The recent upward shift in home prices is causing some ambivalent homeowners to seriously consider selling. A common dilemma is when to sell. Is the recent uptick in the market a blip or the beginning of a trend? Should you sell this year or next or perhaps even years from now?
After declining every month for nearly three years, the Standard & Poor’s/Case-Shiller 10-City Composite Price Index for the U.S. rose 3.6 percent between April and July following a 4.8 percent decline for January to April. This represents a big and sudden change — probably due to near-record-low interest rates, the $8,000 first-time homebuyer tax credit, and a change in buyer psychology.
However, even though home prices moved in a positive direction, they are still much lower than they were a year ago. One of the key factors affecting increased sales activity is improved affordability. Lower prices and interest rates are motivating buyers to commit to a purchase.
The magnitude of price changes varies from one market to the next. In the San Francisco Bay Area, the median price of existing homes in the summer of 2007 was $665,000, according to MDA DataQuick, a real estate information firm. The median home price for the region in September 2009 was $365,000.
The S&P/Case-Shiller price indexes attempt to measure changes in home values. Median-price fluctuations reflect both a change in home values and changes in character in the market. Half the homes sold during a period sold for more than the median price and half sold for less.
The Mortgage Bankers Association (MBA) recently predicted continued economic growth through 2009 and a fall-off at the beginning of 2010. MBA predicts that sustained growth should resume in the second half of 2010, with fixed-rate mortgages expected to rise next year from the current 5 percent level to 5.6 percent. MBA predicts that national average home prices will bottom out in early 2010, although this will vary with location and price range. …CONTINUED
The entry level is currently the hottest segment of the market, and the mid-price-range market has improved some, according to DataQuick. The multimillion-dollar markets are still stagnating with buyers expecting large discounts.
HOUSE HUNTING TIP: Homeowners who want to sell in the next year should start preparing now. It’s possible that the housing market will be volatile with periods of increased sales activity followed by lulls. The only way to take advantage of a bounce is to have your home already on the market, or have it ready to show to buyers when your agent calls and says there’s increased demand for homes like yours.
Don’t make the mistake of waiting until the last minute to get your home ready to sell. Some agents advise their clients to do nothing to their home before selling. They encourage sellers to list at a low price to compensate for the fact that the home is not in good condition and will not show well.
The way to sell your home for as much as possible in any market is to have it looking as good as possible. At the least, most homes need to be decluttered. Usually homes need some cosmetic updating like painting walls a more appealing color, replacing worn carpet, updating light fixtures and clearing out the yard. If you live in an area where the homes that sell for the most money are staged for sale, you should consider staging in order to be competitive.
THE CLOSING: If the major preparation work is done in advance, you’ll be able to call your agent and get your home on the market quickly. It takes some sellers months to prepare their homes for sale.
Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer’s Guide."
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