out of the woodwork and begin looking for homes. The reason is so that they can settle into their new home over the summer and have their kids start the school year off in a new school as opposed to moving during the year.
- On the supply side, many homeowners have been underwater and unable to list their house for sale without bringing large sums of money to the closing table.
Why It Will Be Short Lived
All of the above, higher demand both from home-buyers and investors along with small supply have pushed prices higher. With the higher prices, both current homeowners and banks will begin to increase the supply of homes on the market. As demand slows down later into the summer, prices will level off and possibly even drop a little bit. Again, just a little, not like 2008.
So is Now the Time to Sell?
If you have been meaning to sell and just couldn’t because you have been underwater, now might be the ideal time for you to sell. However, if you have no reason to sell, I would hold tight. Prices will continue to increase as time goes on. They won’t increase by 10-15% like before, but will return to their normal rate of growth of about 3% per year. If you have no need to sell, holding out for a little bit longer makes a lot of sense.