Why it can also be a Great Time to Sell your home!

Everyone is talking about it being a great time to buy real estate, but it's also a great time to sell real estate!

Now you may be thinking how could this be possible???

One reason is Mortgage rates are shy of record lows. 30 year fixed rate mortgage rate was 4.83% on 5/7/09 (Source Freedie Mac, MSNBC) this is important because interest rates effect a buyers mortgage payments, and if interest rates go up a buyer's mortgage will go up. Therefore as interest rates rise the demand for a particular home will go down because it will be less affordable to buyers.

Example:Say you want to list your home for $100,000

30 yr fixed rate at 5%

3.5% down (FHA loan requirement)

= $518.03 mortgage

If rates go up just 1% to 6% with the same 3.5% down, the sales price would have to be $90,000 to equal a mortgage of $520.71

In this example just a 1% increase in rates makes a home worth 10% less in price.

A $250,000 property is worth $25,000 less with a 1% increase in rates

And $50,000 less with a 2% increase in rates.

Now the million dollar question is when will interest rates start going back up?? And how fast will it take for them to go back up??

The one thing we do know is they are at all time lows right now!

Well what about home prices???

Well today's homes prices also make it a great time to sell because according to Pinellas Realtor Organization Single Family Median Sales Price's are back at 2001 Prices. If we look back to see how long it took from 2001 to get to the peak of the market's median sale price it took 4 years and that was in a strong economy. Therefore it could be at least 4 years, 2014 till we so those prices again. So if you are considering selling do you want to wait 4 years?

What if we aren't at the bottom yet, it will take longer than 4 years to go back up.

We also have to realize that the 4 year increase from 2001-2005 was during a strong economy. Since we are in a week economy now that too could make it take longer.

Another question you might want to ask is what will interest rates be in +4 years?

When in comes to Real Estate buyers and sellers should consider all possibilities and the more information you have the better decision you can make. If you have any questions feel free to contact me, I'd be happy to help!

I also want to thank my colleague Gene Senger taking the time time to explain these two very important factor's right now in the Real Estate market.