Selling Your Home May Mean Having To Move to a More Affordable State
With housing inventory low and high demand, the U.S housing market is what you call a seller’s market. The desire to sell is so strong that internet searches for “sell my house” exploded by 147% as of July 2022.
Luxury real estate platform RubyHome, which analyzed the Google data, revealed that searches for ‘sell my house for cash’ is also at an all-time high.
The U.S Housing Market
It’s easy to understand why anyone would want to sell or downsize. For many Americans, selling their home and cashing in is a reasonable financial choice. Property costs are rising, even for current homeowners, and there are fears of a looming recession. This also creates barriers to refinancing homes, given that high-interest rates could have a net-neutral or detrimental effect on mortgage payments.
A spokesperson from RubyHome commented on the data analysis:
“With the rate of inflation skyrocketing in recent years, the value of a house has increased massively, meaning homeowners and sellers are in a prime position to reap the benefits, especially with any money left over from selling a property being able to help towards the growing costs of everyday items.”
Which Areas Are Looking to Sell the Most?
Given the current climate, it’s no wonder current homeowners are interested in selling. But this trend of increased internet searches is not evenly distributed across the entire country. The top ten states searching to sell the most are:
- New Mexico
- North Carolina
- New York
This list represents a mix of states without income taxes (Florida) and those with high-income taxes (New York) and states with low property taxes (New Mexico), and those with high property taxes (Connecticut).
While this list includes states in every part of the country, the desire to sell is not focused on one particular area. Each state on the list has a very different cost of living and tax burden and represents a range of average income levels of its citizens. These factors indicate a universal interest in selling that is independent of location and cost of living.
How Are Buyers Affected?
The spokesperson from RubyHome spokesperson commented further on the data:
“Affordable housing has become increasingly challenging to come across throughout America, and it will be interesting to see if these figures translate into actual sales and what this may mean for the housing market.”
The factors that make it favorable for a homeowner to sell are the same ones that work against those looking to buy.
Americans looking to buy a home must contend with mortgage rates that are over 6% (up from 2.8% last year). Low housing inventory and high demand lead to bidding wars, and homes to sell far above the asking price. Then there is inflation. According to Zillow, housing prices are up by approximately 20.7%, with the average home cost at $350,000.
What Does All Of This Mean?
The current climate, level of demand, and possibility of a recession have made it more important for Americans to find ways to maintain financial stability. Downsizing from a real estate standpoint is one way to reduce debt, pay bills and save for the future.
However, with so many factors in play, it’s unclear how long current housing prices will remain this high. Since so many people are interested in selling, there could be a cooling effect. In fact, according to data by Redfin, as of August, things are starting to level off. For the first time since March 2021, they are seeing the average home sell at below the asking price.
This data represents home prices nationwide and does not indicate a trend in one area. Multiple factors could contribute to the sudden shift, including increased inventory due to those internet searches, a change in buyer demand, or decreasing affordability because of interest rates and inflation. The time of year could also be a factor.
If it is becoming financially challenging to maintain your home, then it is reasonable to try to sell or look for ways to downsize. As a buyer, staying within your budget and negotiating the best terms for your home loan is essential.
The market is dynamic and shifting month over month. Even if things are cooling off, high mortgage rates and inflation still keep home prices much higher than before the pandemic.
Any real estate transaction is a huge financial responsibility and should not be taken lightly. Regardless of which side of the real estate market you are on, it is important to watch the trends and calculate how a decision will affect you financially. Independent of what is happening or your location, prioritize making the best decision for you and your family.