House Prices Have Peaked. Why “Wait Out” The Market?
Would it surprise you that house values actually depreciated in Snohomish County last month? A common story we hear is people decide to remain in their properties when their house expenses are above a third of their income (not recommended by most financial advisers) or have a tenant in there that is currently negative cashflowing. The logic is to “wait out” the market. Here is why this is not a good idea.
Are you deciding whether or not to short sell your house? One big factor is to know what the market is doing and what the projections are. The market around Washington has peaked in prices. The multiple offer frenzy is now over and inventory continues to remain unsold. We are seeing demand decreasing as investors are now leaving the market (had their fill) and homebuyer’s affordability is diminishing as interest rates are increasing. Not only that, because of the government shutdown, more homebuyer’s are scared to move forward with their purchase. At the same time, inventory is increasing.
Why wait out the market? Many homeowners purchased their homes as they felt they were “wasting” money giving someone else rent rather than putting it back into your own house and building equity. Now I still believe this to be true and yet, for those who are underwater, you are doing the same thing and on top of that, you are paying on a debt that you can get forgiven on if you short sell your house.
Not many foresaw such a hard crash in 2006-2008. However, it did happen and making the best financial move from there is in your best financial interest. You do have the option to wait and yet how long do you plan on doing so and why? From my many consultations, we’ve found that it will take on average about 5-10 years until they recover what they owe. This is only to break even and also assuming we will have a steady 3-4% appreciation rate.
In a short sale, you are able to sell your house for less than what is owed and in most cases, be forgiven the difference. You can requalify for a mortgage on average in 1-2 years. If you end up short selling years later, wasting time, energy, and money, your recovery (ability to requalify) will only be delayed until you close the short sale.
Get a consultation with our experts here in Washington State. Just click the short sale tab above and fill out the information.
P.S. short selling is completely free to you.
Hope this helps