Are you considering installing new floors for your home? That decision will likely impact the value of your home for many years to come.
Let’s look at the variables that contribute to price change and then we’ll turn to solutions. First let’s talk about the history. It’s fair to say that the foundation of the current housing market was established in housing bubbles and busts that began with major government stimulus packages and high interest rates.
Price changes are usually determined by three variables: supply, demand and interest rates. When we say supply, it means the number of houses available for sale.
The rise in mortgage rates in the wake of the subprime debacle that began in 2020 is the most famous supply constraint. The stock of new and existing homes in high demand made it possible for investors to buy properties at rock bottom prices in large quantities, while the market was flooded with foreclosures and distressed properties. The result was a “panic” sale when there was no need for it.
But that wasn’t the end of the problem. Foreclosures have a domino effect. If you look at the price change of homes on the open market during this period, it’s not hard to see that “panic” selling has encouraged more high-risk purchases and dramatically reduced the available supply.
The result is that mortgage rates have steadily declined since the beginning of the Great Recession. Even the modest level of interest rate increases over the past few years is helping to stimulate the economy. At the same time, investment and home sales are rising.
The good news is that the number of potential buyers out there has increased. And those buyers are starting to realize that they need to think long-term and invest in a home, especially if they plan to move into the area.
Those factors alone suggest that residential real estate prices won’t rise too much. But there’s one more factor that matters as well. It’s the price of any particular type of house that will determine how much people are willing to pay for it.
Homeowners who buy homes with a lower price tag often face a problem: they don’t know how much they can sell their house for. If you’re considering making a purchase, make sure you are aware of all the available options and ask about financing options.
Consider, too, the cost of closing, because you may find yourself spending far more than you thought on closing costs. Sometimes it is far more expensive to close on a property than to rent it.
Don’t just take the offers you get: after all, the best offers are typically for bigger homes, so you should consider how much bigger it is when deciding how much to sell your home for. Be sure you negotiate on the size and style of your home and don’t be afraid to try to make an offer that is larger than you might initially anticipate.
Before you choose a home for sale, contact a local real estate agent. Get estimates from several and do your own analysis before you decide.