This is not the easiest time to buy a house — or sell one. The combination of high home prices and rising mortgage rates has pushed many potential buyers to the sidelines. That could be problematic for homeowners who want to sell this summer, when activity usually picks up.
Existing home sales so far in 2023 are down more than 20% from a year ago, Forbes reported, citing data from the National Association of Realtors.
“Home sales are bouncing back and forth but remain above recent cyclical lows,” said NAR chief economist Lawrence Yun wrote in a recent report. “The combination of job gains, limited inventory and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand.”
Mortgage rates are on the rise again after easing earlier in the year, making it a challenging market for many Americans.
“If current economic conditions persist, with elevated mortgage rates and home prices amid scarce inventory, the market is likely in for a long, slow climb and a few bumps along the way,” Danielle Hale, chief economist at Realtor.com, told Forbes in an emailed statement.
If you are looking to sell your home this summer, here are four reasons you might not be able to.
It’s Too Expensive
As a seller, you want to get the best price possible — and now is a good time to do so, with average home prices still historically high. The average sale price of houses sold during the 2023 first quarter was $516,500, according to Federal Reserve data. That was down from $552,600 the previous quarter, but up by about $2,000 from the prior year.
The Q1 2023 average was also well up from two years earlier, when the average price was $418,600. During the first quarter of 2020 — before the COVID-19 pandemic — the average price of a home sold was only $383,000.
Today’s high prices make it difficult for many Americans to afford a home. To ensure your home is priced right, House Digest recommends working closely with your real estate agent to carefully price your home based on current market conditions.
There Aren’t Enough Buyers
A large majority of normal home buyers — Americans who are currently renting — don’t seem too anxious to enter the housing market right now. Fewer than one-third of renters (30%) are considering purchasing a home in the next 12 months, according to a new survey of 2,500 U.S. landlords and renters from Avail. This means about 70% are not considering buying a home.
HOA Fees Are Prohibitive
This problem was recently brought up in a Motley Fool blog by finance writer Christy Bieber. She recounted the challenges she faced selling her home due to HOA fees that collectively added up to more than $650 a month. As Bieber noted, many lenders include HOA dues when determining if someone is within the allowable debt-to-income ratio to purchase a home — which reduces the pool of potential buyers. Her answer was to push the positive aspects of HOA fees, such as improving the value of the home and neighborhood.
It’s Not Updated
Because home prices are so high right now, buyers want to get the best bang for the buck, which means they expect homes to be move-in ready. If your home is in need of expensive repairs and maintenance, you might have a hard time selling it this summer. House Digest recommends updating your kitchen and bathrooms, adding a fresh coat of paint where needed, and ensuring that your yard is in good condition.
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