The real estate market in spring 2023 is proving to be more competitive than expected—home prices have risen from February to March in 92 percent of markets and March prices were 3.1 percent higher than the same time last year. As a result, there has been an uptick in bidding wars, homes are selling above their asking price, and almost half are selling in two weeks or less. And CoreLogic Home Price Index Forecast predicts that this trend will continue through 2024.
While this may be positive news for current sellers, it also indicates that the economy could be approaching a recessionary period. In fact, the Federal Reserve yet again increased interest rates by a quarter point in early May to help slow inflation and stave off a recession. With such economic uncertainty ahead, sellers may be reluctant to list their homes—home prices can fluctuate greatly during a recession. However, buyers’ interest remains strong, as decreasing inventory and the possibility of higher interest rates keeps them motivated to purchase. So if you’ve been thinking about selling your home, here are some reasons why it may be a beneficial time to list and how to sell quickly while still making a profit.
Deciding to sell
When it comes to the housing market, a recession doesn’t necessarily spell doom and gloom, especially in the current economy. Consider the following factors that may make now the perfect time to sell.
Although it may seem counterintuitive to sell heading into a recession, it can work to your advantage since the number of new listings continues to trail prepandemic levels by 30 percent. This makes it more likely that competition will be held to a minimum. In addition, unlike the market crash in 2007–2008, where foreclosures flooded the market, the low foreclosure activity in recent years has also contributed to lower inventory levels.
Industry experts believe that home prices will likely remain high even in the face of a recession. This is because pricing is based on circumstances such as supply and demand and geographic location. For example, Miami, located in the ever-popular warm and sunny Florida, experienced a 15 percent increase over the past year. Lawrence Yun, the chief economist at the National Association of REALTORS®, believes that home prices will continue to rise in places where the job market is healthy and homes are relatively affordable.
Due to the rapid increase in home prices and the lack of inventory over the past few years, home equity has increased more than it has for the past several decades. So, if you’ve been thinking about selling, now may be a great time to do so to maximize your profits.
Prepare to sell
Selling your home always takes careful planning, and this is especially true during a recession. Here are some tips to help you minimize buyer hesitation and sell quickly and efficiently.
List sooner than later
If you need to sell in a recessionary market, your best opportunity to make a profitable sale is to put your home on the market quickly. The current limited inventory is causing demand to be strong, especially in popular markets.
Price it right
Typically, home prices dip in a recessionary period, which can make it hard to know how to price your home. Pricing it too high can prevent a quick sale and may result in you needing to lower it, putting you at a disadvantage. On the other hand, pricing your home too low may attract deal-seeking buyers, resulting in lowball bids. Therefore, it’s a good idea to consult with your agent to determine a price that will generate interest and a profitable sale.
Stage and update
When selling your home, showcasing its best features is essential. Luckily, you don’t need to spend a lot of money on significant renovations; simple, cost-effective upgrades can make a big difference. Consider applying a fresh coat of paint to rooms or areas needing it most, removing clutter, getting some new throw pillows for your sofa, or even adding some additional lighting to lift your home’s brightness.
Selling a property during an economic downturn can be confusing, so it’s wise to seek advice from your real estate agent who can provide insight on the best course of action.