If you're a homeowner who's been watching home prices, you may feel like you've won the lottery, as median home prices are up in nearly all of the top markets. And with the number of home listings down below the typical real estate market, it's a perfect storm of a low supply of houses and plenty of eager buyers looking for a little more space after spending months in their homes or apartments during quarantine.
"Massive price gains are pretty common all across the U.S.," says realtor.com chief economist Danielle Hale. "We're talking double-digit price gains over a year ago."
While it may be tempting to cash in right now and make a profit on your house, there's plenty to think about before you put that For Sale sign out front.
While the prices are up nationwide, that doesn't mean it's that way everywhere—the prices have dipped slightly around Denver and Miami, for instance.
And unless you're downsizing or moving to a cheaper market, selling your house now may not make financial sense. "You have to consider what’s your motivation for selling it," says Steven Podnos, MD, CFP, principal of Wealth Care LLC. "If you turn around and buy a house in the same area, you’re going to pay the same high price for whatever you move to. Optimally, when you’re selling your home, you're moving somewhere that’s not as expensive."
Don't try to time the market
These prices may look spectacular, but no one really knows when they will drop again. "House prices may go up much more—and trends like this often go much longer than you think," Podnos says. "I would never counsel someone to sell a home if you’ll be staying in the area. I don’t think you can time the real estate market any better than you can the stock market."
Know where you'll go
"When homes are selling really quickly, you need a game plan for what you want to do next—especially if you're planning to buy in a market that’s also competitive," Hale says. "You have to be prepared to move."
If your sale is too speedy for you to find your perfect next home, you can always get a little creative with your contract. "You can sell your home, then rent it back for a little while until you find your next home," Hale says. "Then you don't have to deal with the logistics of timing both sales."
You may not be making as much as you think
If your home has doubled in price since you bought it, that may sound pretty amazing. But if you space that out over the course of 10 years or so when you've had the home—and consider inflation, any money you've put into repairs or renovations, and other costs—the return on your investment doesn't look quite as good. ''People tend to overestimate how much money they earned on their house," Podnos says. "Buying a house is more of a quality of life decision."
Show your home in its best light
Even though it's currently a seller's market, that doesn't mean you can just list your home. "You still have to get your home ready, even if it’s a seller’s market," Hale says. "Buyers are still pretty choosy."
Decluttering, a fresh coat of paint, sprucing up your home's exterior, and the best staging and photos you can manage are extremely important right now, when many people will be limiting how many homes they actually tour. "You want to put your best foot forward and take the best photos—if your home doesn't pass the view test, you may not sell as quickly or for as high a price," Hale says.