Buying and selling property is an emotional process even in the best economy. After seeing home prices and mortgage rates rise abruptly last year, it’s important to understand what factors impact the market when you’re thinking about moving. Here’s everything you need to know about buying and selling real estate in 2023.
Selling Your Home in 2023
There is a lot to assess before deciding to list your home for sale but don’t get overwhelmed. From renovation to relocation, we’ll analyze the pros and cons of selling your home this year.
Renovations with Best ROI
It’s easy to create a staggering list of home renovation projects when preparing to sell. According to a 2022 Cost vs Value Report, in the last 12 months, these 5 renovation projects had the best return on investment for Pensacola homeowners:
- Manufactured Stone Veneer recouped 93.1% of the project cost.
- Garage Door Replacement recouped 93% of the project cost.
- Minor Mid Range Kitchen Remodel recouped 80.3% of the project cost.
- Entry Door Steel Replacement recouped 78% of the project cost.
- Vinyl Siding Replacement recouped 70.5% of the project cost.
The cost and return can vary depending on your zip code but over all, this is the best place to start planning your pre-sale renovation. The only downside to some of these home improvement projects is the impact on your timeline if you need to relocate quickly.
A great Realtor© can help you identify which projects should be a priority and get you connected with the professionals that can make renovation easy. Here are 10 Tips for Selecting a Real Estate Agent.
Equity
Many homeowners aren’t aware of the extent that the equity in their home has grown since the time of purchase. The value of the financial investment in your house is represented by the current market value minus any liens associated with the property such as a mortgage.
Components of your home equity are comprised of:
- Down payment
- Parts of mortgage payments, and
- Property appreciation
Fundamentally, you calculate equity by removing your loan balance from the current market value of your home. To understand the current market value, you’ll want a comparative market analysis by a professional real estate agent.
Supply and Demand
In real estate, supply and demand are rarely balanced. If there are more buyers than inventory, prices rise.
Developing a larger supply of homes takes time and effort in any community. This depends on how easily builders can find workers, materials, and good weather. The National Association of Realtors (NAR) publishes information about the “months’ supply” which represents how long it would take to sell all the current homes on the market at the current pace of sales. In January 2022, the months’ supply reached an all-time record low.
In the last 12 months, rising interest rates have impacted demand by lowering the buyer’s purchasing power. Due to the direct connection between interest rates and mortgage payments, this rate hike has slowed home sales.
While recovering from the 2008 financial crisis, many are wondering if they will have an opportunity to invest after the proverbial bubble pops. Thanks to the Consumer Protection Act in 2010, new policies are in place to increase lending practice oversight and prevent the lax mortgage lending that ushered in the Great Recession.
Relocation
Understanding the current state of supply and demand, it’s no surprise that last year some sellers had trouble finding a new home to purchase. The goal was to cash in on the equity that had grown. Homes sold quickly but as a buyer, some couldn’t find the right house in the right location as quickly. When you’re thinking about relocating, have a plan in place. Length of stay, maintenance, and control over housing are worth considering.
Buying Your Home in 2023
Is now a good time to buy a house? The market is beginning to cool as we see a shift away from the seller’s market at the start of 2022. Let’s look at how housing market trends could influence buyers this year.
Motivation
The first step is to understand your reason for buying. This starts by defining your financial goals and personal milestones you want to achieve. The community surrounding your home will influence your lifestyle so take time to consider which amenities mean the most to you. Then make a list of what home features are the most important.
Mortgage
The Pre-Approval process will determine the maximum loan you qualify for. To get started, assemble your driver’s license, Social Security Number, and proof of income. Lenders look at many factors when deciding to approve a loan.
If you have a good credit score of 607 or more, it’ll be easier to get approved. You’ll need enough savings to put down a deposit, handle closing costs, and take care of any maintenance needed. You benefit from saving long term if you avoid private mortgage insurance (PMI). This usually requires 20% of the home’s purchase price for a down payment.
There are numerous types of mortgage loans available. If you’re a first time home buyer, you’ll want to read about 6 Common Types of Mortgage Loans for First-Time Buyers.
Budget and Lifestyle
Get a holistic look at costs like homeowners association fees and other long-term costs. Affording a down payment and mortgage is just the beginning. Make sure your monthly budget can take care of mortgage payments, utilities, groceries, transportation expenses, and more.
Need help deciding if buying or selling in 2023 is right for you? Our experienced agents at aDoor Real Estate are here to help guide you through every step of the real estate process. Contact us today!
