Here’s Why Now’s the Time for Millennials to Sell
It's been said that millennials have it worse than any other generation, particularly with regard to finances. They typically earn less than baby boomers at the same stage of life and many millennials struggle with massive student debt. Because of their financial state, this generation is sometimes called the “renter generation,” in spite of the fact that millennials lead the pack of homebuyers in 2017, purchasing 34% of homes.
While some millennials are just now embarking on their home buying experience, others took the plunge years ago after the housing crisis. If you belong to the second group, you might be looking to trade up. Of course, it doesn't make sense to move just for the sake of moving. But if you’re going back-and-forth and considering a move, here are three reasons why now might be the right time to sell and purchase another home.
1. Cash in your home equity
A stronger housing market and economy signals the return of home equity. If your home’s value dropped a few years ago, you likely put off moving knowing your property wouldn’t command a high price. But since property values have been on the upswing since 2012, the equity you’ve gained over the past five years could justify a move
According to ATTOM Data Solutions Q2 2017 U.S. Home Sales Report, “homeowners who sold in the second quarter realized an average price gain of $51,000 since purchase — the highest average price gain for home sellers since Q2 2007, when it was $57,000.”
Gaining a substantial amount of equity can make a more expensive house more affordable, whether you’re looking for a home with more square footage or a property closer to work. Use proceeds from the sale of your current house as down payment on your next property. Or if you prefer, use only a portion of your proceeds as a down payment, and put the remaining funds toward jump-starting your savings account.
2. Home prices may increase
The older we become, the more life changes we experience; and eventually, some of these changes affect our housing needs. If your starter home is beginning to feel a little tight and cramped after getting married or expanding your family, now’s the perfect time to sell and purchase a bigger place.
A Home Price Expectation Survey projects that home prices will increase by nearly 5% over the next year. So, the property you’re eyeing today could potentially cost 5% more over the next year. The longer you wait to purchase a bigger home, the greater the risk of properties being pushed outside your budget.
3. Interest rates aren't getting any lower
In all fairness, there's no way to predict how interest rates will perform from year to year. But interest rates have been slowly increasing since the end of 2016, and many experts—such as the National Association of Realtors, the Mortgage Bankers Association, Freddie Mac and Fannie Mae—believe rates will continue to increase over the next year.
Even if home prices in your area remain relatively unchanged, higher interest rates can push up housing costs, making it increasingly difficult to afford your forever home. Since higher rates equal larger mortgage payments, plan a move before rate increase.
If you're comfortable in your current home and the property meets your needs, selling and buying a new property doesn’t make sense. On the other hand, if you’ve been contemplating a move and you're in a position to make it happen, why not list your home and get a new place before home values and mortgage rates increase? By doing so, you save money in the long run.
It's our goal to help homebuyers like yourself find the perfect mortgage for their situation. Give us a call to receive mortgage loan information and learn how affordable a home can be.