If you own a modest house in a metro area where job growth is strong, now could be an excellent time to sell if you've ever wanted to upgrade.
“The housing market is extremely competitive, especially for first-time buyers who are looking to purchase a starter home,” says Svenja Gudell, the chief economist for Zillow, which tracks housing markets across America.
“Young buyers often start their careers in fast-growing cities in which the market is particularly tough,” she says.
Of course, higher-tier properties aren’t exactly trading at fire-sale prices these days, either. But the inventory of unsold homes at higher levels is relatively plumper than at the entry level. As a result, the realities of supply and demand can now favor those seeking to trade up.
“For starter-home owners who wish to move, the present market is ripe for those who act strategically and wish to get a better house for their families,” says Mark Nash, a real estate analyst and author of “1001 Tips for Buying and Selling a Home.”
Here are a few pointers for potential home traders:
-- Consider the math on moving up.
There are several ways you could take advantage of the current real estate market to find a happier housing situation. One is to move to a more spacious place. Another is to make a “lateral move” to a home roughly the same size, though in a neighborhood that gives you better schools or a shorter commute.
“On the sell-side you should do very well, given the huge demand for starter homes in coveted areas. And on the buy-side you won’t be facing quite as intense a level of competition as purchasers at lower tiers of the same market,” Nash says.
Inertia is one reason many homeowners are failing to put their entry-level homes up for sale. Surprisingly, some continue to procrastinate simply because of the daunting chore of prepping their property.
“If the time is right to trade up, don’t let disorganization cause you to postpone the joy of better quarters,” Nash says.
-- Get a handle on your home’s real value.
As always, a few real estate agents might try to flatter you into hiring them by suggesting your property is worth more than it truly is, says Dorcas Helfant, a Coldwell Banker broker-owner and former president of the National Association of Realtors (realtor.org).
“You don’t want a wishful-thinking answer about your home’s value. You want an agent who is tactful, but calls it like it is on pricing. That’s because even after discounts, accurately priced homes ultimately go for more than those that are overpriced at the beginning,” Helfant says.
One way to increase the odds of finding a realistic listing agent is to interview at least three prospects before making your selection. Ask each to do a comparative market analysis on your property, using recent data from similar home sales in your neighborhood as a basis to set the appropriate list price.
“Watch out for any agent who comes in with a proposed list price way above the other agents you’ve surveyed,” she says.
Of course, as Helfant says, it’s always possible your property is worth more than you’ve been led to think by a real estate agent who wishes to score a quick sale. But that’s especially rare these days, given that inventory is scarce and many agents are hungry for listings.
“When it comes to affordable housing in desirable neighborhoods, there are far fewer sellers than willing buyers, and agents are dealing with that issue every day,” she says.
-- Factor your career plans into any purchase decision.
No matter the economy’s trajectory, real estate specialists caution against buying a trade-up property with the intention of selling it in just a year or two.
“Truth be told, you’ll probably need to hold your new property for at least three to five years to come out ahead. Otherwise, the transaction costs involved in selling, buying and then moving could eat up any potential profits,” Nash says.
On the other hand, if you anticipate holding the trade-up property for a lengthy period, this could be a favorable time to go through with the transaction.
-- Don’t allow unwarranted fears to sabotage your housing plans.
Veteran investors often cite an old adage when it comes to making money in any market: Buy low and sell high. Granted, very few homes are now as deeply discounted as they were in the aftermath of the Great Recession.
Nevertheless, Nash reminds starter-home owners who wish to sell and then trade up that it could be a mistake to delay fulfillment of their plans in hopes of awaiting a utopian situation. One downside of waiting is that mortgage rates, which are still hovering near historic lows, could rise in the future.
“Right now, maybe you won’t get a smashing deal on that fine property you hanker to own. But at least you’ll still have access to well-priced mortgage money, and there’s no telling how long that will last,” he says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)