The recent economic growth patterns throughout the nation have been forcing many home-owners to consider if now is the right time to sell their home. Across the country, the housing market is continuing to bounce back to pre-2007 levels following seven years of depreciation and a slash in property purchases. This current trend is paying dividends for patient homeowners who have held off on selling their property until now. With 2013 bringing in price surges in excess of 10% in many areas, bidding wars are becoming more common and there is far greater competition within the market. Consequently, this has led to many houses selling over their asking price as potential buyers aggressively aim to secure a property in the face of such competition.
What This Means for Summit County, CO
Within Colorado, the housing market is increasing significantly due to a recent increase in the state economy. It is predicted this trend will continue throughout the remainder of 2014 and beyond, which is correlated to a larger pool of potential buyers. The job market in Colorado is currently secure, with low unemployment rates, meaning it is far less of a daunting task for many to be approved for a mortgage. The so called “Rent Ratio” for Colorado is currently fluctuating between 10 and 15, offering buyers a larger incentive to buy a property as opposed to renting. This figure is calculated by dividing the asking price of a “for sale” property by the annual cost to rent a house of similar value. Values lower than 20 indicate a good time to buy, as it means it costs less to purchase outright when all other costs are factored in.
Average Housing Prices on the Rise
Single-family homes throughout the US sold for an average of $244,300 in November 2013, which has increased from 2012. Within Summit County, the average sale price of a 3 bedroom house has increased from $609,415 to $929,000 since 2004. Although the current market is showing fluctuations, this indicates that the current property market in Colorado is very much seller dominated.
Rising Mortgage Rates Push Buyers to Purchase
In December 2013, the Federal Reserve announced that it will reduce its bond purchase from $85 billion to $75 billion per month. For buyers, this is bad news as it indicates that the period of low mortgage rates is coming to a quick end. As is always the case however, a buyer’s loss is a seller’s gain. With mortgage rates rising higher than 5.5%, it would appear as though a bottleneck is on the horizon where buyers rush to purchase a property before the bubble bursts. Thus, it would be a safe decision to consider selling your house now to take advantage of the expected increase in interest in the near future.
Changes in the Market
Considering the above, it would be forgivable to assume that holding back slightly longer would lead to a higher final sale cost. However, this is a very risky strategy. With the market still remaining volatile, recent price gains could halt or even reverse. The current seller’s market is largely due to private-equity firms purchasing many small homes and turning them into rental properties. However, it is likely that these properties will be turned around and sold within the next five years, which could cause an overabundance of homes on the market. Thus, in order to take advantage of rising house prices, buyer’s interest and scarcity of homes available, it is deemed that now is a great time to sell your home in Colorado.