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The journey towards buying and selling a home can be tedious. Attempting to time a market that fluctuates as quickly as the housing market can have any owner or buyer feeling like they made the wrong decision in retrospect every time. This article will attempt to answer what timing the market does for an individual, and furthermore establish the market we’re in to help make more critical decisions for those buying and selling.
The current housing market that rears its head into the new year is one of moderate inventory and a low number buyers. At a glance, the market feels as if it is performing at a slower rate when compared to previous years. However, this can be assuredly related to the winter months. Pulling data from the Columbus MLS, the average number of houses over the past three years always rises around November. This number remains relatively high until February or March. What’s the reason? Buyers. Hate. The Cold.
Now that the weather warms up, the number of buyers begins to increase as well. Combine that with interest rates lowering over the course of a year? Now buyers have some competition. So where are we? Was the beginning of the year a buyer’s market? Are we heading into a seller’s market? Can you have both in one year?
Yes to all. The idea of buyer/seller’s markets is a simple macro-example of supply and demand. The winter months produce less buyers, meaning more houses to choose from. My clients not only had more options to choose from when it came to inventory, they also had more time to make decisions. Now that more buyers have entered that market, it is time to readjust.
When it comes to traversing an emerging seller’s market, keep in mind that we are heading into competition down the line as well. For every 1% of an interest rate drop, that many more buyers will enter a market that they think will have better “affordable” prices for them. But what’s the issue here? More buyers = more expensive houses
This is worth diving into. A more expensive house with a lower interest rate sounds good, but it may be the reason you won’t get one. Waiting to buy will group you into the large number of people that are also waiting. The pool of buyers in the summer and fall will be like a great white whale to the guppy pond we find ourselves in right now.
Additionally, buying a house at a higher price locks you in at that price. Instead, consider refinancing as an option. Taking a higher interest rate allows you to refinance down the line. Not only can you get a lower rate (that will lower your monthly mortgage), it will also ensure a lower price for a house (by buying now instead of waiting).
However, and whenever you choose to buy or sell your house, it’s critical to understand how the markets work. Keep in mind when demand is called upon. Those that wait may find it harder than those that act now. Regardless of when you choose to make your financial decision, make sure you have the foresight to see where you are heading with any option you choose.
