Is the housing market in a bubble right now? Are home prices likely to continue growing? Is it a good time to sell a house in Texas right now? These are a few questions we will answer in the article below.
Most realtors and real estate experts believe anytime is a good time to put your home on the local market. It’s not a great idea to delay home sales for a year or two since experts predict home values to decrease in 2024.
Currently, there is high buyer demand in the real estate market and low inventory for potential buyers. Below, we will explain why homeowners should consider putting their houses up for sale in the current market. Ready to learn all about it? Then, read on!
Is It a Good Time to Sell Your House?
Have you wondered – is it a good time to sell a house with current market conditions? A countrywide housing market survey from October 2022 found that 51 percent of respondents feel good about selling their homes.
Home price growth has increased slowly in recent months, but you can still get a good price on your real estate property. Yet, home sellers may have trouble attracting as many buyers as in recent years due to growing mortgage interest rates. Fewer home buyers can handle 7 percent mortgage rates.
Sometimes, you can’t depend on the seller’s market, and you may need to move. For instance, you may consider downsizing after your adult children move out of the house. On the other hand, if you have a growing family, you may need a new home that’s large enough to handle the number of children you plan to raise.
Economists have found that housing inventory has increased by 49 percent over the last year. Nonetheless, the median listing price did rise by 11 percent in 2022. While the real estate market trends do benefit sellers right now, it is still not the best buyer’s market. That may make it more difficult for sellers to then buy themselves a new property.
Essentially, it might make sense to sell a house right now but a new home purchase may be out of reach for some. That’s especially true for sellers who need to pay off their lenders.
Is There a Housing Market Bubble?
The housing market kept growing with the typical home sale price growing exorbitantly ever since the start of the COVID-19 pandemic. The median home price grew by 38 percent from 2020 to 2022. Due to the steep increase in the average asking price, real estate experts began fearing a housing market bubble.
A housing bubble entails a sharp increase in home prices, a huge growth in demand, and limited inventory. Low mortgage rates, easy access to credit, and greater disposable income all fuel housing demand and the potential for a real estate bubble.
At the beginning of the pandemic, the government incentivized buyers with record-low mortgage interest rates due to fears of a housing market crash. Low monthly mortgage payments and little inventory created greater buyer demand in recent years.
More recently, the Federal Reserve raised mortgage interest rates to ensure inflation doesn’t lead to significant issues in the real estate market. It was meant to cool down the market, which may have worked. Currently, housing inventory has grown somewhat and home sales have declined. Regardless, home prices remain high.
While it seems that a housing bubble is forming, the housing shortage makes the case for the bubble harder. As many as 5 million homes are necessary to meet the demand for housing.
Yet, real estate investors and the average real estate agent do fear the formation of a housing bubble. Since the financial crisis of 2008, financial institutions have created protections that will ensure homeowners do not face the same situations as in the past.
In January 2022, the year-on-year rise for the real estate market reached 11.2 percent in the United States. That double-digit increase is not a common occurrence and does indicate a potential problem. Essentially, a housing market bubble may have begun forming.
A housing bubble is likely to burst when buyer demand drops and housing supply increases to a high inventory list. While inventory remains relatively low, it’s unlikely that a housing bubble will burst anytime soon.
Inflation and House Prices
The inflation rates have grown significantly throughout 2022. The price of gas and groceries have increased significantly and average consumers have struggled with paying for their basic needs. However, inflation rates may have started to stabilize.
The Consumer Price Index grew only 0.1 percent in November 2022 as compared to the 0.4 percent growth in October 2022, according to the U.S. Bureau of Labor Statistics. That was the lowest increase in all of 2022.
The slowdown in inflation rates may relate to the Federal Reserve increasing interest rates several times last year. Yet, inflation is still impacting the housing market nationwide.
For example, the 30-year fixed mortgage rate is currently at 6.64 percent while home prices grew 10.1 percent year-over-year by October 2022. The home price growth rate did decline by 1.3 percent, but the high increase is still historic.
It indicates that rising interest rates are not having the same impact on housing costs. Essentially, inflation is still hurting the housing market.
Could Now Be The Right Time to Sell a House?
Whether it’s the right time for you to sell your home depends on numerous factors. You may want to wait to sell your home if you purchased it only a few years ago or refinanced your loan only a year or two ago. You should keep your lower mortgage rate since buying a new home means you’ll likely have a higher interest rate.
Many home buyers locked in rates below 3 percent when purchasing homes before 2022. You may also find it hard to afford a new home at the rates they’re at right now. While you can make a good amount selling your home, you’ll end up giving it all up (and potentially more) by buying a new property. Higher prices also mean you’ll need more funds for the down payment.
You may also lack the money needed to sell your home, which can include closing costs and the expenses of home improvements. With low inventory, you may also have trouble finding the right house for your needs.
Yet, there are still good reasons why this might be the right time to sell your home. Some economists predict that the interest rates will decline slowly and stabilize in 2023.
Also, if you’re looking to make a high profit from a home sale and want to downsize, it might make sense to sell your house right now. While bidding wars are less likely, you can still get a good price for your property.
You can also use creative ways to sell a house in TX, such as adding videos and local influencers to your marketing plan. That should help you get more offers and better offers on your home.
Will House Value Depreciate Over the Coming Years?
Throughout 2023, experts believe that house prices will drop by 5 to 10 percent. Goldman Sachs research shows that home costs will level off and remain stable from the end of 2023 to the middle of 2024.
A Zillow survey also indicates that the housing market will begin to favor buyers more in 2023 than sellers. Most survey takers believe the shift toward buyers will occur either in 2023 or 2024.
However, metro areas in the South and Midwest are less likely to experience home price decreases over the next year. Locations with a strong tourist market are also unlikely to see home price drops.
Nonetheless, house values will likely decrease slowly in most places over the coming years. Yet, real estate experts agree that a housing market crash is highly unlikely despite the real estate market exhibiting bubble-like features.
So, is it a good time to sell a house right now? The answer depends on multiple factors. If you are mostly looking for a greater profit and plan to downsize or rent, then you shouldn’t delay and put your home up for sale sooner rather than later.
However, the market does not benefit buyers right now. So, if you need to purchase a new house after selling your current home, you may want to wait until mortgage rates decline and home prices fall.
You can also save on realtor fees and home improvement costs if you sell directly to a cash buyer. These benefits of accepting a cash offer, among others, can ensure you complete a home sale quickly and easily.