The real estate market has been on fire for several months now, with homes selling so quickly that there’s brewing concern over how long this momentum can last, and whether a crash isn’t an inevitable consequence. With houses being scooped up for insanely high prices (in many cases, sparking bidding wars between eager buyers), homeowners not planning to move might be asking themselves, “Should we get in on the action and sell our home?”
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Before we get into breaking down that gargantuan question, it’s worth understanding why the housing market is blowing up right now. This is happening for a few reasons. Chester Spatt, professor of finance at Carnegie Mellon University’s Tepper School of Business explains:
“Currently, the real estate market is hot because of low-interest rates, limited construction activity earlier due to COVID-19 and high lumber prices, and pent-up demand for housing due to very high saving rates as a byproduct of both economic stimulus and COVID-19 suppressing demand for other goods,” Spatt told GOBankingRates. “We have an imbalance between demand and the fixed (limited) supply of housing, manifesting itself in many bidders for properties, bids over asking price and bids without contingencies. The underlying demand shock provides a special opportunity for sellers to obtain high effective pricing, at least in the near term. Additionally, this is the time of year (tied to the [traditional] school year) in which transactions are greatest and the market is most liquid.”
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Additionally, home sales in the U.S. rose 5.6% in 2020, the highest pace since 2006, noted Kris Lindahl, CEO and founder of Kris Lindahl Real Estate. What all this means, to put it plainly, is that you could make a tremendous profit off your house if you put it on the market ASAP.
What’s more, you could still rake in a ton of cash without making repairs that you would have had to make in a pre-COVID-19 market. This translates into heavy savings value.
“Traditionally, before putting a house on the market, sellers would take the time to evaluate wear and tear and what needed repairing and make all the necessary fixes and upgrades weeks to even months before marketing the home,” said Mark Washburn, realtor, The Naples Condo Boutique. “Today, assuming the home doesn’t have any major structural issues, we have clients who put their homes on the market ‘as is’ and are able to attract multiple offers and sort through them to pick the best one in a weekend. Apart from decluttering the house, and ensuring the carpets are clean, there isn’t much you need to do to get top dollar as long as the house is priced reasonably. This market dynamic definitely won’t last — but if you dread making any upgrades or remodeling, you may want to take advantage of today’s market to avoid having to make any additional investments. At present, all the stars and then some are aligned — but it won’t always be this way. At some point, we’ll cycle back into a buyer’s market.”
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“We all know from the volatility over the last decade that the housing market is very cyclical and pricing goes up and down over time,” said Bill Samuel, a residential real estate developer and broker in Illinois. “However, no one really knows when the market will shift from a seller’s market to a buyer’s market. Right now we are seeing the strongest sellers market of this current cycle so what we do know for certain at this point is that it is a great time to sell right now. ”
But what if now isn’t the right time for you? What if you were holding off until “things got back to normal” in regards to the pandemic, or until your kids are off at colleges, or so on and so forth? There could be a dozen reasons that come to mind as to why you should not sell right now, but there are likely a dozen more as to why you should.
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One unavoidable downer of selling your home right now is that you’ll also have to move right now. That’s a whole process and stressor in itself. The cost of buying a new house could cancel out your profits from selling, leading you to ask, “What’s the point?” The good news here is that you don’t have to buy a new home. You could simply rent one until the timing to buy is more in your favor.
“Some sellers worry if they sell, where will they move to if the inventory is so low and prices so high?” said Luly Lopez, regional director, Lopez Real Estate Group. “I have been communicating with other real estate professionals around the country and we have been seeing a trend where sellers are temporarily opting to rent after selling their houses while putting their profits into an interest-bearing account as they wait for the tide to shift to a buyer’s market with more inventory and lower prices.”
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The renter’s market is currently teeming with vacancies.
“There is a vast supply of rentals available with buyers taking advantage of low-interest rates and the changing COVID/Post-COVID lifestyle to purchase a home that better suits their needs,” said Fatima Malik, a global real estate agent. “Some sellers are taking advantage of this and selling their homes at aspirational prices… Once sold, the high vacancy rate of rentals is appealing to have a choice home that suits their needs for the time being until they are ready to purchase again.”
No one can make the choice for you, but if you decide to give it a go and list your house, you’ll be getting in on one of real estate’s most unprecedented boom of all time and probably making far more than you would have imagined.
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Last updated: May 20, 2021