By Nancy Perkins
As the real estate market continues to evolve in 2023, one of the most significant trends this year is the reluctance of homeowners to sell their properties. This is resulting in a significant home inventory shortage. However, homeowners may want to take advantage of the current market, access their equity to fund their dreams and consider moving to a new home that better serves them in the next chapter of their lives.
Contrary to the national headlines, the local real estate market is still favoring sellers. In the City of Alexandria, the inventory of new listings was down 45% in March of 2023 as compared to March of 2022 per RBI Smart Charts. The effective inventory for homes priced under $1,000,000 and priced between $1,000,000 and $2,000,000 is less than one month, clearly indicating a seller’s market. While the market may not be as frenetic as last year with homes taking an average of 25 days to sell in 2023 as opposed to 16 days in 2022, this is still a great time to sell.
In addition, the average price of a home is up 2% over last year as well per RBI Smart Charts. This means that homeowners who held onto their homes through the rapid escalation of value in 2020 through 2022, could see record high prices for their homes, assuming they are in good condition. Homeowners clearly have not “missed the market.”
Many homeowners today have significant equity locked up in their homes, which could be accessed and put toward other goals. The average sold price of a home in 2023 in Alexandria was $945,638, up more than $160,000 over the average pre-pandemic 2019 price of $784,726. Additionally, if a homeowner has owned the house for 25 years when the average price was $250,019, they are likely to have nearly $700,000 in equity for an “average” priced home.
Homeowners with “empty nests” working with their financial planners, may find that the highest and best use of that equity might be for college tuition, priceless family vacations or a home better suited to their retirement years. This may mean a home near the beach or the mountains, a home near younger family members or a home constructed for the needs of aging bodies.
Interest rates have risen since reaching the historically low 2% range in 2020 and 2021. However, they are still relatively low compared to rates over the last 50 years. According to FreddieMac, a homeowner today who purchased their home in the late 1990s, probably paid 6 to 8% interest on a 30-year conforming loan. In the early 2000s, rates were over 8%. In 1981, interest rates hit a record high of more than 18%. Homeowners today should not see the rates as a barrier to a real estate transaction. Many buyers in the market have already adapted their budgets to reflect this higher cost. Interest rates vary over time and can always be refinanced when conditions are more favorable.
After raising a family in a home for 25 years, many homeowners are emotionally attached to homes that are bigger than they require and are in need of significant maintenance. Working with an experienced real estate agent, these potential sellers can begin to envision a new home and a new lifestyle better suited for the next chapter in their lives.
Agents can steer homeowners to resources to help with estate sales, consignments, auctions, junk removal and distribution of heirlooms to their future heirs. While the process of sorting through 25 years of stuff is never fun, it is best accomplished while you are healthy, fit and clear-headed.
Too often, people wait to make a move when one of the homeowners faces a health crisis. This makes the declutter- ing process that much more difficult for the homeowners and their children in the midst of what is often a very emotional time.
By downsizing to a smaller home, homeowners can simplify their lives. They can enjoy more free time for grandkids, hobbies or travel and reduce the costs associated with maintaining a larger home. They may also be able to move to a new location that better suits their interests or lifestyle, such as a beach or mountain community.
A retirement community offers amenities and services specifically designed for this next chapter. They may want to consider homes with one level living and a more universal design to assist with any future health care needs.
The current market conditions, with high demand and low inventory, create an ideal environment for sellers to sell their homes for a strong price relatively quickly. Downsizing can be a smart move and provide financial benefits and an opportunity for a change in lifestyle.
If you are considering selling your home, now is the time to take advantage of the current market and make the most of your investment.
Nancy is an award-winning Realtor and lifelong Alexandrian who is proud to work, play, and raise her family in the town where she grew up. To learn more, visit NancyPerkins.SothebysRealty.