Are you ready to get rid of your current place and move on? With home values now drifting lower, you might be tempted to buy something new.
Maybe you're just itching to get out of your current place and start a new phase of your life. Or perhaps you want to sell an expensive home, downsize and use your profits to boost your bank account.
Before you put that “for sale” sign in your yard, however, consider these reasons why selling your home this year might not be the best idea.
Mortgage rates are high
The national average mortgage rate peaked at 6.9% in October, according to real estate website Redfin. And while the rate has declined a bit since then, it's still far higher than it was a year ago.
If you sell your home, you might get stuck with a much higher mortgage rate on your new place. Elevated mortgage rates also could keep potential buyers out of the market, making it harder for you to get a top price for your current home.
You refinanced in recent years
Did you take advantage of lower mortgage rates and refinance before rates skyrocketed? If so, you’re probably in a good position to stay put.
For example, a low rate on a 30-year fixed-rate mortgage is tough to beat. Such a loan provides you with decades of low borrowing costs.
Yes, in some cases, selling can be smart despite such great mortgage terms on your current loan. But don’t overlook the value of the mortgage you have. Sell only if it makes sense for you.
Inventory is low
There were a little more than 253,000 homes listed for sale in December 2022, according to Redfin. That’s a 30.4% decline in the number of homes listed compared to December 2021.
Newly listed homes for sale are down sharply compared to June 2022, when more than 800,000 homes were listed.
The decline in inventory could be bad news if you sell your current home and have to find something new. You may not have as many options to choose from or you might have to compromise on where you want to live.
So think about inventory before you sell.
Housing prices remain high in many places
Sure, housing costs may be cooling off a little, but prices are still high in many parts of the U.S.
Cities in Florida and Sun Belt favorites like Las Vegas and Phoenix continue to see an influx of new residents. While housing prices may be slipping, those markets can still be highly competitive.
Before you sell your current home, make sure you're ready for the challenges of moving to and finding a home in these popular destinations.
A recession might be coming
While economists can’t predict exactly when a recession will occur or how bad it will be, there are indications that a downturn could be on the way for 2023.
So, as you prepare for a possible recession, think about how a downturn would impact your finances. You might find that buying a home is too risky when the economic future is so uncertain.
You plan to move in a few years
Perhaps you've had longtime plans to move so you can be closer to family or relocate to a retirement destination.
If that’s the case, it might be a good idea to sit tight and wait out the market a little longer until conditions are better and you’re ready to move to a different place.
You haven’t saved enough elsewhere
Saving for a down payment on a home is a good goal. But don’t neglect other important areas of your financial life.
Before you sell your current home and dump money into a new one, make sure you're saving cash in retirement accounts and an emergency fund.
Pro tip: With a recession possibly on the way, now is a good time to add some extra cash to your emergency fund to cover any unexpected costs that might pop up during what could be leaner times.
You still have debt
If you're still in the red, paying down your debts might be a bigger priority than finding a new home. So make sure you lower your debt from credit cards and student loans before you start weighing a move.
Remember, debt can affect your ability to get a good mortgage rate on a new home. And higher borrowing costs can lead to financial trouble.
You haven’t updated your home
Perhaps you want to sell your current home so you can find something less outdated. But this might not be a good reason to sell your home.
Instead, consider updating your current home. A fresh coat of paint or a few necessary repairs can help you fall in love with your current home all over again.
Such small changes can also be more affordable than a big change like purchasing a new place.
Selling your home can mean a new and exciting start. But in 2023, that change might come with some downsides.
So, before you take the plunge and put your home up for sale, carefully weigh the pros and cons of selling in the current climate.
Taking time to make a careful decision can help you avoid wasting money on a new home that will fill you with regret down the road.
Compare Quotes Benefits
- Get quotes in 60 seconds
- Compare rates from top insurers
- Coverage you need at an affordable price
- It's free and fast to compare quotes