Puerto rico real estate market conditions

After a few red-hot years for home sellers, rising mortgage and interest rates along with widespread economic uncertainty have cooled the market, leaving many buyers out in the cold and forcing sellers to reevaluate their pricing strategies. In recent months, we started to see rates drop — for example in January 2023, they were at their lowest in four months (then in February, rates crept up again ).

But keep in mind that mortgage rates hit a 20-year high (subscription required) in late 2022 at more than 7%, so we’re still better positioned than we were last year. In fact, I’ve noticed that offer activity seems to be resuming as buyers return to the table with pent-up demand; this should help balance out higher interest rates.

Regardless of market conditions, the decision to sell your home is generally based on personal circumstances like stage of life, financial situation, family changes or career moves. Some homeowners can wait until the market starts trending up again, while others will have to sell despite market conditions.

The more homeowners know about their selling options, the better equipped they are to take control of their sale and come out ahead, even in a slower market. Assuming a relocation is in your future this spring, here’s what you need to know.

The Factors Driving Home Selling Success: Exposure and Price

The more buyers you reach, the more offers you’re likely to get. One of the easiest ways to widen exposure is by listing your home on the Multiple Listing Service ( MLS ). This can be done either through a real estate broker or a licensed online home selling platform (but it’s not available to “For Sale By Owner” (FSBO) sellers). When your home is on the MLS, it will automatically appear on the biggest real estate search sites (e.g., Zillow, Redfin, Trulia and Realtor.com) — and hopefully capture the attention of buyers nationwide.

Marketing your home through the MLS is only one key step; equally important is setting the sale price. Educate yourself about what homes are selling for in your neighborhood, how your home compares to current inventory (known as “comps”) and how long comparable homes are generally on the market. Over-pricing a home usually means it languishes — and the longer a house is on the market, the more it seems stale or even undesirable to prospective buyers. Finding the sweet spot (sometimes even slightly under-pricing the property) could lead to the coveted bidding war.

By considering these factors in advance, you can maximize your chances of success.

Budget for Pre-inspections, Repairs and Staging

Before you dive into the home selling process, make sure you budget for repairs and staging.

First, determine if there are any issues that need to be addressed before listing—this is known as a pre-inspection. Consider hiring a certified home inspector to conduct a pre-inspection, evaluating factors like the HVAC, furnace, windows, water heater, plumbing, appliances, toilets and even kitchen cabinets. It’s smart to invest in large repairs up front, rather than waiting for issues to be discovered during the buyer’s inspection. More deals fall apart during that phase than any other, and it’s usually due to buyers learning the home needs a significant amount of unforeseen work.

Next, budgeting for staging, which includes painting in neutral tones and upping curb appeal through yard work and minor landscaping, can go a long way in making a strong first impression. You can also consider making small improvements if they fit in your budget, like adding smart thermostats or energy-efficient appliances.

But not everything about prepping your home costs money. It’s key to disconnect yourself from the personal character of your home. Buyers want to picture it as theirs, not yours — and you can achieve this for free. Family photos, knickknacks and kids’ trophies detract from this illusion, so declutter and depersonalize as much as possible. Make sure every countertop and surface is bare and bookcases are minimally but tastefully styled. And color code your closets so they look neater, better organized and bigger; buyers care about storage space.

Choose the Best Selling Approach for Your Situation

As I wrote recently, there’s more than one way to sell your home. Options include working with an agent, FSBO or online selling platforms — and it’s up to you to figure out which best meets your individual needs.

Working with a real estate professional is still the most popular option, but it comes at a steep price (usually 6% commission). For some, the full-service offering real estate agents provide justifies the price; others may prefer a route that allows them to preserve more equity and control.

For example, a number of technology platforms are helping to democratize a market that estate agents once had a monopoly over. (Full disclosure: My company is one such platform.) They generally charge a flat fee rather than a percentage of the sales price. These tools can help home sellers streamline and automate the selling process and retain more control throughout. But not all platforms offer the same value; look for those that are easy to use, harness advanced technology and include guidance from licensed real estate professionals.

Finally, you can sell your home yourself and avoid paying commission, but keep in mind that FSBO homes can sell for up to 26% less than assisted real estate transactions. However, FSBO may make sense if you already have a potential buyer in mind.

Of course, you need to account for seller closing costs, which will be deducted from your equity payout. Generally, closing costs for a seller can amount to roughly 6% to 10% of the sale price , including agent commissions, transfer taxes and fees.

