🔑 Key takeaways:
This article draws on in-depth research and interviews with more than a dozen real estate professionals with experience in buying, selling, and investing. Subject matter experts who contributed to this piece include:
- Kyle Alfriend, a realtor and investor with the Alfriend Group
- Jacob Blackett, a real estate investor and founder of SyndicationPro
- Sean Gilliam, an associate broker with LoKation Real Estate
- Tim Gordon, a real estate investor based in San Diego
- Andrew Iremonger, a realtor with eXp Realty and CEO of the Emerald Group
- Danielle Rownin, a real estate broker with Keller Williams
- Mark Washburn, a realtor with Naples Condo Boutique
We also drew on data from the following sources:
With national home sale prices at an all time high and average days on market at a six-year low, now could be a great time to sell your house — if you have a plan for what to do next.
While sellers have seen their home values rise 20.9% over the past year, the housing market remains incredibly challenging for buyers — many of whom have been forced to the sidelines because of rising interest rates and cutthroat competition over a short supply of active listings.
Even if you manage to sell your house for your desired asking price, you'll then be competing with other buyers for a new house. And taking on a mortgage to pay for it could take a big bite out of your earnings.
Selling now could also mean losing out on additional equity (your home's value, minus what you owe), since home prices are projected to keep climbing — albeit at a lower rate than we've seen so far in 2022.
Despite forecasted home price growth, some realtors caution that there's a downside to waiting to sell. Real estate is local, and some markets are already seeing prices starting to fall.
"The market has quickly shifted in the past 4–6 weeks whereby we have twice the inventory, yet sellers are experiencing far fewer showings and offers," says Danielle Rownin, a Connecticut-based real estate agent with 20 years of experience in the field.
"On a scale of 1–10, where 1 is a hot sellers’ market and 10 a hot buyers’ market," Rownin continues, "we have shifted from a 1 to a 3." She cautions that 2022 could be the last time to cash in on your equity before we enter a full-blown recession.
If you're concerned about where the market is headed, talk to a local real estate agent, who can help you determine if now is the right time to sell.
Reasons to sell your house now
You want to maximize your equity. If your home has risen significantly in value, you may want to cash in while it's still a seller's market.
You're looking to downsize. Pulling your equity out now could put you in a good place to buy your next home in cash.
You're selling for personal reasons. If you've had a change in circumstances, you might not have a choice but to move.
» JUMP: Reasons to sell later
You want to maximize your equity
At the start of June 2022, the median U.S. home price soared to an all-time high of $401,372 — with 56% of homes selling above asking. And the typical home spent just 31 days on the market, reaching a 6-year low.
🗣 "All in all, it's a great time to be a seller," says Andrew Iremonger, who sells real estate along Florida's Emerald Coast. He advises that selling now could mean:
- Fewer repairs needed to attract buyers
- A better chance of a bidding war driving up your sale price
- More favorable contract terms (e.g., fewer contingencies, faster closing, extra time to move)
National home prices are expected to keep climbing, but the outlook isn't universally rosy.
While housing inventory has picked up, mortgage applications and requests for home tours have slowed — a reflection of rising interest rates pricing buyers out of the market.
A shift in buyer activity has created a surge in price drops. More sellers lowered their asking prices at the end of May 2022 than at any time since 2019.
🗣 "If you believe the market is still operating like it was in 2021 and early 2022, it may be time to adjust your expectations," says San Diego-based real estate investor Tim Gordon. "At this stage of the market," he warns, "there may not be a buyer for every seller."
Overpriced, outdated, or poorly maintained homes may need to be listed for lower to sell.
You're looking to downsize your lifestyle
Perhaps the best scenario for selling now is if you're downsizing or moving to a more affordable area — particularly if you have a significant amount of equity in your home.
🗣 "While many buyers may be on the sidelines due to higher mortgage interest rates and inflation," says Sean Gilliam of LoKation Real Estate, "there are also plenty of buyers that have cash or are strong borrowers that are actively looking for homes. Demand is such that homes are still selling above list price on average."
If you have enough equity to pay for your next home in cash, you're in a good position to not only win a bidding war but also avoid taking out a hefty mortgage while interest rates are on the rise.
Another benefit of downsizing? If home prices DO drop, the impact on your equity will be much lower with a less expensive property.
You're selling for personal reasons
Sometimes circumstances like a new job, family illness, or financial hardship don't leave you with much of a choice other than to move.
In certain cases, you might have to sell your current house to qualify for a mortgage and afford the down payment on a new one.
The good news is, selling now — when home values are at an all-time high — will likely net you a great price for your property.
Reasons to sell your house later
You don't want to miss out on appreciation. Home values are still climbing, so you might be walking away from additional equity.
You're not prepared for selling costs. If you've owned for <2 years, capital gains and selling costs could eat into your profits.
Trying to time the market: If you're simply trying to time the market — with no real need to sell — it's probably not worth the risk.
You don't want to miss out on appreciation
"Home values tend to be resilient during recessions," advises realtor Sean Gilliam, "so sellers can expect their homes to continue to increase in value."
Citing data from Pulsenomics' Home Price Expectation Survey, Gilliam explains that home values are expected to rise by 9.3% in 2022 and then again by 4.19% the following year. "With these figures," he says, "it may be wise to wait to sell your home if you don’t have to."
