Real estate is cyclical. That simply means that there are peaks and spikes that not only effect the real estate market overall, but the entire national economy, since real estate plays a key role in it. If anyone tries to tell you they know for certain what the market will be doing in coming months, please take it with a grain of salt. Certainly there are economists that have accurately determined trends, but if anyone really knew what was going to happen next in the real estate market, we might have avoided the entire crash of 2008.
As a rule of thumb, the market shifts every 5-7 years and is contingent on a variety of factors, including interest rates (the cost of borrowing money), supply and demand (how much inventory is available in any given area), and the big one. The big one is the one that is nearly impossible to predict with exact accuracy. While experts can pin point what impact higher interest rates may have on the real estate market, consumer confidence has everything to do with the health of the national economy.
When people feel confident, they spend money. When people feel fearful, they do not spend money. The media and news, politics, and even local economies do much to contribute to this thing called consumer confidence. For instance, if a big manufacturing plant closes down in a town that was dependent on it for employment, the confidence of the community may take a nose dive, and no one will be buying homes.
Here are three basic ways to determine the timing for selling your higher-end home.
1. Once you’ve found a trusted Realtor (see next section), ask them to research an up-to-date comparative marketing analysis (CMA) for you. Next, ask them to keep an eye out over the next couple of weeks or months (depending on what’s going on in the market). This will give you a good idea of what direction things are moving and allow you to make an intelligent timing decision. If there is little inventory in your area (houses for sale), then that’s usually a good indication that you could command a higher price. However, if there are many comparable properties currently listed for sale, you may be better off waiting until the inventory runs out. The other option, if you need to sell quickly is to price your property competitively.
2. Ask your Realtor to reach out to the agents who have sold homes near you to find out how fast they sold, if there were multiple offers, or if there is anything else that isn’t mentioned in MLS that might give you a leg up on market conditions.
3. While the news and media can be very fear-focused, it never hurts to hear what experts are predicting in the coming months. This doesn’t mean they will always be accurate, but it never hurts to have as much intel as possible when making such an important decision.
4. Another timing consideration has to do with your plans. Are you moving to another city or state? Are you moving to a smaller home in your same area? Do you need to sell your home before you buy another? Or, are you cashing out and moving to another country? Each of these presents a different scenario. In other words, the market is relative. If listing your home now won’t get you the highest dollar, but you’ll be buying a new home, that means the home you’ll be buying will quite likely be lower priced as well. Just the opposite is also true. If you’re selling your home when inventory is at an all-time high, you can likely expect to pay an all-time high when you re-purchase. Of course, the caveat is if you’re cashing out with no intention of re-investing, in which case, waiting for a higher-priced market might be wise.