We’re not immune to anxiety. If you’re a homeowner looking to sell your house, you’ve probably got your head buried in the news each day. Inflation. Rising interest rates. Recession. Double-dip recession. We’ve seen it all. Some days it feels like doomscrolling on steroids, and that’s on the light days.
It makes you wonder if now is the right time to sell. Maybe I should just wait? Will home prices keep rising? When will be the perfect time to sell my house? How do I sell in a recession? We’ve compiled this article to help you sort through all of the emotions and understand how uncertainty affects home prices.
Uncertainty is a major factor in real estate
While it may be hard to stomach, economic uncertainty doesn’t really have one cause. Sometimes it’s due to interest rates shifting. Other times, it’s employment levels not keeping up. Inflation can lead to uncertainty, as can unexpected world events.
The reason uncertainty plays such a large role is that when people are uncertain about their income, their job, or their financial future, they are much less likely to make a large purchase, such as a home. If buyers aren’t biting, demand goes down. When there are fewer buyers and more people selling, home prices will suffer.
This is particularly true when demand goes down while supply continues to rise. As sellers list more and more homes for sale, there are more options on the market, and a buyer’s market ensues. At that point, the competition between sellers is all about price or enticing incentives.
However, if the supply of homes remains low due to homeowners reluctant to list in uncertain times, prices may not fall as fast. When there aren’t many options on the market, prices can remain elevated.
Interest rates and housing
Interest rates are a critical part of the real estate market. When interest rates are low, it’s cheaper to borrow money, and that makes the higher-priced home more affordable. On the other hand, when interest rates go up, it becomes much more expensive to get a mortgage. That’s when you start to see the impact on home prices.
Buyer affordability is a big deal when it comes to buying a house. They have a budget, and their budget is entirely dependent on interest rates. If those go up, it starts to pinch. Buyers may have to lower their budgets, or they may drop out of the market entirely.
On the other hand, sellers need to know what to expect with interest rates. If they are rising, it might be time to reconsider the strategy to sell your house. If the homeowner is unwilling to adjust, they may see their house languish on the market for months.
Inflation and the housing market
Inflation means that the value of money is going down. Prices go up, but the buying power of that dollar doesn’t increase. All costs go up, including the price of houses. There is an initial jump in home prices during inflationary periods because real estate is one of the best investments.
Buyers often jump on homes, and that demand drives home prices up initially. However, over time, as the real estate market becomes more inflationary, buyer affordability is going to come under strain. That’s because salaries and wages don’t keep pace with inflation on housing costs.
When that happens, home prices will flatten out and start to decline. That’s because there are fewer potential buyers in the mix. For sellers, that means that you might be able to list at a higher price, but you’re also likely to have a much smaller pool of buyers.
Another big factor: Job market stability
Job market stability is also important to home prices and stability in the real estate market. People need jobs to feel comfortable enough to buy a house. If they are losing their jobs or are worried about keeping their job, that is a big disincentive to take out a mortgage and buy a new home.
Think about regions with one or two big industries. If an economic change results in a loss of jobs in that area, home prices are going to fall more drastically than in a diverse market.
Counteracting Uncertainty
If you’re already in the game, not selling your home because things aren’t 100% “good” or “normal” is only going to cause more problems. But there are some things you can do to mitigate the impacts of market uncertainty, recession, and other factors on your home sale. Here’s what you should be doing to sell your house when the market is uncertain.
- Price your home competitively
Home price is the number one factor of the entire home-selling process. It’s also the one element you can control as a seller. If you price your house low enough that you have multiple offers, those buyers are going to compete for your home. They’re also going to drive the price up.
On the other hand, you price it too high, and your home isn’t going to sell. It’ll linger on the market, and you’ll eventually have to lower your price anyway, scaring off the most eager buyers .
- Sell off-market
When the market is going sideways, selling off-market may be your best bet. An off-market sale is a transaction between a seller and a cash buyer, such as SFR Unlimited. With an off-market sale, everything is closed quickly, without contingencies, inspections, appraisals, and other issues that can derail a traditional sale.
Go off-market if you want to be sure about a quick sale and don’t have to concern yourself with market fluctuations.
- Be flexible with negotiation
If the market is slow, buyers have all the power. If you’re going to close a sale, being a bit flexible with negotiation can be worth it to close a sale and lock in your profit. Are you willing to help with closing costs or other incentives? Willing to make some concessions for repairs? Maybe you can be more flexible on the closing timeline.
Give buyers a little extra reason to buy your home while not impacting your profit much.
- Highlight the strengths of your home
Buyers in an uncertain market are going to be super picky. They’re also shopping around, knowing that they have more leverage. To help yourself stand out, focus on highlighting the strengths of your home. Can you do a few minor repairs to help things sell faster? Can you stage the home to increase curb appeal?
Maybe you have a decent-size yard. Throw some fairy lights around, and set out a couple of chairs or benches for prospective buyers to sit and relax. Little touches like that make all the difference.
- Factor in local market influences
The real estate market is very local. Even though we look at the overall economic indicators to get a sense of where things are, every area is different. What’s happening in the real estate market and economy around you? Is it a job market or a buyer market? Do you have a lot of inventory? All of these questions are the ones that will help you make the best decision.
One option is to consider a local real estate investor. Investors can help you assess your specific situation and local market to help you make the best decision.
- Sell with certainty, even when it’s uncertain
Uncertain times are the worst. Not knowing is difficult for anyone. However, by being flexible, realistic, and a little more proactive, you can successfully sell your home no matter the economy or market. SFR Unlimited can give you a clear, fair offer in as little as 24 hours, so you can get on with your life instead of living in limbo.
Uncertainty comes up at times in everyone’s lives. If you’re uncertain about selling because of a job relocation or other reasons, an all-cash sale may be the answer. The certainty that an all-cash buyer can give you during uncertain times may be the best option for you.
When everything is uncertain, knowledge is power. Understanding the current market, your local area, and your financial situation can give you the edge you need to make an informed decision. At the end of the day, you don’t have to let fear, uncertainty, or anxiety get in the way of your plans, and you don’t have to wait until things are “perfect” to sell your home.