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Should I Sell My House Now? Factors to Consider In 2023

5-Minute Read
Published on August 3, 2022
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Thinking of selling your home? So far, 2023 has been a good year to list a home for sale.

Prices have risen over the past year and appear to have settled. And despite repeated interest rate hikes by the Federal Reserve, the demand for homes remains high.

Unfortunately, no one can predict what will happen next in the U.S. housing market. But you can consider several key indicators before putting your home on the market.

Is Now A Good Time To Sell A House?

How do you know if selling a house in 2023 is the right choice? If you’re interested in getting a high offer for your home, now may be the time to sell.

According to the Federal Reserve's home price data, the median existing-home price in June 2023 was $410,000, which is a difference of less than 1% from the median price in June 2022.

While the demand for homes remains high, recent interest rate hikes have cooled demand, and prices may be leveling out. Home prices aren’t expected to drop dramatically anytime soon, but the seller’s market of the past few years, driven in part by lower interest rates, may be starting to decline.

Reasons To Sell Your House Now

Here are the key factors that can help you determine whether it’s time to sell when analyzing any real estate market:

It’s A Seller’s Market

It’s always best to put your home up for sale in a seller’s market. In a seller’s market, the demand for homes is higher than the inventory of homes, so sellers are likely to sell their homes for more money in a seller’s market.

As of the summer of 2023, most of the U.S. was still a seller’s market. Part of this is due to the low inventory of homes for sale in many cities. This scarcity increases competition among buyers, who are often desperate to find that perfect home.

Sellers Are Receiving Cash Offers

Sellers often receive cash offers from buyers when there are more buyers than homes for sale. Cash offers are attractive because sellers don’t have to worry their buyers won’t qualify for a mortgage loan. Sellers will likely find their homes are the objects of fierce buyer bidding wars, which can rocket a home’s sales price.

Interest Rates Are Low

Mortgage interest rates have been in the news a lot lately. In 2022, the Federal Reserve raised the benchmark interest rate several times. While there is no direct correlation between the federal funds rate and mortgage interest rates, historically, mortgage rates have tended to creep up when the Fed raises the federal funds rate. And this year has been no exception.

According to the Federal Reserve’s mortgage data, in January 2022, the interest rate for a 30-year fixed-rate mortgage was 3.45%. By January 2023, the rate laddered up to 6.27%. Since then, the Fed has reined in interest rate increases, and the mortgage rate has consistently ranged between 6% – 7%.

What does the current interest rate environment mean for homeowners? Because mortgage interest rates have risen, some buyers may leave the housing market and choose to rent.

No one can predict how much higher mortgage interest rates might rise, so it may make sense to sell your home now. Rates may climb next month – or not. But mortgage rates are still low enough that mortgage debt remains less expensive than other debt consumers carry.

Your Current House Needs Renovations

Is your home’s kitchen outdated? Is your garage too small for today’s cars? Do you need another bathroom? If so, it may make sense to sell your home and buy a new property rather than spring for costly renovations, which is especially true in a seller’s market.

Buyers who desperately want a home are more likely to overlook needed improvements if it means getting into their desired neighborhoods.

And if you sell, you can purchase a home with all the amenities you need and skip the stress of living through a major home renovation.

Your Current Home Doesn’t Suit Your Needs

Is your family growing, or are you an empty nester? Do you work from home and need more space for an office, or do you want a home with no stairs to climb? Are you eager to move into a neighborhood with a good school district or a walkable community? It may be a good time to sell if your home doesn’t meet your needs.

This is especially true if you decide to rightsize. Rightsizing involves moving to a bigger or smaller home that suits your family’s size and requirements. In these cases, moving to a home that’s a better fit can be a smart choice.

Reasons To Wait To Sell Your House

There are also reasons to hold off on selling your home, which often depends on your financial circumstances. Waiting to sell might make sense – even in the middle of a seller’s market.

You Can’t Afford Current Housing Prices

It’s one thing to sell your home for a high price and quite another thing to afford home prices in the neighborhoods where you want to live. In a seller’s market, home prices rise. You may need to sell your home for much more than expected to afford a new home. Waiting until housing prices fall or your income increases may make more sense.

You Don’t Have Enough Equity

Selling may not make sense if you haven’t built enough equity in your home to earn a healthy 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 $150,000 on your mortgage and your home is worth $350,000, you have $200,000 in equity.

If you don’t have much equity in your home, the fees you pay to close on the home sale, including the real estate commission, can eat up most or all your profit.

For example, if you owe $325,000 on your mortgage and your home is worth $350,000, you won’t make enough from your home sale to earn a profit. Waiting to sell until you’ve paid off more of your mortgage or your home’s value rises may make more sense.

You Want To Avoid Capital Gains Taxes

You may pay capital gains taxes if you sell your home for a profit.

If the home was your primary residence for at least 2 of the past 5 years, you may be eligible for a deduction of up to $250,000 in profit if you’re a single filer or up to $500,000 if you’re married and file your tax return jointly.

Depending on how long you’ve lived in the home and the potential profit you earn from the sale, it may make sense to wait until you’ve lived there for 2 years to qualify for the exemption.

You Recently Refinanced

Selling your home shortly after a mortgage refinance may not make financial sense. If you refinanced to a new loan with a lower interest rate, you may struggle to find a new mortgage with as low a rate and end up paying more in interest over the life of a new mortgage.

If you took out a cash-out refinance – refinancing for a larger loan than what you owe on your mortgage to receive the difference in a lump-sum cash payment – you may have eaten into your home’s equity, making it less likely to earn a profit if you sell.

The Bottom Line

If you’re debating whether now is the right time to sell, consider the strong indicators on either side of the debate, including the type of market you’re in and your potential capital gains liability. Each indicator can play a role in helping you decide whether selling today makes financial sense – no matter how strong the market is.

If you decide that now is the time to sell your home, reach out to a Rocket Homesâ„  agent today. They can help you get the best price for your home and sell it faster.

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Dan Rafter

Dan Rafter has been writing about personal finance for more than 15 years. He's written for publications ranging from the Chicago Tribune and Washington Post to Wise Bread, RocketMortgage.com and RocketHQ.com.