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Sell or Stay? That Is One of the Questions.


The real estate market has been booming. Homes in my neighborhood are being sold for substantially more than I would have ever imagined. So should you take advantage of the boom and sell? It is tempting, but where do you go from there?

Multiple concerns
What if I sell my house and can’t find another I want and can afford? I have the proceeds from my sale in my bank, but they are earning very little and the inventory of available homes is extremely low. When I speak with clients making real estate transactions, I’m blown away by the bidding wars. When I speak with realtors, they tell me they are busier than ever but that the lack of inventory has made their work as challenging as ever. According to The Economist (“Which housing markets are most exposed to the coming interest-rate storm?” May 14, 2022), “In America there were 62% fewer listings in March than the year before.”

So if I can’t find the perfect property, do I rent? What can I rent for my family of four plus pets? And rental prices have also skyrocketed. I could be paying more rent than the monthly mortgage payments on the house I just sold.

If I’m not comfortable with the idea of being without a home, perhaps I should buy another house first, then put mine on the market. But there is risk involved in that strategy as well. Do I have the credit and income to accommodate such a transaction? What if I buy my next home then can’t get what I expected from the sale of my existing home? Inventory might be low, but I can’t be certain I’ll get top dollar for my home. What if I end up owning and paying for two homes for an extended period of time? Can I afford that? How will that affect my long-term financial plan?

One option is to sell with the provision that I will be allowed to stay in the home for a period of time after closing. That gives me more time and flexibility to look for my next home. But the contract with my buyer will certainly identify an end date to my stay. Now I’m in a time crunch that could pressure me to buy something less than ideal or more expensive than I had planned for.

Inflated prices and rising interest rates
While I am thrilled with the increased value of my home, I have some hesitations about buying something else priced significantly higher than it was valued at just a few months ago. Home prices in the U.S. rose 31.2 percent in the two years from Q42019 to Q42021—and more for higher income areas, such as South Florida. It seems unreasonable that prices will remain at that level for the long term. The Economist article, which I am sure was well researched, notes that, “Many economists believe that a 2008-style global property crash is unlikely.” But as someone who felt the pain of the bursting of that real estate bubble, I remain skeptical.

What if I, like many others are doing, choose to avoid the home sale process altogether and focus on improvements to my current home? The rise in home prices has increased my borrowing power. I could refinance or take out a home equity loan and do some remodeling. I’ve always wanted a pool. This could be a good plan, especially if I’m committed to staying in my home. However, I must exercise caution. I don’t want to be overextended or to overspend. Some remodeling projects—like that pool—don’t always command a correspondingly higher selling price down the road.

Then there are those rising interest rates. Is my new loan rate fixed or adjustable? While the increased value of my home might translate into more available cash, a rising adjustable rate on a home equity loan could make that cash more expensive than I’d planned for with more of those monthly loan payments going to the higher interest rate.

Moral of the story
Don’t make a rush decision about selling your home, or even committing to a home improvement project. Talk with your financial advisor and make sure you know exactly what you are taking on.


The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.

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