Sell Now or Wait?
This past week, we have discussed how the current economy is wreaking havoc on our housing industry, how many homeowners can no longer make their mortgage payments and can’t qualify for a loan modification. We reported that millions of these homes will eventually become foreclosures or, in a best case scenario, a short sale.
You may be asking how that affects you. That depends. If you have no plans to either refinance or sell your home in the near future, current circumstances should have no impact.
However, if you do plan to refinance or sell your home, the impact could be monumental. When you are selling anything or using it as collateral for a loan, value is crucial. And value is always established by the supply and demand ratio. If supply is low and demand is high then value rises. And vice versa.
During the week, we established that there would be a dramatic increase in the housing supply of distressed (discounted) properties. That will drive housing values down.
You may argue that demand is also increasing and you would be correct. However, the increase in demand is being created by the government which has held down interest rates and given tax credits to purchases. Both programs will be drawing to a conclusion in the first half of 2010. After that, demand will begin to fade (as shown below).
So, if you plan to sell, the best time to get full value for your property is RIGHT NOW!
Or, you could wait for the economy to come back and hope that prices return to the peaks of 2005 – 2006. Fiserv and Moody’s Economy.com did a study on just that issue. The map below quantifies when we might see those prices again.
If you have a good reason to move now, do it!
Afraid that buying isn’t prudent at this time?
Next week, we will discuss whether now is the right time to buy real estate.
| Members: Sign in now to set up your Personalized Posts & start sharing today! Not a Member Yet? Click Here to learn more about KCM’s newest feature, Personalized Posts. |
Thanks for a very informative article that I would like to link to my blog please to share with my clients and potential clients.. Let me know if that’s OK with you. Vanessa
Love the graph showing buyer demand v. property values. Clear argument for moving for both buyers and sellers. Thanks.
Janet – Thank you for the kind words.
Vanessa – You can definitely link to your blog. Let’s spread the message.
Steve, great post. I shared it with clients, friends and family. I look forward to further posts from you.