• English
  • Español
AGENTS: Did you know you can share a personalized version of this post? Learn more!
,

Selling a House? Don’t Overprice It

There is no doubt that the housing market is coming back nicely. What, if anything, could slow down the current momentum? We believe it may be sellers’ over exuberance when it comes to pricing. There is little doubt that house prices have appreciated over the last twelve months in most regions of the country. However, with both the inventory of homes for sale and interest rates increasing, we have to be careful to not over judge what the market can bear.

Trulia just reported that asking prices have jumped dramatically and the increase is accelerating:

  • Year-Over-Year prices jumped 10.7%
  • Quarter-Over-Quarter prices jumped 4.1% (16.4% annualized)
  • Month-Over-Month prices jumped 1.5% (18% annualized)

No expert is expecting home prices to shoot up 18% in the next twelve months. If anything, price appreciation may slow as rates and inventories increase. Investors will begin to slow their purchases and the first-time buyers expected to take their place will be working within a pre-set budget in many cases.

Buyers’ Purchasing Power

Let’s look at an example: A young couple is looking for a home and have predetermined that their budget will only allow them to spend $1,000 a month on a mortgage. At today’s mortgage rate of 4.5%, they could afford a $200,000 mortgage ($1,013 principal & interest). However, if rates jump to 5%, they would have to lower their mortgage amount to $190,000 in order to keep their monthly payment where they need it ($1,020). At 5.5%, the mortgage would need to be no more than $180,000 ($1,022).

The Impact on Prices

This decrease in buyers’ purchasing power will have an impact on home values going forward. We do not believe it will cause a decrease in prices. However, we do believe it will likely cause current rates of appreciation to slow.

If you are thinking about selling your home, don’t get carried away with current headlines about home price increases that have taken place over the last twelve months. Instead, call a local real estate professional. They will be best prepared to explain where prices are headed over the next six months.

Attention Agents:

We will be discussing the issue of pricing in depth on our webinar, The 5 Elements of a PERFECT Listing Presentation, on Thursday, July 25th. You can reserve a seat here.


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.

3 replies
    • Michael
      Michael says:

      Totally agree with you Juliana, that’s why its so important to have an experienced real estate agent who actually knows the area (And for agents to really get to know the area), it can be the difference between waiting hours for a sale or waiting months.

      Reply
  1. Janine
    Janine says:

    I disagree! Only talking here about the bay area where there are not enough houses to go around!
    I say start high and see what happens!! After a week or two lower price if you have to!
    But as far as I know you just hold out and ait while you get multiple bids…higher and higher.
    Most are cash too! In my neighborhood that’s how it’s going down! Up to 100,000 more!
    So its easy to sell even the ugliest house in the neighbourhood for way over what it is worth! People don’t care they will tear it down and rebuild! Or totally remodel! They don’t care ! They just want to be in that area! Price!! High and then higher!!
    The market is on fire …but the available housing is limited! Especially in the hot school districts!
    Timing is also important! It all depends on how fast you need to sell …

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *