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Five Signs That It’s A Good Time To Sell

Traditionally, most homes have sold during the spring months. In the current volatile housing market, the time of year is not the most reliable predictor of the best time to sell.

Homes certainly show better in spring than they do on a dark and dreary winter day. Lately, however, weather patterns are hard to predict.

The weather has some effect on home sales. It can slow things down if incessant rain keeps sellers from being able to prepare their homes for sale. However, a bigger influence on the housing market is the overall economic situation and its impact on buyers’ psyche.

Normally, the home-sale market ramps up in March or April and stays busy until the beginning of July when the market tends to slow down for the summer. The 2011 home sales went counter to this. The market was active at the beginning of the year, but stalled in April. If you waited until spring to sell last year, you would have missed the best selling opportunity of the first half of 2011.

The early slowdown was partially due to the expiration of the homebuyer stimulus package. The homebuyer tax credit program accelerated home purchases creating a mini bubble in 2010 that was followed by a significant slowdown in home sales.

Negative economic news played a big part in the sluggish home sales during most of last year. The stock market was unpredictable, and the earthquake in Japan had repercussions for many industries. Plus, Greece was on the brink of bankruptcy, and the future of the European Union was in doubt.

Bad economic news and massive uncertainty lowers consumer confidence. Buyers need to have jobs, but they also need to feel confident in their future to take on a major purchase like a house.

HOUSE HUNTING TIP: The best time to sell is when consumer confidence is on the upswing; interest rates are low; unemployment is decreasing; the economic news is mild; and there are more buyers in your local market niche than there are sellers. A high-demand, low-inventory market gives sellers an edge.

The Conference Board Consumer Confidence Index fell in March 2012 to 70.2 (1985=100), down from 71.6 in February, when it was up sharply.  Lynn Franco, director of The Conference Board Consumer Research Center, attributed the improvement in consumer confidence in February to less pessimism about current business and employment conditions and more optimism about the short-term outlook for the economy and job prospects despite a rise in gas prices. Franco said the moderate decline seen in March was “due solely to a less favorable short-term outlook.”

Interest rates are currently at historic lows and are expected to stay low for the rest of the year. Even with low rates, buyers have had difficulty qualifying due to rigid mortgage approval underwriting.

Capital Economics, an analytics firm, expects the housing crisis to end this year partially due to lenders loosening credit. According to Capital Economics, one indicator of loosening is that banks are now lending 82 percent of loan-to-value (LTV), compared with a low of 74 percent LTV reached in mid-2010. This means qualified buyers need less cash to buy, which should lead to more sales this year, although higher home prices are not expected.

These positive indicators combined with a drop in homes for sale at the end of 2011 and a decrease in unemployment may provide an opportunity for sellers in spring 2012, provided their homes are priced right for the market. A major surprise on the economic front could change the picture.

THE CLOSING: Regardless of the economic indicators, the best time to sell is when the time is right for you.