SEATTLE, WA — The traditionally celebrated Spring home-shopping season might witness an encore if mortgage rates dip, according to the latest insights from Zillow®. A detailed study of 2023 home sales by Zillow® reveals that houses listed in the first two weeks of June sold for 2.3% more than their usual market price. This trend reflects a shift from May, the previously favored period to list homes pre-pandemic, signifying that the sway of mortgage rates is overriding standard seasonal tendencies.
San Francisco saw sellers enter the fray as early as the latter half of February, while New York and Philadelphia home-owners waited until the beginning of July. This change is directly influenced by the roller-coaster ride of mortgage rates during the Spring season.
The most profitable time to list was consistently early May in the years leading up to the pandemic. However, the shift to June indicates that the fluctuating mortgage rates are significantly influencing demand, on top of the usual seasonality that brings buyers to the market in the spring. This home-shopping season is expected to follow a similar pattern as that in 2023, with the possibility of a second wave if the Federal Reserve decides to cut interest rates midyear or later.
In 2023, the rising premium on sale prices in June followed the first spring in over fifteen years with mortgage rates eclipsing 6% on a 30-year fixed-rate-loan. As rates continued to rise through May, potential buyers likely reassessed their decisions, culminating in less aggressive bidding. However, a slight dip in rates from 6.79% to 6.67% in June seemed to have swung the pendulum back in favor of the buyers, heightening competition, and driving up sale prices.
Zillow’s Chief Economist Skylar Olsen observes, “The old logic suggested that sellers could earn a premium by listing in late spring when their home would be on the top of the pile of listings… Now, with persistently low inventory, mortgage rate fluctuations make their own seasonality.” Olsen predicts the Federal Reserve won’t implement any interest-rate cuts until mid-2024 at the earliest, which if matched by mortgage rates, could trigger another buying spree later this year.
Mortgage rates have been a crucial factor affecting sale prices and affordability since they began to rise rapidly two years ago. Last year, the highest sale premium nationwide was observed when homes were listed in late March, right before the rates breached the 5% mark and continued climbing.
Zillow’s research illustrates that the “best time to list” can wildly vary based on the metropolitan area. In 2023, the optimal listing period ranged from the second half of February in San Francisco to the first half of July in New York. Thirty of the top 35 largest metro areas witnessed the highest sale prices for listings between May and early July.
Zillow also discovered a substantial variation in the sale price premiums associated with homes listed during these peak periods. At the zenith of the buying season in San Jose, homes sold for 5.5% more, garnering a $88,000 boost on a typical home. Conversely, houses in San Antonio sold for a modest 1.9% more during the same period.
“Most sellers don’t have the luxury of timing the market. The best time to list is when it makes the most sense for their lives,” advises Olsen. To make the most of the current market conditions, Olsen also recommends sellers to enlist the help of a seasoned real estate agent who can devise a localized strategy based on comparable sales.
Zillow’s data also provides some novel cues for selling a house faster and at a higher price in today’s market. Highlighting desirable features and making strategic improvements, like interior painting, can significantly enhance sales prospects. Additionally, sellers can benefit from showcasing their homes through virtual tours and high-quality photos.
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