Dear Monty column: Is 2021 a good time to sell our home?
Reader Question: Is 2021 a good time to sell our home? We are in our late 50s. Our kids are grown and on their own. Our health is good, and we have no mortgage. We are thinking of downsizing into a smaller home in a newer subdivision not far from our current home. There are numerous news stories about the seller’s market, low interest rates and this being an excellent time to sell. Your opinion, please.
Monty’s Answer: Questions about future events require a caveat. I don’t have an opinion. I can provide you with a few thoughts or questions that may help you crystalize your thinking. A variety of sources generate news stories in press releases to news organizations. Public relation firms, trade associations or private companies see trends and craft press releases that encourage consumer participation to fuel sales. Organizations that may do this in the current economy could be mortgage lenders, home builders, real estate organizations, etc. Some stories are word-of-mouth based on experiences real estate agents and mortgage lenders are currently experiencing.
Stories about historically low interest rates and booming home sales is not a bad thing; it is good news for some consumers. In their exuberance, folks sharing the information can forget that there is an equal or opposite reaction for every action. They miss the downside.
What you hear
Today is a good time to sell because
1. Homes are selling quickly;
2. Faster closings with fewer issues;
3. Mortgage payments are low;
4. Homes are selling at record prices and more.
If this is such a good time to sell your home, one might wonder why more homeowners are not doing it. For-sale inventory is down drastically. Are we on a bubble, like 2008?
What you don’t hear
- It may be challenging to find a home to replace the one you are leaving. Low interest rates bring millions of more buyers into the market and create a sparse inventory. Here is a chart from Federal Reserve Research (https://fred.stlouisfed.org/series/MSACSR) that tells the story.
- You will likely be paying a record price for your replacement home. This consideration counteracts the high price for your old home.
- There will be stiff competition, so you must act quickly. Haste in a market like this can have negative consequences.
It appears that many potential home sellers recognize there are downsides to selling in the current market with the limited amount of new inventory appearing. Suppose you have a mortgage on your home. In that case, another way to take advantage of the artificially low interest rates is to refinance. Your current lender may be reluctant to reduce your rate or offer a rate reduction that is not as attractive as current rates. So, moving the loan to a different lender may be an excellent option to consider, a money-saver with little downside risk. Home improvement stores are enjoying brisk sales.
Examples that fit the perfect time to sell your home:
- Not planning on buying another home.
- Move to a lower-priced market.
- Move to apartment living.
- Move outside the United States.
Personal finances and circumstances also play a significant role in the decision to sell.
Richard Montgomery is the author of “House Money - An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home.” He advocates industry reform and offers readers unbiased real estate advice. Follow him on Twitter at @dearmonty, or at DearMonty.com.