Currently, the US is nearing the end of our third-largest housing boom since 1913. US property values have risen 53% on average since February 2012. To make it easier to grasp the numbers: a house worth $200,000 back in 2012 is now worth $300,000.
Experts predict a 2019 or 2020 “economic correction”, amid signs of a cooling real estate market. Real estate insiders are recommending you take the opportunity to sell your house in 2019. Read on for detailed and data-based reasons to sell this year.
1. This Pricing is Time Sensitive
The National Association of Realtors (NAR) reported that the existing-home sales already hit their peak back in 2017. In November 2017, existing-home sales were at their highest level since December 2006. Since then, we’ve seen a 7% drop nationally. What this means nationally is that selling now is going to serve you better than selling in the short-term future, although the Bay Area may not follow national trends.
2. Lower Interest Rates Now Than Tomorrow
Throughout 2018, there were four interest rate hikes. Rising interest rates affect mortgages, and that will contribute to the softening of housing demand. In other words, your buyer will get a better interest rate now, and so will you if you buy your next home soon, because rates are still going up. Analysts predict at least two more rate hikes in 2019 and rates are projected to hit 5.5% by the end of the year.
3. Fewer Contracts Signed
Mortgage rates and a drop in eligible homebuyers contribute to a decrease in buying power. Financing is becoming harder for some buyers, and some are choosing not to buy. This leaves properties sitting on the market longer. Sell your house in 2019, before interest rates peak, to avoid putting your house on the market longer than it should be.
4. New Listings
It is clear that the post-crisis real estate boom was primarily caused by lack of inventory. Because there are fewer houses for sale, there is a tighter competition among buyers. That is changing, though.
Some cities like San Jose, San Francisco, Seattle, and San Diego, experienced a remarkable jump in the number of homes sold in 2018 compared to 2017. The longer you put off selling your house, the more competition you will have to face in the market.
5. Shaky Stock Market
Experts were divided as to whether there would be a positive stock market period in 2019. However, most agree on one thing: that there will be a recession in 2020.
Real estate and the stock market are heavily connected, and one impacts the other. If stocks go down, people will fear losing money and rising mortgage rates. So fewer people buy houses. In that case, sellers who want to avoid sitting on the market must lower their prices.
6. Price Growth is Leveling Out
Data shows that there was a drop in the price growth rate from 5.7% in August to 5.5% in September 2018. Price appreciation is expected to plummet to 2%-3% in the next year. This slow down is foreseeable because it’s natural after a long period of intense growth. To avoid decline and selling at the wrong time, it is better to sell your house when the value is still high.
7. Elongating Days on Market
The term “days on market” (DOM) is a time marker that shows the length of time a house has been on the market. A longer DOM raises questions for homebuyers and experts.
DOM is now increasing. Houses now stay on the market longer on average, currently 42 days compared to 36 days in October 2018 and 40 days in November 2017. This is often tied to fewer homebuyers in the market.
8. Low Unemployment Rate
In November 2018, statistics released by the Bureau of Labor states that employers managed to open up 155,000 jobs to the market. Although this number is less than the 250,000 new jobs in October, unemployment remains at 3.7%, the lowest it has been in 50 years.
This low unemployment rate suggests that people still have buying power and consumer confidence. This should continue through 2019, making it the appropriate time to sell your house before unemployment rises back to more historically average rates.
A 2020 recession is predicted by many economic experts. Some claim a 35%-50% probability of this American economic recession. Timing the real estate market to avoid future losses means selling your house in 2019 when home values are still generally high.
10. New Construction is Picking Up Pace
There was a 5% increase in building permits in November, according to the Census Bureau and U.S. Department of Housing. Even though new construction fluctuates each month, there is a rise in construction annually. More new construction means more competition.
If you’ve considered selling your home, sell your house in 2019. Values are still high and interest rates are low. Put a competitive price on your house, and you can use this moment to your advantage.