Increase Your Wealth By Moving Up Now, Not Next Year

Increase Your Wealth By Moving Up Now, Not Next Year (Source: - used as royalty free image)Let’s dispense with one prevalent real estate myth right upfront: There will never be a perfect time to buy or sell your home. The housing market can change on a dime, driven as it is by a complex array of factors – some big, some bizarre – and every home is different.

With that in mind, it’s always important to take stock of the market as it exists right now; this is the water you’ll be swimming in when you’re buying or selling a home, and it always helps to know what you’re diving into.

The good news? With conditions as they are, the temperature looks good for buyers and sellers – if you act quickly. Drag your feet, however, and you could miss out on a chance to maximize your wealth. Here’s what we mean:

You’ll Make More If You List Your Home Right Now

As we wrote fairly recently, Chicago is currently a market with fairly low inventory. Our city isn’t unique in that respect, though; in fact, the entire country right now shows signs of having a low inventory – and that could actually be good news for sellers.

As National Association of Realtors Chief Economist Lawrence Yun commented recently:

“…. new and existing inventory is not keeping up with the fast pace homes are coming off the market. Demand is easily outstripping supply in most of the country and it’s stymieing many prospective buyers from finding a home to purchase.”

There’s data to back up that assertion. Check out this chart, courtesy of the NAR and real estate blog Keeping Current Matters, which details the year-over-year inventory shortages of the past 12 months:

Or, via Keeping Current Matters, take a look at this graph, which highlights the months’ available supply of inventory across the country:

In general, we consider an inventory supply of less than six months indicative of a seller’s market; conditions like these suggest that buyers, driven by their high demand and the relatively low supply of the current market, will be particularly motivated to move - and pay up - on the right home.

If you properly position your home now, you could secure a lucrative sale from a buyer eager and willing to pounce on your property before the competition heats up. On the other hand, if you choose to wait until next year to list your home, you could well miss your chance at a quick, profitable sale as the market adjusts based on supply/demand conditions in the months ahead.

You’ll Save More If You Buy A New Home Right Now

The other big reason to enter the market right now? It’s a prime time not just to sell, but to make a move on your dream home. Wait too much longer, in fact, and it could well end up diminishing your purchasing power while costing you thousands in additional mortgage payments over your lifetime.

To see what we mean, take a look at this chart, once again provided by our friends at Keeping Current Matters:

What this helpful infographic illustrates is what real estate professionals call “the cost of waiting to buy,” which can broadly be thought of as additional funds that it would take to buy a home at some point in the future, assuming an increase in interest rates and/or home prices between now and then.

And, as this graphic suggests, buyers should expect an increase in both mortgage rates and home prices. Rates have already climbed from historic lows, and the experts at Freddie Mac have predicted that interest rates could increase to nearly 5% by this time next year; meanwhile, predictions from CoreLogic suggest that home prices could appreciate by nearly 5%, driven by “a potent mix of strong job gains, household formation, population growth and still-attractive mortgage rates.”

These little changes add up; given the predicted increases in both home prices and interest rates, a home that currently costs $250k will go for upwards of $260k next year. In addition to your down payment, that translates into a bump in what you can expect to pay per month or year in the long term – to the tune of an extra $179/month, or a staggering $64,624 over 30 years.

Ready to Make Your Move?

The takeaway? You can increase your wealth in the short term and the long by acting now, while the market is favorable to sellers and before changing interest rates alter the tenor of the market on the buy side. 

Of course, it helps to have a real estate team on your side that understands not only the nationwide housing market, but what sets each and every Chicago neighborhood apart. That’s where the Real Group team comes in! Whether you’re interested in buying or selling a home or you just have some questions, we’d love to get the conversation started.

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