Mortgage rates recently hit nearly 7%, which may contribute to slowing home sales and reduced homebuyer budgets.
With less buyer competition, some sellers are dropping prices.
If you decide to sell, you may need to negotiate with buyers.
If you want to sell your house, you may be wondering if now’s the right time. Interest rates are on the rise, sending mortgage rates to nearly 7%. Home sales are slowing, and there are signs of buyers are exiting the market as the rising cost of interest prices them out of homeownership. But what does this mean for sellers? Here are a few things you should know before you put a home on the market.
Buyers can’t afford as much home
As interest rates rise, homebuyers have less spending power. A year ago, a buyer could get a mortgage at around 3% interest, while today it’s closer to 7%. A higher rate comes with a higher mortgage payment, so a home priced at $375,000 costs significantly more today than it did a year ago. As such, some buyers are lowering their budgets or leaving the market, with existing home sales down 1.5% in September.
Competition is slowing
With fewer buyers in the market, competition may be slowing. Homes are now on the market for an average of 26 days, up from an average of 17 days in June 2022. Gone are the days of bidding wars and getting multiple competitive offers within mere days of listing, at least in most markets. Today, you can probably expect a quieter market, so you may need to do a bit more marketing to sell your home.
Home prices are falling
With all of this slowing in the market, home prices are beginning to fall. Since June 2022, home prices have gone down around 6%, and more price drops may be on the way as rates continue to climb. As a would-be seller, it can be distressing watching house prices drop around you. But keep in mind there are a lot of factors that go into home pricing, including location, square footage, and any special features. For example, in desirable locations where there’s still a lot of buyer demand, home prices may not drop significantly. Similarly, homes that have many of the features buyers are looking for may continue to fetch competitive pricing.
You may need to negotiate more
If you choose to sell a home in this higher interest rate environment, you may need to negotiate with buyers. Sometimes that looks like agreeing to a lower price, but it could also mean offering closing credits or a more flexible moving timeline. The bottom line is that 2022’s real estate market may require more flexibility from sellers than the market of 2021.
This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice. Opendoor always encourages you to reach out to an advisor regarding your own situation.
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