Though the market has cooled considerably in recent months following a sizzling hot streak, home prices remain relatively high. However, there has been talk of a possible recession in 2023, which is making some homeowners nervous about the future of their investment.
As you look to the months ahead, one question you might be grappling with is, “Should I sell my home this year?”
Unless you must sell — due to a work relocation, for example — then making that decision can be difficult.
A technique that may make it easier is to ask yourself these questions:
- How much can we get for our property on today’s market?
- Is there a dream area or neighbourhood we’d like to live in someday? (Maybe “someday” is sometime this year!)
- Does our current property no longer meet our needs? (For example, we need another bedroom.)
- Do we want to live closer to something? (For example, we want to be closer to relatives.)
- Do we want to get away from something? (For example, we’d like to move somewhere quieter.)
- How will moving make our lives better?
Asking those questions will give you a clearer picture of the benefits of moving versus staying. That, in turn, will make the decision a lot easier. Typically, you should consider selling now if the circumstances provide favorable selling scenarios. Each scenario in our list below can count as a positive point towards your decision to sell.
The right situation might include:
1. If mortgage interest rates are low
Historically, sellers will find the greatest success when interest rates are low and more buyers are on the hunt. So, today’s higher rates will likely play a role in your decision of whether to sell your house now or wait.
By the Numbers – Inventory & New Listings:
- Months of Inventory for the freehold-class properties has increased to 3.8 months from 0.9 months in January 2022.
- Months of Inventory for condominium-class properties has increased to 3.8 months from 0.8 months in January 2022.
- January’s new listings (1,324) were 16% higher than 2022 (1,142) and up 89% from December 2022 (699). The 5-year average for new listings in January is 1,233.
2. If housing inventory is low
When supply is low and demand is high, selling your home can be more profitable. The total inventory of for-sale homes in Ottawa shows an increase in comparison to December 2022 however, overall the housing inventory is still relatively low.
By the Numbers – Inventory & New Listings:
- Months of Inventory for the freehold-class properties has increased to 3.8 months in February 2023 from 0.9 months in January 2022.
- Months of inventory for condominium-class properties has increased to 3.8 months in February from 0.8 months in January 2022.
- January’s new listings (1,324) were 16% higher than 2022 (1,142) and up 89% from December 2022 (699). The 5-year average for new listings in January is 1,233.
A 6-months supply is representative of a balanced market.
3. If you need to relocate for a job or other life change
If the hand of change is knocking at your life’s front door, selling your home may be unavoidable. You may need to move for a job, a family medical crisis, or divorce.
For example, if you discover that your lifestyle will be much better in a new home — because of an extra bedroom, faster commute to work, or quieter neighbourhood — then selling this year makes sense. Why wait? In fact, you should start the process right now to get an early start.
4. If your home’s value has grown
If you have lived in your current home a long time, or if property values in your neighborhood have increased to the point where you have earned a significant amount of home equity, now might be a good time to sell and cash out.
5. If you are ready to downsize
For many older homeowners, downsizing may be more than a desire; it may be a necessity, either for financial, mobility, or other health reasons. If maintaining your home has become difficult, now might be a good time to sell.
6. If you need to upsize
Perhaps you need more room because your family is growing. Or maybe an elderly relative or child will come to live with you. Maybe your employment has changed and you need a home office. The need to upsize can play a big role in your decision to sell now.
7. If you’re selling a second or inherited home
Now may be an optimal window to be a seller who isn’t also trying to buy a home.
If, on the other hand, you see no good reason to move this year, then not selling might be the right decision for you.
When to consider waiting to sell a home:
1. If mortgage interest rates are going up
When interest rates go up, home values and offer prices can come down. That doesn’t necessarily mean it’s a bad time to sell; it just means you will want to carefully evaluate your selling objectives and consider if you might benefit from waiting.
2. If your move isn’t crucial
Yes, upsizing can be on both the “sell now” list and the “wait to sell” list. Is your desire to upsize based on a crucial need, or just because you think it would be nice to have the extra space? The cost of purchasing a larger home now may become a burden, especially if other factors will add additional costs, such as higher interest rates or a lack of equity.
3. If you haven’t built much equity
Similar to evaluating your home equity when you’re considering trading up, you don’t want to move when your home is considered “upside down,” i.e., you owe more than the property is worth.
Keep in mind, however, that you don’t necessarily need a tangible reason to move. Simply “wanting a change” is enough.
4. If housing inventory is rising
When supply is high and demand is low, selling your home may not be as profitable as you would like. Keep an eye on what’s happening in your market.
5. If you’re happy with your current home
If you are content with your existing home, and it fits your needs and budget, waiting to sell might be the best decision
Homeownership is a natural hedge against inflation. While rents continue to go up at an unusually fast rate, you can rest easy knowing that your mortgage payments will remain predictable.
6. If you recently refinanced your home
Because mortgage rates hit record lows between 2020 and 2021, many people opted to refinance their higher mortgage rates instead of opting to buy a new home. Now, as mortgage rates are higher heading into 2023, if you’re one of the many homeowners who refinanced in 2020, you will likely want to hold off on selling for now.
7. If you can’t afford to move
The recent rise in home prices can be a double-edged sword. It’s great when you’re on the sell side, but is it worth cashing out now if you’ll have to sacrifice those profits to buy high?
If you are not in a financial position to make your next home purchase, or if the cost of transitional housing is beyond your current reach, now may not be the best time to sell.
8. If you have no clear game plan or objective
Moving is a big decision. It’s even bigger when it involves selling what is likely the largest financial asset you have. To avoid seller’s remorse, you’ll want to map out exactly what you’re going to do as soon as the home is sold; whether that’s immediately buying a new home, moving into a family member’s casita, or committing to full time RV living.
9. You aren’t mentally ready to sell
Even if you keep pace with up-to-date information about the housing market and your equity situation, deciding whether to sell now or wait often comes down to a battle between your heart and mind.
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