Wait Until Next Year If You Are A Homeseller?
"We are going to have to wait until next year to sell our house," is perhaps the concern that I am hearing most from upside-down homeowners, or those who have lost much of the equity in their homes. Perhaps they hope to rent the house out to a tenant for the next year or so, and then put the home on the market when it will sell for the values found back in 2006.
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As I sit here and write the "500th post" for the Tallahassee Real Estate Blog, I am hoping that I can convey an awareness to those people who have homes for sale in Tallahassee (or for those who want to sell a home). These people have a decision to make, and like it or not, choosing to make "no decision" is a bad decision that many have made.
Is It Smart To Wait Until Next Year?
The one question that every homeowner who is in no hurry to sell is considering is whether or not they should wait until next year. This question has plagued "low motivation" home sellers for as long as I have been in the business, and most likely for a long time prior to that. So how does one decide ...
I think you have to look at the direction of the real estate market. Common sense says if prices are rising, then you are not really in a hurry (if price is your only concern.) If prices are dropping, then you will get more money today then you will next year.
I think the biggest mistake that I am seeing from homeowners in this situation is that they think "last year's prices" will return next year. They do not consider that prices are moving in a fairly predictable manner, and that if prices are dropping for a while, they will eventually start to rise again (But not from today's values, but from the values they reach when they hit the bottom). If prices are to go down another 10%, they will start to appreciate from that point, not from where we are today.
Historic "Wait Until Next Year" Decisions
If we look at a real estate graph of home sales and average home prices, we can determine whether a "wait until next year" decision was wise for a homeowner.
This graph shows that from 1991 through 2005, anybody who chose to wait to sell their home, with the exception of one year, was able to do so in a better priced market. But that is not the case since 2006. Look at those who were thinking of selling in 2008 (or those who were on the market in 2008 and priced too high), they saw their home values drop. They will not see 2008 prices again most likely for 5 or more years.
"Wait Until Next Year" Is A Bad Decision
Realistically, anybody who chooses to wait until next year is either really waiting until 2015 to get this year's price (or later) or is choosing to get less money for their home. Remember, prices are dropping and will do so until market supply and demand get back into balance. Once this occurs, prices should start appreciating again ... but from the new levels that we reach, not from today's home values.
If you know you have to sell your home in the next few years, now is the best time. If you have the luxury of waiting, expect the wait to be longer than "just a year or two." With interest rates on the rise, this will be the year of the "best buy" for home buyers, so make sure you can take advantage the best opportunity to sell your home.
Relevant Real Estate Market Reports
The following real estate reports are available at the Tallahassee Housing Report. We keep updating these reports so that Tallahassee home sellers (and buyers) know the current state of the real estate market in Tallahassee.
Thanks Jim, not to mention we don't know how long the bottom will last. Realistically, it's wait 5 to 7 years or act now.
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