Timing a purchase, sale in today's market
Loan limits, investors may impact your decision
Question: Allison, we’re debating timing the sale of our Wildernest Condo with the purchase of a Mesa Cortina single family home. Any thoughts?
Answer: The decision of whether to buy or sell a home is perplexing. A lot of buyers and sellers are still wondering if now is the right time to be in the market.
According to Dian Hymer of Inman News, ideally, buyers would like to know that the market has hit bottom and that the value of what they buy won't decline. Sellers who will sell at a loss today wonder if they should get out now or wait for a better market to sell.
When will that better market appear? It's impossible to time the market. We'll know that we hit bottom after the market turns around -- not before. Some economists think this will take another two years; others expect a turnaround in five to six years.
Many economists think we're at or close to bottom. However, it's expected that the market will be rocky for some time. The market will change seasonally. For example, it's typical for home sales to decline during the winter months.
Good and bad news can affect whether buyers feel optimistic about home buying. The fact that the conforming jumbo loan limit is likely to drop to $625,000 from $729,750 could spur home sales in higher-priced markets between now and September, when the higher loan limit expires.
Interest rates have been fluctuating but remain below 5 percent for conforming, fixed-rate mortgages. Interest rates and affordability in general have a great impact on the strength of the housing market.
The news about the real estate market was discouraging at the beginning of the year, as hopes of a solid recovery were dashed by declining home-sale volume and prices. Some economists even predicted that the housing market was headed for a double-dip recession, but this doesn't look likely at this point.
March brought good news as home-sale volume nationally picked up 3.7 percent from February, according to the National Association of Realtors. However, the sales were primarily driven by investors buying cheap foreclosures.
Although investor purchases were up, the percentage of first-time-buyer purchases was down, possibly due to tough mortgage qualifying criteria, which are expected to become even more difficult going forward.
Leslie Appleton-Young, chief economist for the California Association of Realtors (CAR), points out that it's difficult for buyers to trade up or down if they don't have equity in their homes. According to CAR, approximately 25 percent of homeowners in the U.S. owe more than their home is worth. Appleton-Young believes the figure is closer to 31 percent in California.
Keep an eye on trends, but focus on your local neighborhood when making decisions about buying and selling.
For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours. Want to know the value of your Summit County property? Visit www.SummitHomeValue.com