The housing market has been super-heated in recent years since the pandemic and the popularity of working from home sent ripples across America. You may be wondering if this is the year to sell your home, or would it be wise to wait another year or two?
That’s not a simple yes/no decision. A variety of factors come into play when making a big lifestyle and financial move like this one.
Here, we’ll provide guidance on how to size up the pros and cons of selling now, including:
• What is the housing market like in 2023?
• What are good reasons to sell your house?
• What are good reasons to wait to sell your house?
• Should I sell my house now or wait? If so, what are selling tips?
• Should I buy a house in 2023?
Examining the Housing Market in 2023
The coronavirus pandemic brought an unprecedented demand for housing as more people needed houses that would accommodate the shift to working from home as well as kids shifting to the remote-learning model. The housing market heated up, also fueled by low mortgage interest rates.
Since then, though, many people are heading back to the office, children are back at school, and mortgage rates and the annual percentage yield (APYs) on mortgages have climbed. This has occurred in sync with the Fed raising their rates with an eye to slowing inflation.
What does that mean for the housing market in 2023? It may be softer than at its white-hot peak, but it is still largely a seller’s market, with home prices above 2021 figures in many markets.
So to summarize: Houses were selling like hotcakes throughout the pandemic and demand remains strong in many areas. The market is cooling off, but prices aren’t plummeting. This could provide a good opportunity to sell your house in some situations…but if you’re selling so you can buy another house, there’s more to dig into local market conditions in order to answer the question, “Should I sell my house now?”
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3 Reasons to Sell Your House
Now could be the smartest time to sell your house, depending on your specific situation. Here are some compelling reasons to sell your house in 2023.
Reason #1: Your House is Worth More Now
Housing prices spiked recently, and now they are cooling but not crashing. In other words, your home is likely worth more than several years ago and possibly less that it will be in a year or two.
If, due to the spike in value, you discover that how much equity you have in your home is significantly higher, it could be a great time to cash out and buy something else. Or, if you know you want to sell within the next year or two, it might be wise to make a move now since property values may slip lower in the near future.
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Reason #2: A Few Minor Repairs Could Increase Value
Even if your home is already worth more than in the past, you can get even more value out of it if you make common home repairs like replacing pipes or a water heater.
Also consider revamping your kitchen or bathrooms, since those are big influencers for people looking for a new home. A fresh coat of paint can breathe new life into your home and make it all the more appealing if you put it on the market.
Reason #3: Houses are Selling Fast
Looking to sell quickly? Now could be a good time. At the start of the year, homes were typically on the market for two weeks longer than a year prior, but that still represents a quicker sale than pre-pandemic norms. So if you do decide to sell your property, be prepared to have to move out quickly and make sure you have a plan for where you’ll live next.
3 Reasons You Should Wait to Sell Your House
While there are some great reasons to sell your home right now, it may not be the right time to sell for everyone. Here’s why you might want to wait.
Reason #1: You Can’t Afford to Buy
Selling in a seller’s market is great…but not so great if you need to buy another house, especially if you’re staying in the same area. Buying a house may be cost-prohibitive for you, especially when you factor in closing costs on top of the inflated pricing.
Also, there’s no avoiding the fact that it has become more expensive to borrow money. As of mid-April 2-23, the average mortgage rate for a 15-year fixed-rate mortgage was 6.34% versus 2.43% in January of 2022.
That said, if you live in an expensive area, you could sell your home and move to another more affordable state. Or you might look into different mortgage loan products and options (for instance, buying down your rate by paying points) to make a move less cost-prohibitive.
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Reason #2: You Owe More Than You Could Sell For
If you are upside-down on your mortgage payments though, selling won’t provide a solution. Perhaps you took out a second mortgage or not have paid enough on your first mortgage to recoup the expense by selling, even at a higher price. That means you would still owe money on a house you no longer live in after selling.
If this is the case, it may be better to build equity over time before selling.
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Reason #3: You’re Not Ready to Make Home Repairs
While making home repairs before selling could help you get a higher price for your home, that doesn’t necessarily mean you have $30,000 lying around to make those improvements. If you know that certain repairs would help you get more for your house but you can’t afford to make them right now, it may be better to wait to sell a house until you can afford to invest in those home improvements.
Tips for Selling (and Buying) a Home
Before coming up with your own answer to the question of “Should I sell my house,” consider these points:
• Figure out how much you can afford to pay to buy another. If you can only afford a house that’s smaller than your current one, or in a neighborhood you don’t want to live in, there’s not much point in selling only to end up worse off.
• Look at comparables to understand market trends and how much homes are selling for in your neighborhood. Go to open houses to see what sort of updates and features sellers are offering so you have an idea of what to do to get your own house ready for sale.
• Contemplate being represented by a real estate agent and doing it yourself. There are some great DIY sites that can cut down on the fees you pay to sell, but you will probably have to invest time, effort, and cash into marketing your property.
For instance, if you’re selling your house on your own, invest in professional photos rather than taking your own, and get the house staged (that means more than just removing all the toys and dog beds before a showing!). The better you present your home, the better the price you can command.
• Remain patient if you’re also buying. It can feel frustrating to be outbid for what seems like the house of your dreams, but it can be a reality right now. Don’t force a decision — the right house will find you.
Selling your house this year could be a smart financial decision, but it’s important to make sure you’re looking at the bigger picture with your finances.
SoFi’s money tracker app lets you keep track of your spending, create budgets, and set goals for what matters — like buying your next house. Get started managing your money better today.
Photo credit: iStock/AlexSecret
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