Should I Sell My House Now? Factors to Consider In 2023
Thinking of selling your home? So far, 2022 has been a good year to do so.
Why? Rising prices. Home values continue to increase throughout the country, meaning that sellers can nab a top price for their residences. At the same time, many cities are facing a low inventory of homes for sale. That can result in bidding wars from buyers desperate to find their new home.
But how long will this hot market last? There are already signs that rising inflation and interest rates might slow the demand for housing, which could make it more difficult to sell.
Kurt Grosse, a real estate agent with Realty ONE Group in Las Vegas, said that signs indicate that U.S. housing prices might have reached their peak. Las Vegas saw its first dip in housing prices in June since the start of the pandemic.
"Is now a good time to sell? It depends," Grosse said. "If you're looking to sell at the peak of the market, then I believe the answer is 'yes.' If your goal is to cash in at the peak, then now is the time, and you had better be aggressive about pricing it or it will sit."
Unfortunately, no one can predict exactly what will happen next in the U.S. housing market. But there are several factors you can consider before deciding to list your residence.
Apply Online with Rocket Mortgage
Is It A Good Time To Sell A House?
Debating whether selling a house in 2022 is the right decision for you? If you’re interested in getting a high price for your home, this might be the time to sell.
The median existing-home price for all housing types in May of this year was $407,600, according to the National Association of REALTORS®. That's up 14.8% from the same month one year earlier and is the first time the median price rose above $400,000.
But rising interest rates and high inflation could slow demand for housing soon, which is why some real estate experts recommend that you sell now.
Tomas Satas, founder and chief executive officer of Chicago-based Windy City HomeBuyer, recommended that sellers move quickly to list their homes.
"Every strong market is followed by a correction," Satas said. "The real estate market is going to shrink dramatically in the coming months. Anyone who is thinking about selling needs to sell while the selling is good. Home values are still up, but that can only last so long."
See What You Qualify For
Congratulations! Based on the information you have provided, you are eligible to continue your home loan process online with Rocket Mortgage.
If a sign-in page does not automatically pop up in a new tab, click here
Reasons To Sell Your House Now
When analyzing any real estate market, what should inspire you to put your home up for sale? Here are the key factors that can help you determine if it’s time to sell.
If It’s A Seller’s Market
It’s always best to put your home up for sale in a seller’s market. In this type of market, the demand for homes is higher than the number for sale. Sellers are likely to sell their homes for more money in such a market.
As of the summer of 2022, most of the United States remained in a seller’s market. Part of this is because many cities have a low inventory of homes for sale. This increases the competition among buyers, who are often desperate to find that perfect home.
When there are more buyers than homes for sale, sellers receive cash offers from buyers. These offers are attractive because sellers don’t have to worry that their buyers won’t qualify for a mortgage loan. Sellers might also find their homes in the middle of bidding wars in which several buyers make offers. This could lead to a higher sales price.
Ralph DiBugnara, senior vice president at Edgewater, New Jersey-based mortgage lender Cardinal Financial, said that this lack of inventory has only been exacerbated during the COVID-19 pandemic when many owners fled cities and apartments in a search of more living space. Lower interest rates also encouraged many renters to make the move to owning.
"The supply of homes for sale could take years to get to normal levels," DiBugnara said. "Even if there is a sell-off, it won't be a fire sale at discount prices. Home prices might come down some, but not drastically like in 2007 and 2008."
If Interest Rates Are Low
There’s been plenty of news lately about mortgage interest rates. In June, the Federal Reserve Board raised its benchmark interest rate. There is no direct correlation between this rate and mortgage interest rates, but historically mortgage rates have tended to increase when the Fed makes such a move.
This year has been no exception. Mortgage interest rates have been steadily rising throughout the spring and summer, with Freddie Mac stating the average interest rate on a 30-year, fixed-rate mortgage stood at 5.51% as of July 14. That’s higher than the 3% interest rates many borrowers were nabbing on 30-year loans, but it’s still historically low. For instance, on July 13 of 1990, the average interest rate on a 30-year, fixed-rate loan stood at 10.11%.
What does the current interest rate environment mean for homeowners? Because mortgage interest rates have risen, some buyers might leave the housing market and instead choose to rent. No one knows how much higher mortgage interest rates might rise.
Given that, it still makes sense to sell your home now. Rates might go higher next month, or they might not. But they are still low enough that mortgage debt remains one of the most affordable forms of debt that consumers can take on.
If Your Current House Needs Renovations
Is your home’s current kitchen badly outdated? Is your garage too small for today’s cars? Do you desperately need another bathroom? If so, it might make more sense to sell your home and buy a new property than it does to spend the money for costly renovations.
This is especially true in a seller’s market. Buyers who are dealing with a low number of homes for sale are more likely to overlook needed improvements if it means getting into their preferred neighborhoods.
And if you sell, you won’t have to put up with the stress of living through a major home renovation. Instead, you can purchase a home that already boasts all the amenities you need.
If Your Current Home Doesn’t Suit Your Needs
Is your family growing? Do you work from home and need more space for an office? Are you eager to move into a neighborhood that is more walkable? If your current home doesn’t meet your needs, it’s always a good time to move.
This is especially true when it comes to the need to right-size. This is when you need to move to a home that is either bigger or smaller, depending on the size of your family. It’s no fun living in a cramped house when you have three children. Living in a larger home might be a challenge if you are empty nesters and you no longer want to take on the yard work and maintenance that comes with a bigger property. In these cases, moving to a home that’s a better fit is the smart choice.
Ready for a change?
Reasons To Wait To Sell Your House
There are also reasons to hold off on selling your home, often depending on your financial situation. Even if you are in the middle of a sellers’ market, waiting to sell might still make sense.
If You’re Unable to Afford Current Housing Prices
It’s one thing to sell your home for a high price. But what if you can’t afford the housing prices in the neighborhoods in which you want to move? In a sellers’ market, home prices will rise. This might make it impossible for you to afford a new home after you sell your current residence. It might make more sense to wait until either housing prices fall or your income rises.
If You Don’t Have Enough Equity
Selling might not make sense if you haven’t built enough equity in your home to earn a profit when you sell. Equity is the difference between what you owe on your mortgage and what your home is currently worth. If you owe $100,000 on your mortgage and your home is worth $250,000, you have $150,000 in equity.
The more equity you have, the more money you’ll walk away with after your sale. If you don’t have much equity, though, the fees you pay to close your home sale, including the commission you pay to your real estate agent, might eat up most or all your profit.
Say you owe $200,000 on your mortgage and your home is only worth $210,000. The odds are you won’t make enough from your home sale to earn any profit. Waiting to sell until you’ve paid off more of your mortgage or your home’s value rises might make more sense.
If You’ve Recently Refinanced
Selling might not make sense, either, if you have recently closed a mortgage refinance. If you’ve refinanced to a new loan with a lower interest rate, you might struggle to find a new mortgage with a rate as low. That could end up costing you money.
And if you closed a cash-out refinance – one in which you refinance for more than what you owe on your mortgage and receive the difference in a lump-sum payment – you might have eaten into your home’s equity, making it less likely that you’ll earn a profit if you do sell.
A refinance might also bring financial relief, lowering your mortgage interest rate and your monthly mortgage payment. If your payment is low enough, you might not need to move to a less expensive home if those monthly mortgage bills were getting too high.
The Bottom Line
If you’re debating whether this is the right time to sell, it’s important to consider these factors. Each plays a role in helping you decide whether selling today, no matter how strong the market is, makes financial sense.
And if you do decide that it is time to sell your home? Make sure to apply for a new mortgage today.
Take the first step toward buying a house.