Who Should (and Shouldn’t) Sell Their House Right Now
With the federal government tackling the fine needle of curbing inflation by raising interest rates, the housing market is still in a very different position than it was before the pandemic. As home prices seem to be finally on the decline , many people may be wondering if it’s time to sell while prices are still high. 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 must. If you’ve lost your job, have to move to find work, or can’t afford a mortgage, selling now is a good idea. Just don’t jump right into a new mortgage if you don’t need to. Explore renting and save or invest the profits to survive high interest rates until they drop significantly or your financial situation improves to the point where you can afford to buy again.
- You are flexible. If you don’t need to sign a new mortgage at today’s high interest rate because you have another home you can live in or want to rent, you should consider selling and taking advantage of the inflated prices while you still can.
- You want to downgrade in space. If you’re retiring, the kids are off to college, you’re recently divorced or separated, or you want to live in a small home for another reason, this could be the right time to sell.
- If you can afford high interest rates. If you can afford higher interest rates, this could be one of the best times to sell and buy again. Because so many buyers are turning away from buying new homes with high interest rates, you will have less competition from other buyers and more opportunities to get better deals.
Anyone trying to sell should expect their home to be on the market longer than it has been in recent years. Since many people do not have a price in the housing market, fewer people will make offers and more people will seek offers. Homes were on the market for an average of 26 days in August, up nine days from August 2021, according to recent reports from Redfin.
You should not sell your home now if:
- You recently bought or refinanced. If you are one of the lucky ones who bought or refinanced when the interest rate was below the 3% mark, you are sitting on gold. The cost of not selling and keeping your cheap mortgage can be a lot better than having to jump into a 7% mortgage. Why do you want to sell now? Switching to a new mortgage at current APRs could eat up most, if not all, of your profits in due time, and interest rates on 30-year mortgages appear to stay around 7% for several years, according to recent reports from Housingwire.com . So if you have 3% per annum, consider yourself lucky – we won’t see those numbers again for a while. Instead of selling, use this time wisely to pay off the principal and create more equity in your home.
- If you are not sure how you afford your next purchase. Finding a new home that fits your budget, with low housing inventory, inflated home prices, and a 7% interest rate, will make finding a new home very difficult and expensive. Don’t expect to get a bigger house just because you sold it for a big profit. Think of it this way; If you were to buy your current home at today’s interest rates, would you be able to afford it? Many people won’t. So if you’re selling, you’ll likely have to downgrade your home to live on about the same amount you’re spending right now.
Keep in mind that any decision to sell or buy a new home should be based on your specific financial situation and your own risk tolerance. However, some people will benefit from selling right now more than others.