Should you sell your home this September?
If you've tried to buy a home at any point over the last few years, you know how tough the housing market has been to navigate. After all, a perfect storm of high mortgage loan rates, elevated home prices and limited for-sale inventory has caused the cost of buying a home to increase dramatically. As a result, many would-be buyers have been priced out and are now waiting on the sidelines in hopes that something will change.
But homebuyers aren't the only ones dealing with the repercussions of today's housing market. Sellers are, too. While homeowners have an opportunity to earn big returns by selling their home in today's market, doing so typically means trading in a 3% mortgage loan rate for a rate that's over twice as high. That's not a move many people are willing to make.
The good news is, though, that the housing market landscape is shifting. Inflation has been on a steady downward trajectory over the last few months, and mortgage rates have begun to cool as a result. In turn, some homeowners may be asking themselves: Is this September the right time to sell? The short answer to that question is it could be. Here's, we'll explain why.
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Should you sell your home this September?
For many homeowners, the primary concern with selling now is the loss of their low mortgage loan rate. And that makes sense. Trading in a mortgage loan with a 3% rate for a loan with a rate of 6.44% is tough to justify — at least on paper. But it's important to understand that the rate environment is changing quickly and there are certain events that could push mortgage rates much lower than they are now.
One is the Federal Reserve's September meeting, which is scheduled for September 17 and September 18. Experts and analysts widely expect the Federal Reserve to conduct the first rate cut of the year at this meeting, which is expected to be at least 25 basis points. Should that happen, it could push mortgage rates down further this month.
The Fed is also expected to conduct at least two more 25-basis-point reductions in the following months. If that comes to fruition, the collective 75-basis-point drop could cause mortgage rates to drop even more over time, easing some of the financial burden on borrowers. That said, it's unlikely we'll see a return to the ultra-low mortgage rates of 2020-2021 in the near term.
However, if mortgage rates were to drop by the same 75 basis points in total, it could mean locking in a rate of 5.69% instead of 6.44%. That would make new home loans significantly more affordable (and palatable) for sellers. As rates begin to decline, we may also see an uptick in buyer demand, which could work in favor of the sellers looking to maximize their home's value.
Another factor to consider is the current state of home inventory. Despite today's economic uncertainties, housing supply remains low in many markets across the country. This scarcity can work to the advantage of sellers, potentially leading to quicker sales and stronger negotiating positions. So by listing your home in September, you may be able to capitalize on this supply-demand imbalance before a potential influx of new listings hits the market in response to improving economic conditions.
Selling your home now could position you well for future opportunities as well. For example, if you're looking to upgrade to a larger property or relocate to a more desirable area, acting sooner rather than later might allow you to lock in a new home at a relatively favorable price point before the market potentially heats up again. While you may be trading your current low interest rate for a slightly higher one, the long-term benefits of a more suitable property or location could outweigh the short-term increase in borrowing costs.
It's also worth considering the seasonal aspects of the real estate market. While spring is traditionally considered the peak selling season, fall can be an excellent time to list your home. Buyers who are active in the market during this period are often more serious and motivated, potentially leading to smoother transactions and better outcomes.
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The bottom line
While selling your home this September involves trade-offs, especially if you're giving up a very low interest rate, the current market dynamics and economic outlook suggest that it could be a favorable time to make a move. With potential Fed rate cuts on the horizon, a persistent shortage of housing inventory and the possibility of increased buyer activity, sellers who act now may find themselves well-positioned to achieve their real estate goals. The key is to carefully weigh your options, consider your long-term objectives and make a decision that aligns with your personal and financial circumstances.
