When Is the Best Time for Sellers to List Homes

By Tali Wee of Zillow

Home sellers must consider numerous market factors before listing their homes to ensure the highest returns on their investments (ROI). Market knowledge and listing timing dictate sellers’ resale values. Sellers who list their houses at steep prices or before properly updating or staging might risk their homes sitting on the market for months.

To avoid the dreaded stale listing and secure the greatest resale values, sellers should consider the following factors to determine when to list a home.

Buying Seasonality

Traditionally, springtime is the start of home buying season. The sun is out, – showcasing homes in their best light – and kids are almost out of school, which can make moving into a home during the summer a less-stressful situation. Since sellers know buyers are searching during spring, many choose that time to list their properties to get exposure in front of the widest audience of shoppers. However, high inventory is a drawback for sellers because it reduces demand. It’s better for sellers to list when there is greater demand in their areas.

Serious home shoppers buy homes when they’re ready, regardless of seasonality. Whether house hunters are relocating for work or family, pressured by rental leases ending or anxious to change environments, they buy homes during all seasons. Therefore, sellers may want to focus more on preparing their homes for listing during off-peak times and thoroughly marketing them to increase exposure during periods of low supply.

Real Estate Inventory

Fortunately for sellers, it’s a seller’s market. Nationwide for-sale inventory is low, down 31.4 percent since the height of inventory in July 2011. For-sale inventory fell 33 percent from that peak to its trough in January 2013. Though it recovered slightly in late 2013, it fell again in early 2014. Such low inventory is ideal for sellers to increase competition between buyers, which promotes bidding wars and sales.

According to Zillow’s April Real Estate Market Report, for-sale inventory decreased in more than half of U.S. metros evaluated during the past year. Most of the inventory decline occurred in the bottom tier of the market, which are the most affordable homes for first-time buyers. The bottom tier has the most homeowners who are underwater on their mortgages, preventing those owners from selling and maintaining low supply for first-time buyers.

Therefore, homeowners considering selling their properties currently have the greatest opportunity for resale while inventory remains low, especially owners of homes within the affordable range for first-time buyers (price varies by market).

Resale Values

Sellers must also consider their timing because home values fluctuate. Home values peaked in May 2007 and crashed to their lowest levels in October 2011. April’s report indicates national home values are still 13.3 percent below their 2007 height, but the last time they were appreciating at this level was in December 2004 before the bubble and crash. National home values appreciated 5.3 percent throughout the past year, with rising values in 80 percent of the evaluated metros, marking widespread home value recovery.

Home value growth is forecasted to slow nationally to 2.2 percent appreciation throughout the next year, stabilizing values at sustainable rates of appreciation. Thus, sellers who list now should yield quality ROI, without missing near-future appreciation spikes.

Rental Prices

A fourth factor indicating the right time to buy is the cost of local rents. When rents are high they become less affordable, making mortgages more realistic alternatives for prospective buyers. Currently, rents increased in 626 of the 854 evaluated rental metros throughout the last year. In 227 metros –mostly big cites – renters face the worst rental affordability since 1985. These high costs drive more renters toward buying. Home buying demand increases as renters calculate the costs of mortgages with the presently low interest rates, especially considering rates might hit 5 percent by the end of 2014.

The high demand caused by rising rents and low inventory, paired with healthier home values and impressively low interest rates make the current market ideal for sellers.