The past 12 months have certainly been interesting for the housing market. For one thing, low inventory and inflated prices made buying extremely difficult for potential owners. On the other hand, record mortgage rates helped offset ultra-high house prices.
Either way, buyers and sellers (but especially sellers) seem more confident in today’s real estate market. After two months of decline, the Fannie Mae Home Buy Sentiment Index – which tracks the housing market and consumer confidence to buy or sell a home – rose 3.7 points in January to 77, 7. This is a good sign, although it should be noted that the index is still down 15.3 points from the previous year.
A big reason for this jump comes from the confidence of the sellers. The percentage of respondents who believe it is the right time to sell a home has increased from 50% in December to 57% in January. Those who think now is a good time to buy remained unchanged at 52%.
In light of this, should you considering buying or selling a home now?
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Should we buy?
Many people have been financially affected by the coronavirus pandemic. But if this hasn’t happened to you – that is, your job and salary are still stable and you haven’t taken on additional debt or destroyed your credit in the past 11 months – then it could be the good time to buy a home, provided you can find one in your price range.
This can be a tall order, however. The median price of an existing home sold in December 2020 was $ 309,800, which is a 12.9% increase from December 2019. If you don’t have a healthy home buying budget, you you may have to sit still and wait for prices to come down. There is a good chance that this will happen as 2021 progresses, especially if the housing stock starts to open.
Should we sell?
In today’s real estate market, sellers clearly have the upper hand, and this is something you can use to your advantage. If you put your house up for sale, the chances are good that you are happy with the price you get, and from there you will have the option of expanding, downsizing, or doing whatever suits your needs. and your lifestyle.
But remember, you will need a place to live once you’ve sold your home, so make sure you’re a strong enough candidate for a mortgage if you’re considering buying. This means having limited existing debt, a stable job and salary, and a strong credit rating. The minimum score you will need is 620, but you should aim for a much higher score so that mortgage lenders are more likely to offer you a competitive interest rate on your loan.
It is also beneficial to research the cost of a home you could buy to replace the one you are selling. If you’re looking to move from a starter home to a larger property, for example, you might find that today’s inflated prices put homes in your target neighborhood out of reach. If so, you might want to put the sale on hold until you are able to save more for a down payment.
Ultimately, confidence in the housing market may be on the rise, but that doesn’t mean it’s a good time to buy or sell. Consider your own situation before making this call rather than relying on a general feeling that you may or may not agree with.