If you’re considering selling your home, it’s critical to understand the current real estate market dynamics. The volatility that dominated the market amid pandemic-related pressures is starting to ease, but that doesn’t mean there aren’t still challenges.
For one thing, mortgage interest rates remain stubbornly high and stood at 6.9 percent as of the end of May. That reality is making mortgage payments increasingly expensive and driving more than a few potential buyers to the sidelines — certainly not ideal if you’re on the selling side of the equation.
And while April’s median home prices saw the third consecutive month of year-over-year declines, according to the National Association of Realtors, S&P CoreLogic’s latest Case-Shiller U.S. National Home Price NSA Index, released May 30, shows that housing prices have increased for two consecutive months, ending a seven-month stretch of declines. But regardless of pricing trends, with housing inventory still at a very low 2.9-month supply, the nation overall is still very much a seller’s market.
Deciding whether it’s the right time to sell your home is a very personal decision. There are numerous important questions to consider, both financial and lifestyle-based, before putting your home on the market. If popular opinion is any guide, 2023 may still be a good time to sell despite the evolving market dynamics. According to Fannie Mae’s most recent Home Purchase Sentiment Index, more than 60 percent of respondents feel it is a good time to sell.
“Right now is definitely a good time to sell,” says Jade Lee-Duffy, a Realtor with TXR Homes in San Diego. “In my market, demand has recently gone up 28 percent. And housing inventory is still historically low.”
Local market dynamics also play a large part in whether it’s a good or bad time to sell, says Katie Severance, a Realtor with Douglas Elliman in Palm Beach, Florida. “In some areas, selling now is the right thing to do because prices are still climbing — or, at least, are not yet falling,” she says. “In other markets, prices are falling fast, so it might be best to wait to sell until the market correction stops and interest rates come down and stay down, which will spur sales once again.”
Markets with fast-falling prices tend to be the same ones that rose astronomically in recent years. For example, median prices in both San Francisco and Seattle have seen steep year-over-year declines, according to data from Redfin.
Historically, spring and summer are usually the best times of year to sell a house — another point in favor of “now.” But beyond seasonality, there are many factors that might make selling your home a wise decision. Often the reasons are based on financial calculations, cost of living expenses and other considerations, but there may also be other factors that make selling your home the right choice. These include:
| If rates are low | Low interest rates entice more prospective buyers to enter the market, which is advantageous for sellers. An increased number of buyers shopping for homes often leads to bidding wars and drives up home prices, meaning you can likely sell your home for a solid profit. |
| If supply is short | A shortage of housing inventory also drives up demand and prices for available homes. What’s more, when housing supply is low, homes on the market tend to sell faster. |
| If you’re ready to downsize | Downsizing may be a more budget-friendly choice than maintaining a larger, costlier home. For older homeowners, downsizing may even be a necessity. “If you can’t handle the stairs anymore, or if there are more repairs than you can manage, it may be a good time to sell,” says Rick Albert, a broker with Lamerica Real Estate in Los Angeles. |
| If you need to relocate | If you’re relocating to a new state for a job or want to enjoy your retirement in a new area, and you need the profits from the sale to put toward your next place, selling may be unavoidable. “The time to sell is when you need to sell,” says Severance. “It’s a no-brainer to sell if you have somewhere to go.” |
Here are some common factors that might make prospective sellers hold off on listing their home for sale:
| If rates are rising | Rising mortgage rates, as the current market is experiencing, often mean fewer buyers and a smaller pool of buyers who can afford the price you want. Selling a home isn’t free, so if you can’t maximize your price, you might decide to wait. |
| If you’ve recently refinanced | If you recently refinanced your mortgage, it may not make financial sense to sell just yet. You may actually lose money by doing so, when considering the closing costs and other fees typically paid as part of the refinancing process. |
| If you’re upsizing | The cost to purchase a new, bigger home may be unaffordable, particularly in a hot market. Don’t get in over your head — take the time to be sure your finances can accommodate the type of home you want. Bankrate’s home-affordability calculator can help you crunch the numbers. |
| If your home is in poor condition | Got a long list of repairs waiting to be completed around your home? You may want to postpone selling until some of the work can be done. It’s important to show your home in its best light in order to land the most favorable offer possible. If the home is in disrepair or there’s an unfinished project, you are less likely to get a good price. |
| If you have no game plan | If you’re simply trying to time the market to make a profit and have no plan for after your home is sold, it may be best to wait. “It doesn’t make sense to sell if you don’t know what your next play is,” says Albert. “Where are you going? Where is that money going to be spent? If you don’t have a plan, then you shouldn’t sell.” |
According to Bankrate’s First-Quarter Economic Indicator poll, the U.S. economy has a 64 percent chance of entering a recession in 2023. While that is far from a sure thing, it’s worth asking: Should you sell your house during a recession? Or even just before one?
The answer really depends on your personal circumstances. “If you’re concerned a recession is coming, it’s generally better to sell now instead of waiting,” says Lee-Duffy. However, “selling during a recession might be beneficial if you’re looking to downsize or rent. This could cut your overall costs, and you could put the proceeds into a retirement account, go on vacation or invest.”
Remember, recessions typically bring with them job losses and general belt tightening, which can severely limit the number of house-hunters looking to buy. More buyers will be able to afford a home, and qualify for a mortgage, before the recession becomes official than after.
If you’ve considered the pros and cons and decided to put your home on the market, here are some steps you can take to get the best deal possible.
If you need to sell your home quickly and don’t have time for the often-lengthy process of a traditional sale, iBuyers and cash homebuying companies may be worth considering.
An iBuying company operates mostly online and typically makes an offer on homes within 24 to 48 hours. Once you accept an offer, the entire process can often be completed within a few weeks. Opendoor and Offerpad are two of the biggest iBuyers. Similarly, cash homebuying companies also allow you to sell a home fast. These companies make all-cash offers and may be able to finalize a sale in as little as one week, and they often handle all of the required closing paperwork for you as well.
Before proceeding with either method, though, it’s important to understand one major downside: In exchange for their speed and convenience, you sacrifice profit. Both types of companies usually offer much less money for your home than you could get through a traditional sale. And they may charge steep fees as well, so be sure to read the fine print before signing anything.
Deciding to sell your home, whether now or later, is a major decision that requires careful consideration. Your future plans and goals should be a significant part of the equation, as well as your financial needs and the realities of the current market. If you decide to proceed with listing your home, working with an experienced Realtor is a smart move. A real estate agent who knows your community well can help you price a home effectively, which will increase the chances of a quick and smooth sale.
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