Final Thoughts

Sellers looking to capitalize on the spring market should start planning now. Take the time to carefully think through every aspect, from pricing and listing all the way to fixing creaky cabinets and dusting behind the furniture. The more ownership you take of the process early on, the better positioned you will be for long-term success.

The meltdown of Silicon Valley Bank earlier this month—the first of three bank failures in the U.S. in March—sparked fears that an unfolding crisis might spread from the banking sector to the housing market, causing its collapse.

But is this just an understandable but unreasonable feeling of panic at a time of apparent crisis, or an actual potential scenario looming on the turbulent housing sector? The answer is something in the middle, according to Cris DeRitis, deputy chief economist at Moody’s Analytics, who spoke to Newsweek .

At the moment, the financial services company—which is monitoring the unfolding situation in the banking sector as well as trends in the housing market—has formulated two potential scenarios that may emerge from the recent bank failures in the U.S.

In one scenario—which DeRitis and Moody’s Analytics considered the most likely—the current panic around the banking sector would be resolved quickly. In the worst-case scenario, the current crisis led to a recession that wouldn’t be solved until 2024.

The Threat Of A Lasting Recession

People prefer to hear bad news before good ones, so let’s start by analyzing the worst-case scenario. This is the case that would materialize, said DeRitis, if “the panic continues and depositors continue to worry about the safety of their banks.”

In this case, depositors would continue to transfer money from small or regional mid-sized banks to larger banks, DeRitis said. “The deposits move around and that causes more stress on portfolios, bank failures rise, and that continues to create a contagion effect,” the economist told Newsweek .

“The economy then will weaken and lending standards would tighten even more,” DeRitis added. “The commercial real estate market is likely to be hit the hardest, as small- to medium-medium sized banks do about 75 percent of the lending to commercial real estate.”

In this case, the economist said, the country would enter a recession, “a classic recession cycle brought on by credit, tightening a credit crunch. That recession would eventually resolve—probably—in 2024.”

Under this worst-case scenario, DeRitis said, “the good news is that inflation does come down because demand dries up.” That would lead the Federal Reserve to cut rates to support the economy later in the year, “and that’s what helps us get out of recession.

“So I guess the message here is that this is a serious situation and if it is not resolved, if the banking panic becomes a crisis, that certainly could tip the U.S. economy into recession.”

But at the moment, Moody’s Analytics is counting on a quick resolution of the current banking crisis.

A Swift End To The Panic

“Our baseline view does call for a swift resolution,” DeRitis said. “There may be additional bank failures, but nothing systemic, nothing that really causes consumers and businesses to be overly concerned about the safety of their deposits.”

But the U.S. economy and housing market won’t come out of it unscathed. If the bank panic is resolved quickly, there still will be a long-lasting effect on the banking sector, the Moody’s Analytics economist said, “because the banks are going to continue to preserve liquidity.”

“Even if everything blows over this week, and there are no other bank failures, the industry is going to be cautious,” DeRitis said. “So they are going to tighten credit, they are going to restrict lending. And that is going to have some negative impact on the economy overall.”

Moody’s Analytics has marked down its forecast for 2023 by a quarter percentage point and now anticipates that the U.S. economy will grow by 1.3 percent in 2023 versus the 1.6 percent estimated before the bank panic.

“That’s the baseline scenario, the bank panic cools down, there is some lasting impact, but then we continue to focus on getting inflation down,” DeRitis said.

“The economy remains weak, because of the high interest rate environment. But there’s no very strong impact in terms of growth or unemployment, from the panic itself.”

To understand how consumers are feeling and make concrete predictions about how homebuyers and owners will be impacted by the bank failures in the long term, we’ll have to wait for at least a couple of weeks, DeRitis said.

“In the immediate aftermath [of the bank failures], any immediate impact has actually been positive in the sense that we see some activity,” the economist said, referring to the latest data showing that existing home sales actually grew in February, reverting a recent trend that saw demand for homes and sales plunge.

“But it’s probable that last week you had buyers that were already about to buy, thinking about buying, and then they saw the rate go down and they took advantage of it,” DeRitis said.

“So it may not have really affected their decision, in terms of the longer term possibility of economic weakness, but this week, next week, a couple of weeks from now, I think we’ll get a better sense of what consumers really are feeling.”