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Should I Sell My House Now or Wait? In 2022, No Need to ‘Panic Sell’

At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

Moving is a big deal, and the choice of whether to sell your house now or wait is rarely an easy one. In 2022, you may be especially curious about how 5% mortgage rates and 8% inflation should be factored into your decision.

The consensus is that while this year generally remains a great time to sell a house in the U.S., that also doesn’t mean you should “panic sell.” Let’s take a closer look at the current housing market and how to determine your next steps.

Check Your Home Value Before Deciding to Sell

Real estate prices have skyrocketed over the past couple of years. We’ll provide you with an instant home value estimate so you can make a more informed selling decision.

2022 is still a good time to sell because:

  • Most of the country is still a seller’s market.
  • Ultra low supply means homes are still selling fast.
  • Home prices continue to rise, boosting equity.
  • Cash offers are flowing.

You should consider selling now if:

  • You’re selling a second or inherited home.
  • You can pay cash for your next home.
  • You’re uncomfortable in your current home.
  • Your house could use some work.

Consider waiting to sell if:

  • You’re happy ‘chilling’ where you are.
  • You recently refinanced your home.
  • You can’t afford current housing prices.
  • You haven’t built much equity.
  • You’d face steep capital gains taxes.
  • You aren’t mentally ready to sell.

Below, we further explore key market indicators painting a picture of the situation.

Most of the country is still a seller’s market.

As recently as Q1 2022, 98% of real estate agents said that they were in a “seller’s market,” according to a HomeLight survey of over 1,000 top real estate agents in the U.S. For the past 12 months, more than 94% of agents have reported seller’s market conditions for their area. As of this writing, there is no serious shift to report.

Ultra low supply means homes are still selling fast.

In all likelihood, you won’t have any trouble getting a quick offer for your home right now. And that’s largely because the inventory of for-sale homes in the U.S. has run bone dry (it currently sits at 2.0 months of supply, where 6 months represents a balanced market).

Housing supply was relatively low to begin with before COVID-19 entered the picture. Then, from 2020 to now, a tidal wave of demand was met with a sorry amount of housing supply as a result of material costs, supply chain disruptions, and years of chronic underbuilding in the new construction industry.

In spite of rising mortgage rates, houses continue to sell rapidly — in as few as 17 days. Nathan Butcher, a top agent in Los Angeles, believes there are still eight to 12 months worth of backed-up buyers, and he envisions the inventory shortage will last through the year.

Home prices continue to rise, boosting equity.

The value of homes historically appreciates over time, but in recent years prices have accelerated at abnormally high rates. 2022 has shown to be no exception, as the double-digit gains carry on.

Data from the National Association of Realtors (NAR) indicates that the median price of an existing home in the U.S. hit $375,300 in March, a 15% increase over the previous year.

Given these trends, you may be pleasantly surprised by how much you can sell your house for at the moment. Enter your address into our Home Value Estimator tool to get a preliminary estimate of home value in under two minutes.

Cash offers are flowing.

HomeLight found that cash offers accounted for 31% of home purchases in 2021, while 54% of top real estate agents say cash offers increased in Q1 2022 compared to Q4. Market competition has incentivized buyers to make their offers as attractive as possible, and cash talks. Cash makes a seller’s life easier by allowing for a quicker close and fewer unknowns, such as whether the house will appraise or if the buyer’s loan will be approved on time.

Sell for Cash While the Market Is Hot

Skip the hassles of repairs and showings and go straight to receiving a cash offer through HomeLight’s Simple Sale platform.

Favorable selling scenarios

Now that we’ve gone over what’s happening in the market, you need to put that knowledge within the context of your own situation and needs. Here are some circumstances that may make selling an attractive option.

You’re selling a second or inherited home.

Now is an optimal window to be a seller who isn’t also trying to buy a home. Maybe you’re motivated to unload your rental property that’s become a hassle or need to sell a house you inherited from out of state. With so few listings on the market, your property is likely to get lots of attention. If that’s the case, consider connecting with a top real estate agent to get it on the market.

You can pay cash for your next home.

Let’s say you’re relocating from Manhattan to a countryside cottage in rural Michigan. The proceeds from the sale of your previous home will enable you to pay cash for a residence in a less-expensive market. The use of cash eliminates the concern of giving up your lower mortgage rate, so you might as well take advantage of high prices and the breakneck pace of the current market.

You’re uncomfortable in your current home.

People tend to sell their home primarily for personal reasons. They’re relocating to be closer to friends and family. They got a new job that allows them to work remotely. They’re expecting a baby and find themselves one bedroom short. A home shouldn’t get in the way of life, and sometimes selling is the best option for you and your family.

Your house could use some work.

Because of the heavy competition and influx of cash buyers, now could be the time to sell your home for a relative premium, even if it has a few flaws or some dated bathrooms.

One of the benefits of operating in a seller’s market is negotiation leverage; when you have multiple buyers competing for your home, you may not have to concede to the same level of repair work that you would in a more balanced market.

If your home needs more than a touch-up to be marketable, now is also a good time to request a cash offer, as low inventory encourages investors to improve their offers.

Notes: For homeowners who value speed, certainty, and simplicity, HomeLight created Simple Sale, a platform that provides you with a full cash offer whenever you’re ready to sell. Answer a few quick questions about your home and timeline, and you’ll receive offers in 48 hours or less. If you decide to accept the offer, you get to pick the move date.

You also can talk with your real estate agent about which repairs are essential. If there’s an issue that will crop up during the inspection and make the home uninsurable to a financing buyer, you’ll likely need to address it.

Tips to sell your home in 2022

If you’ve decided that it makes sense to sell your home now rather than wait, here are some tips for navigating the market and ensuring a successful transaction:

Deep clean and declutter.

