It’s hard to believe the difference a year can make. This time last year, the world was practically locked down, and now? Economies are opening, people are getting back to work and production of nearly everything is running as quickly as companies are staffed to produce things.
The exact same thing is happening in the housing market.
Incredibly low inventories, record-high supply costs, and a large labor shortage have all created an optimal environment for homeowners looking to sell their homes.
Of course, the money they could make as a result of selling their home would likely be offset by the cost of building or buying a new home, but for a select group of homeowners, selling now could be extremely lucrative.
Are you one of those homeowners?
There are some things to think of if you might be considering selling in the next two months…
First of all, where are you going to live? For those who have already bought or built their retirement home, today’s market almost couldn’t be more perfect. In theory, they’ve already purchased property, or an existing home in a softer market, so selling now is a great chance to maximize their profitability.
It’s worth noting for anyone selling and potentially planning on living in an apartment or condominium that, due to COVID, evictions were virtually halted, so the available supply is still extremely short and rents have continued to climb in many parts of the country.
Just how much have construction costs climbed? Lumber is up nearly 30% from this February! Appliances – even the least expensive models – are also in short supply, so big retailers are not discounting them for summer sales, or offering financing packages like they usually do. Even though many Americans have more cash on hand than they traditionally do, they’ve also proven to be more cautious in the last few months as the pandemic has slowed and the economy has reopened.
So should you sell or hold?
Well, the short answer is this: if you will have to have the equity from your current home to buy or build next home, it might be wise to wait it out. The increased value of your current home is going to be negated in the purchase of a new home, so you won’t “lose” money, but nobody likes to break even. For first time homebuyers, my advice would have to be to wait until the supply catches up – we’re going to see a small “bubble” in prices that will reset in the next year and, frankly, if you can wait to buy then, lower costs and a better supply are going to make a big difference in both the purchase price and the monthly payments.
On the other hand, if you’re moving from a “hot” market – California, Atlanta, Arizona, and so on – to a more rural market or a flyover state, then your options for rentals are not only limited, but the money you can make now from selling in these markets will more than offset the slight increase in more rural markets around the country.
Whatever you do, though, it will be the “right” thing – the key is to spend the time understanding ALL the costs associated with buying or selling now and if that opens you up to other taxation problems or how buying now can yield you additional credits and deductions.
I can’t answer that in a blog, but I can absolutely answer that in a personal conversation, so if you’re tired of guessing, let’s schedule a call to discuss the best strategy for your home purchase or sale in this market.