Sunday, December 6, 2009
What's the right time to buy or sell?
Many sellers nationally and locally, here in Richmond, have been sitting on the sidelines for the greater part of 2 years. Additionally, a lot of buyers have been hesitant to buy for fear that the market prices will continue to fall. So, my thought is that the time to buy or sell is NOW and here's why:
1. The tax credit, especially the $6500 for trade-up buyers who've owned their home for 5 years (and have equity), will bring new buyers for sellers and be a short-term incentive that for many will provide the impetus to act now.
2. The post-holiday is a big season for home buyers many of whom are off from work with time to kill and they're spending that time reviewing real estate websites and thinking strategy for the new year, while also reflecting on their goals for the next year. Therefore, the best time to list your home might just be immediately prior to Christmas or right after (like December 26th).
3. Home prices have started to stabilize while still falling in some areas, but rising in others. No one can really call the market bottom until after the fact, but if we haven't already seen it, then we're pretty close. If you continue to wait, then you just might miss the lowest prices.
4. Interest rates are still really low. You can still find rates in the 4's in many cases, and rates are artificially low right now based on the government buying so many bonds and T-bills. Thus, this situation can not last forever and when rates change (likely in 2nd half of next year if not sooner), then they could change very quickly and very dramatically. Earlier this year (or was it last year) rates went from the 4's to the mid 6's very quickly and luckily we recovered - we may not be so lucky next time.
5. Besides the tax credit, many of the same tax benefits of home ownership that have always existed remain. Most notably is the potential tax write-off of mortgage interest, as well as the potential for future price appreciation. Please check with your accountant or tax professional for details here.
6. There is a ton of "shadow inventory" foreclosures that are and will be hitting the market in the first quarter of 2010. This will provide many great deals that haven't been there. Most housing experts are predicting that this is the last great hurrah of foreclosures. We can only hope that they are right. An example of this is how many HUD homes are currently available - normally there are only about 2-4 in Chesterfield, but right now there are about 10. Multiply that out for all types of foreclosures and you can see how quickly those numbers get really big.
So, if you've been thinking about buying or selling, especially selling, then the time to act is now. Don't miss this artificial bubble of buyers that may be there only until April 30th.