It’s not exactly a tsunami, but real estate pros say there’s finally a growing wave of baby boomers letting go of their family homes and moving into smaller housing units, usually condos.
“From the point of view of price, it’s an absolutely fabulous time to sell one house and buy a smaller place,” says Stacy Berman, a longtime real estate agent in Washington, D.C.
Take the case of a retired social worker who’s about to relinquish ownership of the three-bedroom townhouse she’d hung onto for more than 20 years. The property is expected to sell for twice the value of the condo she intends to buy in a gated retirement community nearby.
“We anticipate a feeding frenzy for this townhouse among young families because it’s in a neighborhood with five-star schools that kids can walk to,” says Berman, the social worker’s listing agent.
Economists say there are multiple reasons why this is an opportune time to sell an affordable home in a popular community where property is still in short supply relative to demand among young adults. That’s because many from the millennial generation, who postponed marriage and child bearing, are now better positioned to buy. Meanwhile, more boomers have become eager to downsize.
Frank Nothaft, the chief economist for CoreLogic (corelogic.com), a California-based provider of global property information, says that many potential sellers are better off financially than they were in the years after the Great Recession.
“Also keeping the home-sales market humming is the fact that mortgage rates continue to hover near historic lows, a major factor intensifying demand among buyers of all ages," Nothaft says.
Though it’s a fortuitous time to sell in many affordable neighborhoods favored by young families, real estate specialists say it’s nearly always better to close on the sale of one property before buying another rather than making the purchase conditional on the sale.
“You can bargain more strongly if you’ve already liquidated the old property,” says Berman, who sells homes for the Long & Foster realty company.
Here are a few pointers for those planning to sell:
-- Try to obtain a realistic assessment of your home’s value.
As always, a minority of 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 former president of the National Association of Realtors (realtor.org).
“You don’t want a fantasyland answer about your home’s value. You want your agent to be brutally honest -- to give you ‘tough love’ when it comes to the value and condition of your place,” says Helfant, the co-owner of several Coldwell Banker realty offices.
One way to increase the odds of finding a realistic listing agent is to interview at least three prospects. 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.
-- Rely on data to calculate your sales prospects.
Beside the location and condition of your home, another factor could strongly influence how much cash you’ll receive if you were to sell: neighborhood competition.
“Statistics on inventory levels are a meaningful way to determine the strength of demand in your neck of the woods,” Helfant says.
For instance, if there’s a three-month supply of unsold homes currently for sale in your market, you can expect to wait longer (and receive less in proceeds) than if there’s only a one-month supply.
Helfant recommends you ask your listing agent to give you a graphic showing fluctuations in inventory levels for your immediate area over the last six to 12 months. Also, ask for a similar chart showing what percentage of list price, on average, sellers have been receiving.
“In a strong seller’s market, you should expect to get at least 95 percent of your asking price and this gap should be narrowing rather than widening,” Helfant says.
-- Don’t let fear keep you from actualizing your home-selling plans.
As always, the real estate market is buffeted by economic trends related to both supply and demand for property and local employment conditions. Prices fluctuate continuously. This causes some potential sellers to delay their sale in hopes of a greater reward at the bottom line.
The current period, when consumer sentiment is still high, could be a good time to put your place up for sale. Yet there are no guarantees of timing, even now.
Those who’ve worked in the real estate field for many years know it’s tricky to time your home sale to your advantage and that a delay could hurt you on price as well as help you, should the economy slow.
“Trying to outsmart the market is usually a fool’s game. It’s nearly always better to time your housing transition to suit your personal plans and preferences,” Helfant says.
(To contact Ellen James Martin, email her at email@example.com.)