In the past few weeks, we have seen mortgage interest rates skyrocket, increasing an average of a quarter point per week! Currently, the 30-year conventional fixed mortgage rate is around 7%.[i] This is about double of what the interest rates were just a year ago. The adjustable-rate mortgages used to be a way to stretch home purchasing power but not so now, as ARM rates are already over 6%.
What does this mean for home buyers? For buyers purchasing a home now, they will be paying 80% more for a home than last year, over the full term of a 30-year mortgage.[ii]
What does this mean for home sellers? Likely we will see fewer bidding wars and homes taking a bit longer to sell. But it’s not as bad as it sounds. Let’s look at recent local sales data[iii]:
In the first half of the year 497 single family homes sold for an average of 104% of the list price
These homes sold in an average of 28 days on market
In the second half of this year to date 445 single family homes sold for an average of 102% of the list price
These homes sold in an average of 26 days on market
The housing market continues to be robust and we did not experience the customary summer slowdown. In fact, the continual rise in interest rates triggered a call to action for home buyers, eager to lock in a mortgage rate before what has become another weekly rate increase.
As housing affordability has become more challenging for buyers, there is an increasing emphasis on the material value of a property. While new kitchens and baths remain a top priority, the overall property condition is increasingly important. For example, the age of the roof and heating and air conditioning systems are focus items for buyers seeking to avoid future costs. Home Warranty coverage for mechanical systems and appliances are very appealing to home buyers. If you are selling your home with older features, home warranties can be purchased for a reasonable amount and transferred to buyers at closing for the first year of home ownership.
Of course, a well-maintained home and property go a long way to getting a higher price and a quicker sale. More than half of our buyers today are first time buyers.[iv] Their inexperience with home maintenance can be overwhelming. Sellers can put buyers at ease by providing a comprehensive Seller Disclosure that lists the material facts of the property, such as the years that improvements were made, type of utilities, etc. Another very useful tool is to provide buyers with a complete
history of municipal permits obtained for home improvements. While this seems basic, showing buyers that you have closed all required permits increases their confidence in purchasing your home. In addition, compiling and sharing a preventative maintenance guide for your home can contribute to a successful sale, as home inspectors are placing greater emphasis on preventative maintenance in their reports for buyers. This can cause confusion because reports don’t always make clear what the difference is between a defect or a maintenance item. While it is reasonable for buyers to ask sellers to address defects, buyers must learn to address property maintenance when they become homeowners.
These low-cost recommendations will require you to invest some time and thoughtfulness but can lead to a more successful sale of your home. For more recommendations, contact me at email@example.com, 908-872-5473.