Don’t forget about home-selling 101 just because we’re in a seller’s market. Spend a few weekends getting organized. Take down personal photos and clear clutter from surfaces and floors. Schedule a cleaning service if you don’t have the time or energy to get the house sparkling. Rent a dumpster and plan for donation pickups if your home is overflowing with belongings you don’t plan to take with you.

Price it right.

One risk in a hot real estate market overshooting your price range. To determine home value, your real estate agent will conduct a comparative market analysis (CMA) that analyzes local comparable sales or “comps.” The key is to make accurate dollar adjustments based on features that drive or reduce value. Some of the main aspects of a home that can hurt appraised value include an undesirable location, general lack of upgrades, or poor construction quality. Be sure to recognize these issues while also giving credit to your home where due.

Work with a high-performing agent.

“The best thing a seller can do is to seek out the top 1%, instead of just going with a friend or family member,” says Butcher. “You need an expert in your area with great reviews. Interview two or three agents. Ask to see the properties they’ve sold in the last 60 months and ask about their networking contacts.” HomeLight makes it easy to find top agents in your area with experience selling homes like yours.

Stage a home office.

Ladders data shows that 25% of all professional jobs will be remote by the end of 2023. Buyers today are looking for homes with an office and sometimes multiple offices. It’s worth it to stage a bonus room, bedroom, or area of the basement as a space that would support working from home. Keep it simple with a chair, desk, and lamp if you don’t already have an office setup.

Ramp up the curb appeal.

Top real estate agents recommend homeowners invest an average of $3,467 in curb appeal prior to listing their property, a 2022 HomeLight survey found. This can include anything from basic lawn care and fresh mulch to new walkways, exterior paint, and upgraded front doors and garage doors. Not only does enhanced curb appeal get more eyeballs on a home in a shorter amount of time, it also yields nearly $12,000 in estimated resale value.

Focus on repairs before renovations.

Opt to repair the roof before you refresh a dated but perfectly functional bathroom. “Homebuyers of 2022 are looking for functionality and practicality instead of appeal and grandeur,” says Anthony Minniti, a seasoned real estate investor and owner of Texas Land and Home. “They want the most bang for their buck.”

Consider waiting to sell if…

Even if all of this sounds promising, you might still want to wait to sell your home. And that’s OK, too! “There are a lot of factors you have to consider when you are planning to move out of your current property,” says Todd Schroth, a top-selling agent in Wekiwa Springs, Florida. “What’s your long-term plan? Have you identified where you want to move once you sell? Are you moving up or are you moving down? Are you moving out of the area?”

You’re happy ‘chilling’ where you are.

Owning a home is… not a bad position to be in right now.

The average 30-year fixed mortgage rate has now eclipsed 5% — up from around 3% at the beginning of the year — which makes the prospect of selling at a high price and then locking in the same or a lower mortgage rate on your next home less likely.

And unless you’re willing to stomach rent increases of 15%, selling and then renting doesn’t seem like a great move, either. If you find your house to be of a suitable size and are happy with your location, maybe you stay put.

“Even when the market shifts, I don’t think we’re going to see significant price drops. If your home is comfortable and you are locked into a low interest rate, then you might not want to sell,” Butcher says.

Homeownership is a natural hedge against inflation. While rents see wild increases, you can rest easy knowing that your mortgage payments will remain predictable.

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.

According to Freddie Mac, refinancing activity in 2020 reached its highest annual total since 2003, climbing to $772 inflation-adjusted dollars in single-family refinances. Now, as mortgage rates are climbing in 2022, if you’re one of the many homeowners who refinanced in 2020, you will likely want to hold off on selling for now.

“Many homeowners have recently refinanced their property, locking in a great rate,” says Liz Hulz, real estate investor and co-owner of a house buying company in Washington, D.C. “If you have taken advantage of the historically low mortgage rates to refinance and ease financial hardship, now is not the time to sell.”

You can’t afford current housing prices.

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? You need to make sure that your budget will work for the current market and type of property you desire.

“With my clients, we take a look at the equity position that they have. Do they have enough money to sell it and have a nice down payment for the next property, or can they sell it, walk away even, and get similar financing on the next home?” says Schroth. “We’re not looking at $400,000 houses when they can only afford $350,000.”

Keep an eye on local real estate to help you make a decision. With reports that inventory is creeping up in recent months and values may be rising at a slower rate in some areas, the remainder of 2022 could present a chance to sell on the heels of the price run-up as some fresh housing stock hits the market.

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. For example, if your home’s value is $300,000 and you owe $320,000, you may want to wait to sell or rent it out until you’ve built up some more equity.

Because the bulk of your monthly mortgage payment goes toward interest at the outset, it usually takes about four to five years for your home to build enough equity to make it worth selling. In addition, you’ll need to make sure your profits from the sale will cover all of your selling fees. A recent analysis at HomeLight found that it costs roughly 9-10% of the sale price to sell a home.

You’d face steep capital gains taxes.

Capital gains taxes are another consideration. You may be able to avoid paying capital gains taxes on your home sale, but you’ll need to have owned the home and lived there for at least two of the five years leading up to the sale.

As long as you meet these criteria, you can exclude up to $250,000 (or $500,000 if you’re married and filing jointly) of “capital gain” on your main home. In other words, if you just bought your primary residence, it may be in your best interest not to sell it for at least two years. If you need help determining how much you’d owe in taxes, reach out to a tax advisor for assistance.

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. While now may seem like the perfect time to sell on paper, there is no deadline.

When in doubt, talk with a top real estate agent who knows your local market inside and out to help you weigh both your personal and financial motivations.

Valerie Kalfrin contributed to this article.

Header Image Source: (Ben White/ Unsplash)