Timing is everything in real estate. While you can never time the market with 100% accuracy, you can get close. Predicting what the housing market will do at any time is not easy. Still, selling near the top is possible because the housing market responds slower to market forces giving sellers and buyers time to react. Is it time to sell your West Knoxville home?
Below is our perspective on the market going forward into the year.
Despite mortgage interest climbing like a homesick angel, there is still a substantial demand for homes in 2022. Over the last few years, low inventory combined with high demand has sent home values soaring. Inventory levels are at historic lows all across the nation, which is driving demand for housing.
Year over year, there has been a significant decrease in the total number of homes for sale in the Knoxville region.
The challenge for many would-be sellers is if they sell, even at historically high housing values, where will they move? 51% of all homeowners with a mortgage in the US have a 4% or less mortgage interest rate and find their current house payment affordable. More homeowners than ever are staying put for the long-term. However, there is one caveat: interest rates are rising very quickly.
When mortgage interest rates rise as quickly as they have, it begins to price some buyers out of the market and temper the expectations of others. The buyers in the entry-level home prices won’t be able to afford a mortgage. Buyers in higher price ranges will begin to move their expectations downward.
If this continues, the upper price ranges will begin to stay on the market longer, and the inventory of homes for sale will increase, which will motivate sellers to reduce their listing prices to get homes sold.
The high demand at the entry-level price ranges will continue for a while, but longer market times will trickle down, motivating those sellers to reduce their prices.
Since the bottom of the housing market in late 2012, sellers have had their way with the market. By all indications, that may be coming to an end sooner than later.
While the “experts” predicted mortgage interest rates to get to 4% by the end of the year, they are now well over 5%. A historically rapid increase in mortgage interest rates has to, at some point, affect housing market demand. While a 5% mortgage interest rate is not historically high, it is for those who don’t remember 18% mortgage interest rates in the mid-1980s.
Combine “high” mortgage interest rates with home values that have gone up over 71% nationwide since 2012, and it’s easy to see that an adjustment for affordability is on the horizon.
As homes become unaffordable, demand begins to wane, the inventory of homes for sale will increase, and housing values will surely decrease with buyers having more options.
That said, it looks like 2022 could be near the top of the housing market in Knoxville. This year may be the best time to sell your Knoxville home if you want to capitalize on 10+ years of value increases.
If somehow inflation moderates and mortgage interest rates come down, we could be off to the races again.
Is now the time to sell your West Knoxville home? We can help you know how long it could take to sell your home and how to get the best price possible. If your move is time-sensitive, let us help you create a plan to get your home sold as quickly as possible. Please click here for our contact page, and we’ll get back to you promptly.
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