I don’t know why you are asking this question. There could be any number of reasons why you’re considering the sale of your home. Unfortunately, there is no short answer to this question. My approach is to break it down into two separate questions.
Is now the right time for me to sell my home?
What are market conditions like right now?
Personal Reasons and Circumstances.
Over 25 years as an adult, I have purchased five properties and sold two. The one property I had decided to rent out when I moved away, but after years of stress because I couldn’t find a reliable property manager, I decided to sell. Following my experience with the first property, I decided to sell a second property because I was moving away from that city and had no expectation ever to return to it. In both cases, my reasons were job-related. Your reasons could be anything. Maybe you are also looking to move for a new job, or you want to move to be closer to your parents as they grow older. Perhaps you want to downsize because your kids have left home. Alternatively, your family might be growing, and you need more space. For any of these reasons, now could be the right time to sell for you.
Market Conditions.
No matter how solid our personal reasons and circumstances are for wanting to sell, the second question to ask is about market conditions. Are market conditions conducive for you to sell your home and get a good price for it? Of course, no one wants to lose money on a home, and you will likely want to use the proceeds from the sale of your home to purchase a follow-on property or for some other financial goal. So, this is an important consideration!
A real estate market is either described as being a “seller’s market” or a “buyer’s market” based on the level of supply and demand for real estate. In a market where there is a low level of supply (fewer sellers looking to sell and fewer new construction homes being built) and high demand from buyers, the market is described as a seller’s market because sellers have the upper hand. With low levels of supply, buyers must compete for fewer homes, and prices generally rise. At the time of writing this article in 2022, most real estate markets globally can be described as seller’s markets.
Inevitably, the supply of new homes catches up to demand, and sellers become more willing to sell, causing the pendulum swings in the other direction towards being a buyer’s market. With more homes to choose from, buyers have the upper hand in setting and negotiating prices. During a buyer’s market, prices tend to increase more slowly or can even stagnate or decrease in extreme cases.
What If It Isn’t The Right Time To Sell Your Home?
Current market conditions can provide a compelling counter-argument to selling your home. The last time the housing market was generally bad was the Housing Market Crises in the late Noughties. At this time, you may have been faced with some tough choices. For example, if you wanted (needed) to sell your home because of a job move, you may have been faced with the choice of selling your home for a steep discount compared to what you paid for it. On the other hand, this period was also a prime opportunity for purchasing your next house at a steep discount.
Consider Your Options.
Your personal reasons for selling might be compelling enough that you decide to go ahead with selling your home anyway. Even if something is not the best decision financially speaking, you may want to avoid stress and worry, or the downsides of selling could be balanced out by an even bigger opportunity.
Another option is to consider not selling. You don’t have to put your life on hold or be prevented from moving on. Instead of downsizing, you can consider renting out part of your home, either to a long-term tenant or as a short-term vacation rental. If you’re moving to a bigger home or moving away for a job, you could hold on to the property and rent it out. With this option, you should check that the rental income will cover your mortgage and other expenses and make sure you have some money in the bank for house maintenance or repairs.
Renting out your home or part of your home is not for everyone. Income from property rental is never completely passive, even with a competent property manager. I currently manage one property myself while two properties are managed by a property manager. The property that I self-manage is in the same town where I live, but the other two are not nearby. Even with a property manager, I still need to decide on rental applications, authorize repairs and maintenance, and generally be on hand if anything goes wrong.
To Sell Or Not To Sell, That Is The Question!
Each situation is different, and whatever you decide to do must be right for you. Taking current market conditions into account is a good thing if it is feasible. If market conditions offer a compelling reason not to sell, you have some options that might be an alternative. Whatever you do, don’t hang onto a property that will be a source of stress in your life or a financial burden.
