Home prices soared last year, leaving sellers in an ideal situation. Will they have the same experience this year?
- Last year, the sale of an average home generated a profit of about $94,000.
- If mortgage rates remain high in 2020 and buyer demand declines, profits from home sales could decline.
While 2021 may have been a tough year for home buyers, it’s been a fantastic year for sellers. Low mortgage rates supported buyer demand and limited inventory put sellers in a position where they could demand much higher prices for their properties.
Last year, the average profit on the sale of a home was just over $94,000, according to ATTOM. This represents a 45% increase over 2020 home sales profits and a 71% increase over pre-pandemic profits.
If you’re thinking of selling your home, you might be wondering if you can anticipate a huge profit like so many sellers did in 2021. But the answer is that it depends on how market conditions change.
Demand from home buyers could decline
Demand for housing has been strong despite rising house prices, as mortgage rates have been too competitive to ignore. But mortgage rates are already up this year, and they’re at higher levels than at any time in 2021.
If rates continue to rise, buyers could pull back. Once buyer demand begins to wane, sellers will have no choice but to start lowering prices, even if real estate inventories do not recover substantially.
If you plan to sell your home this year, you may want to plan to list it as soon as possible. Currently, it is still possible to get a 30-year fixed mortgage at less than 4%. But as 2022 progresses, the 30-year average rate could exceed this threshold. And it could dramatically change the mindset of buyers.
While mortgage rates in the 4-5% range are still historically competitive, in the context of pandemic-era rates, they still look high. Buyers may be unwilling or unable to pay current prices if rates reach this level. If you put your home up for sale before prices go up, you might be able to get a higher price for your home.
Should we wait for spring?
Putting a house up for sale in the winter has its challenges. But if you’re looking to make a profit on the sale of your home that’s comparable to what buyers enjoyed last year, then you might want to move on.
Not only does it make sense to try to register before mortgage rates rise, but stocks could rise in the spring. Signing up now could mean less competition.
But either way, due to the trend in mortgage rates, it won’t be shocking to see average home profits decline in 2022 compared to 2021. If you’re considering selling, it’s important to have the right expectations. . And if you’re not sure what that should be, team up with a local real estate agent.
You might assume that you don’t need a real estate agent to sell a home in today’s market since buyer demand is so high. But hiring an agent could help you market and value your home strategically, so that in the end, you walk away happy.
A Historic Opportunity to Save Potentially Thousands of Dollars on Your Mortgage
Chances are interest rates won’t stay at multi-decade lows much longer. That’s why it’s crucial to act today, whether you want to refinance and lower your mortgage payments or are ready to pull the trigger on buying a new home.
Ascent’s in-house mortgage expert recommends this company find a low rate – and in fact, he’s used them himself to refi (twice!). Click here to learn more and see your rate. While this does not influence our product opinions, we do receive compensation from partners whose offers appear here. We are by your side, always. See The Ascent’s full announcer disclosure here.