Photo: Billion Photos (Shutterstock)
With the federal government threading the fine needle of keeping inflation down by increasing interest rates, the housing market is still in a very different place than it was before the pandemic. With home prices seeming to finally start going down, many people might be considering wether it is a good time to sell while prices are still inflated. Is it a good idea to sell your home and take advantage of the inflated prices while you can? Here’s who should consider selling their homes—and who shouldn’t.
You should sell your home now if:
You have to. If you lost your job, have to move for work, or can’t afford your mortgage, selling now is a good idea. Just don’t jump into a new mortgage right away if you don’t have to. Explore renting and save or invest the profit to ride out the high interest rates until they drop significantly or your financial situation improves to the point that you can afford to buy again.You are flexible. If you don’t need to sign a new mortgage with today’s high interest rate because you have another home you can live in or are willing to rent, then you should consider selling and taking advantage of inflated prices while you still can.You want to downgrade in space. If you’re retiring, the kids have left for college, you’re recently divorced or separated, or you want to live in a smaller place for another reason, it could be a good time to sell.If you can afford the high interest rates. If you can afford the higher interest rates, this can be one of the best times to sell and buy again. With so many buyers priced out of buying new homes with the high interest rates, you will have less competition from other buyers and more room to get better deals.Anyone trying to sell should expect their home to be in the market for longer than in recent years. With many people priced out of the housing market, less people will be making offers and more people will be shopping around for deals. According to recent reports from Redfin, homes had a median of 26 days on market for properties in August, nine days more than August 2021.
You shouldn’t sell your home now if:
You bought or refinanced recently. If you’re one of the lucky people who bought or refinanced when the interest rate was below the 3% mark, you’re sitting on gold. The cost of not selling and keeping your cheap mortgage might be much better than having to jump into a 7% mortgage. Why would you want to sell now? Jumping into a new mortgage with the current APR can eat most—if not all—of your profit in due time, and interest rates for 30-year mortgages seem to be staying around 7% for a couple of years, according to recent reports from Housingwire.com. So if you have a 3% APR, consider yourself lucky—we won’t see those numbers again for a while. Instead of selling, use this time wisely to pay down your principal and create more equity in your home.If you’re not sure about how you’ll afford your next purchase. Finding a new home that fits your budget with low housing inventory, inflated home prices, and 7% interest rates is going to make finding a new home very challenging and expensive. Don’t expect to upgrade into a bigger home just because you sold for a lot of profit. Think about it this way; if you were to buy your current home with today’s interest rates, would you be able to afford it? Many people would not. So if you sell, you will most likely have to downgrade your home to live around the same means you’re spending right now.G/O Media may get a commission
Keep in mind that any decision to sell or purchase a new home should be based on your specific financial situation and your own risk tolerance. Still, some people will benefit from selling right now more than others.
