Is this fall a good time to sell a house? It's what homeowners today are asking themselves as they play the game of real estate roulette. As rates shuffle up and down and demand follows suit, it's unclear whether sellers should wait until better conditions emerge.
If you’re wondering whether it's a good time to sell your house, here are reasons to sell your home right now - as well as several reasons to wait.
Plenty of home sellers held on to the homes they wanted to sell when the real estate market was red hot. Why? Sometimes, it was because they were worried about the struggles they would face as a buyer. But other times, sellers were holding out for even higher prices for their property.
Once the early signs of the market slowing down began to appear, sellers began finally offloading. But by then, it was already too late - everyone else had the same idea. Although sellers could still get good prices for their homes, the crazy 20-offer situations that would get sellers 30% over asking were gone.
Right now, the market is still good for sellers. But rates could rise again, and inventory has been steadily rising since January. Appreciation has slowed. You don’t want to realize that the market has started shifting to a buyer’s market and then decide to sell your home. By then, it’ll be too late - everyone will have the same idea, pushing the market further to the buyer’s favor.
Keep in mind that home selling is not an immediate process. Though homes sell after a median of 35 days on market currently, this doesn't account for the weeks it takes prior to prepare the house, prepare your schedule, and find an agent to assist you.
“It’s been a huge seller’s market and the market is continuing to shift to a more balanced market - so the earlier you can sell, most likely the more you're going to get. If you can sell now, you should sell now," explains Philadelphia-based Realtor Chad Eason.
It’s a bad idea to try to play the market, especially when even seasoned real estate experts are wrong sometimes about what the playing field will look like several months from now. If you need to sell your home because it no longer suits your needs - whether it’s too small, too long of a commute, etc. - then now is the time to switch things up.
If you’re planning to buy a home after selling your current one, rising rates can be tough to stomach when just a few months ago, it was possible to borrow with 3% down. However, by historical standards, rates are still relatively low. And they might not be done rising.
The St. Louis Federal Reserve President James Bullard said that the central bank will continue raising rates until it sees inflation is falling - and that he expects the rates to increase another 1.5% this year.
Rising mortgage rates can be a problem for several reasons. First, it means that more buyers will be pushed out of the market, so that when you go to sell your house, the buyer has more of an advantage than they had before. You’re now more likely to be competing with other properties to get their attention, rather than multiple buyers competing for your attention.
And second, it means that when you go to get a loan for your next home, you receive less house per dollar you spend - as more of your monthly mortgage payment is taken up by interest.
One of the reasons the housing market started to “gridlock” was because sellers who wanted to move were afraid to become buyers. Most people, after all, will buy another house that better suits their needs after selling their current one. With inventory at record lows, though, pragmatic sellers decided to stay in place and wait out the frenzy - rather than selling their home and finding themselves homeless in the interim.
While this strategy ensured stability for plenty of sellers in 2021, the market has cooled, and in most markets the crazy 15-offer, selling for 20% over-asking situation is long gone.
In other words, now is a great time to have an optimum experience if you have to both sell and buy at the same time. It will be both reasonably easy to buy and sell, with neither process likely to hold up the other by months and months - as was the case previously.
On the other hand....
If your main motivation for selling now is that you want to avoid the market crash, don’t. Sell your home if it’s the right move for your needs and your life, and if you’ve built up adequate equity in your home so that you’re not losing money when you go to sell.
But don’t sell because you’ve bought into the hype that 2008 is about to happen all over again. As we’ve noted in Will You Lose Money if You Buy a House Right Now? , plenty of people have been feverishly predicting the next housing market basically since… the last housing market.
It bears repeating (and more repeating) that most of the precipitating events of the last crash are absent today. Not only have regulations surrounding the mortgage industry been tightened up so that only qualified buyers can buy a home - we also have very low housing inventory, making it difficult for demand to truly die down.
“I hear these rumors all the time that it’s about to switch to a buyer’s market with crazy price drops, like $50,000 to $100,000 -but it’s just not going to happen. The inventory and the economics don’t work for that to make sense," observes Eason.
If you’ve lived in your primary residence for at least a year, chances are you can ask your lender whether you can begin renting out your home. The U.S. rental market has been experiencing similar upheaval and rent prices have been rising, while vacancy rates dwindle.
Extremely low vacancy rates mean that your likelihood of finding a qualified renter are high, especially if you price your home at a fair market value. According to iPropertyManagement, the national rental vacancy rate declined 13.8% in 2021.
If you’re looking for a way to develop multiple income streams, there’s a reason why leasing out property has become a popular option.
Even if you don’t make much money off of them month-to-month, you still benefit from having someone else paying off your mortgage. That’s equity you can cash in on down the road.
Due to the upfront costs of buying a home, you can actually lose money if you sell your home too quickly. That’s why it’s always a good idea to have a 5-year plan for your property when you buy it.
Sometimes life happens, of course - a new job or an unexpected family addition might necessitate moving sooner than anticipated. If you’re merely feeling the moving itch and looking forward to upgrading your closet size, however, it might be worth holding out for a few more years.
According to Forbes, it takes the average homebuyer about four years to recoup the initial costs (closing costs, moving costs, etc.) of buying a home - so sticking to a five-year plan to hold on to your property allows you to retain your equity.
If you're wondering whether you should sell your house now, there's no one right answer. If you're worried about losing tons of money, don't be. Homes are still appreciating in price.
While you might not get the crazy 20+-offer, 40% over-asking sell price that lucky sellers experienced at the market peak, on the plus side, you also won't have to deal with that when you go to buy your next home.
If you're thinking about selling your house, the earlier you start to prepare, the better. As housing inventory continues to rise, home sellers will need to work harder to capture buyer attention - that means taking care of small repairs, decluttering, and sprucing up your space.
Ready to meet with a Realtor to discuss your plan of action?