Home sale profits see rare decline in peak season: Is now a good time to sell your home?
Home sale profits saw an unusual drop in the second quarter of 2021, according to a new report from ATTOM Data Solutions. The spring homebuying season – March, April and May – is typically the most favorable for sellers, but the average sale saw a profit margin of 45% compared to 48% in Q1 of this year.
As far as dollar amounts go, though, Q2 home sales generated an average profit of $94,500 compared to Q1's $90,000. That number is also a large jump compared to $60,572 in the second quarter of 2020. These dollar amount increases are good news for homeowners who are seeing record-high home prices over the past year.
"Prices and profits from the second quarter painted yet another picture of a housing market in high gear – except for one thing," ATTOM Chief Product Officer Todd Teta said. "Profit margins dropped in the second quarter, which is very unusual for any springtime period because that’s when the housing market is usually hottest or close to it.
Read on to see if now is a good time to sell your home, and what your alternatives to doing so are, like a cash-out refinance. If you're ready to get started, head to Credible and contact a lender to learn about how much cash you could pull out from your home’s value.
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Should you sell your home in 2021?
With profits down and the market to buy a new home highly competitive amid low inventory, now may not be the best time to sell a home.
Median home sale prices reached $305,000 in the second quarter, according to the ATTOM report. That's a new all-time high and up 11% from the first quarter and 22% from last year amid tight inventory conditions. These rising prices don't necessarily mean homeowners should sell, and experts warn the decrease in profits in recent months could indicate a slowdown ahead.
"While it may just be a momentary thing in today’s volatile market, it’s definitely something to keep an eye on in case it’s a sign that the market is finally cooling or giving in to some of the economic forces connected to the virus pandemic," Teta said.
Homeowners can capitalize on the increase in home prices, however, as well as historically low interest rates through a mortgage refinance. Hundreds of dollars on a monthly payment can be saved just by lowering their interest rate on their home loan. Visit Credible to get started and compare multiple mortgage lenders at once.
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Not in the market to sell? Refinancing could still work to your advantage
Amid sliding home sale profits and heightened purchasing competition, snagging a home in today's market is difficult to say the least. But there are still some options that homeowners can take advantage of to capitalize financially on rapidly rising prices, including refinancing.
1. A cash-out refinance lets you take out equity earned. Borrowers can access equity that's been built over the past year and use it to remodel or update their home, or for other reasons such as paying down high-interest debt.
Homeowners looking at the cash-out refi route typically need a credit score of at least 620, a debt-to-income ratio of no more than 50% and enough equity to still have 10% to 30% after cashing out. Visit an online marketplace like Credible if you're considering a cash-out refinance. From there, you can choose view multiple refinance options and choose the one that works best for your financial situation.
2. Refinancing could save you hundreds on your monthly payments. Lowering your interest rate coupled with increased equity could also help remove mortgage insurance, which usually adds about $100 to $200 to monthly mortgage payments. You could consider contacting Credible to speak to a mortgage expert and get all of your questions answered.
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