How to Sell Your Home with Rising Mortgage Rates
How Interest Rates Are Really Affecting the Real Estate Market
You are going to see many articles in the media talking about how the housing market is starting to cool down and generating fear within the Real Estate industry. On Saturday, November 19, 2022, the current average rate for the benchmark 30-year fixed mortgage is 7.32%, up 15 basis points over the last week. Yes, those rates are the highest they have been since 2006. And yes, it is shocking. However, rising mortgage rates, oddly enough, indicates that the economy is strong. There’s no hiding behind the fact that when mortgage rates go up, it makes it harder for buyers to qualify for loans which directly affects the demand for homes. The more expensive the home, the more difficult it is for the buyer to qualify for that home loan which generally forces the seller to reduce the price of the home to close it. But let's not forget some very important facts.
Reality Check on the Real Estate Industry
“Over the last 2 years, home prices are up 40%”, stated Peter Bookvar of Bleakly Advisory Group. That is an incredibly profitable ROI. This means that many sellers are now used to selling their homes for much higher price and this elevated cost became “the new norm” in the Real Estate Industry. Certain markets will get hit harder with this contraction of the marketplace than others. What this deflation really means is that the housing market is stepping back to what existed prior to the COVID pandemic. This means a more balanced market but that doesn’t mean that all sales will stop and everything comes to a grinding halt.
Let's take a look at this statistic from the California Association of Realtors (Figure A). This chart clearly shows how unusually and quickly the market rose. No doubt it was an incredible opportunity where many sellers had bidding wars and far above asking prices land in their laps within days, sometimes hours, after listing their homes. But the truth of the matter is that it wasn’t normal or something that the economy could sustain. Eventually, the Real Estate market would return to a true normal just like every bull and bear market. They all have a finite time of losses or profitability until the industry balances back out.
Figure A
How Staging Mitigates This Real Estate Sales Slow Down
As the market slows, and inventory becomes limited, it's increasingly important to use every tool in your tool kit to move the house. One of these tools is partnering with a professional staging company to create a welcoming environment that your prospective home buyers can easily see themselves and their family living. Staging a home creates a neutral interior design that allows the new owner to visualize much easier. Pro Tip: Your staging company should advise you on removing any personal pictures of yourself or your family and replace them with artwork that coordinates with the chosen layout your stager recommends. Ensuring cohesive design in each room throughout the house elicits feelings of comfort and calmness. Studies show that buyers will stay in a staged home for up to 45 minutes exploring each room and how they would use that room versus an unstaged house. In unstaged homes, buyers become uninterested and leave the property to go to the next within 5 minutes. Ensure you pick the right partner when choosing your staging company.
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Everything Creative Designs has been in business since 2006, staged thousands of homes, and has a flexible team of professional interior designers and stage assists who can stage a 5000 square foot home from start to finish in one day. We have a fully stocked warehouse of interior design quality pieces. These curated collections are all hand picked with purpose. Everything Creative Designs is your preferred partner when you want your houses to sell faster and command a higher asking price.