Corelogic also forecasts modest home price growth over the next year, but suggests that the rise won't be even across the board. It warns that certain markets face a 50–75% risk of home prices declining in the next 12 months.
"The market state in 2022 will be determined by a number of factors, including interest rates, the economy, and consumer confidence," says Jacob Blackett, who's invested more than $40 million in income-producing real estate.
"If interest rates remain low and the economy continues to strengthen, it will be a favorable market for sellers," Blackett continues. "Prices will continue to rise, and there will be more buyers than there are houses on the market."
However, the opposite could also happen: "If interest rates rise and the economy weakens," he says, "prices could stagnate or even fall, and there will be more houses on the market than there are buyers — making things difficult for sellers."
To get a sense of where you stand as a home seller, talk to a real estate agent with a strong understanding of the local market. They can advise you on whether to sell now or wait until you've built up more equity.
If you're looking for a good real estate agent near you, Clever is a good place to start. Clever's free service connects sellers with top local agents from well-known brokerages like Century 21 and RE/MAX. Our clients get pre-negotiated listing fees of just 1%, which is a fraction of the standard 3% most realtors charge.
Interview as many agents as you'd like until you find the right fit, or walk away at any time with no obligation.
Selling costs could eat your profit
Most homeowners need to be in their house for a couple of years before the profits from selling it can offset the costs.
When you first purchase a home, most of the mortgage payments go toward interest, so it can take some time to start building equity.
Add to that the actual money it costs to sell a home. Selling costs can be approximately 10–15% of the sale price, and include things like:
- Real estate agent commissions (6%)
- Repairs (varies, paid for out of pocket)
- Seller closing costs (1–3%)
- Closing costs on your next home (3-5%)
Imagine you paid $400,000 for a house. With selling costs taking 10% off the top, you'd need to either sell for $440,000 or have already paid off $40,000 of the mortgage — just to break even.
When you sell a home, you're responsible for paying capital gains tax on any profit. The IRS taxes capital gains at the same rate as your income tax.
However, if you've lived in a house for longer than two years, you qualify for a capital gains tax exemption of $250,000 (or $500,000 if you co-own the house and file taxes jointly).
Waiting for the two-year mark could net you thousands of extra dollars from your home sale.
You're not sure where you'll live next
If you bought or refinanced while interest rates were low, and you don't have the equity or assets to purchase a new home in cash, selling your current home may mean exchanging your mortgage for a pricier one.
Mortgage rates have jumped two percentage points since January 2022, making the monthly mortgage on a typically priced home 42% more expensive than it was just a year earlier.
Let's say you bought your home a year ago for the current median asking price of $413,950. Buying that same home today would cost you an extra $718 per month just in interest.
Monthly mortgage on a $413,950 home: June 2021 vs. June 2022
Source: Federal Reserve Bank of St. Louis
You're trying to time the market
🗣 "Trying to time the market is a risky game to play," warns realtor Andrew Iremonger, who believes a drop in home prices is still a long way off. If you don't need to sell, the mental and monetary costs of trying to time the market may not be worth the gamble.
While it makes sense to want to cash in while the market is hot, you'll also need to consider where you'll live after you sell. Today's home shoppers face:
- Lots of competition over a low supply of houses
- The highest mortgage rates in years
- Paying more for less house, with slower appreciation
- Renting until the housing market cools off (with no return or equity)
The key figure to watch is average days on market, suggests Kyle Alfriend, a seasoned real estate agent and investor based in Ohio.
🗣 "In a 'normal' market, when there is an equal number of buyers and sellers, a home will take an average of 30–45 days to sell," he says. "Currently, our average days on market is three."
With far more buyers than sellers, home prices in his area have climbed 20% over the past year. Alfriend doesn't see that happening again this summer, though he does predict a persistent seller's market.
"Prices will not stabilize until the days on market return to the 30–45 days range," says Alfriend "and we have a long way to go before that happens."
Tips for selling your home in 2022
If you'd like to sell your home in 2022, realtor Andrew Iremonger suggests starting by figuring out where you'll move next — right down to picking out the neighborhood and home.
🗣 "Have your house prepped and ready to go, then go home shopping," he advises. "As soon as you secure the next property, throw yours on the market slightly below market value to ensure a quick sale."
Need to sell your property first? Iremonger advises budgeting a portion of the proceeds for a short-term rental, such as an Airbnb. You can also look into home trade-in services (like Knock and Orchard), which can help you buy before you sell and move on your own timeline.
"Everyone's situation is different," says Iremonger, "so a longer discussion with your real estate professional would be helpful to make sure you are making the right move."
🗣 "If you have an investment or second home you are considering selling, you need to make sure that your money is going to be better reinvested somewhere else," advises Iremonger.
Maybe you want to use the money to improve your current lifestyle or roll the money into an investment with better ROI potential.
Just make sure you have a plan that makes sense, says Iremonger — there's no real benefit to pulling money out of a house just to have it sit in a bank.
With both homes and mortgages costing significantly more in 2022 than they did a year ago, buyers are getting choosier about where they'll lay down their money.
🗣 "In many especially competitive markets, buyers have been waiving inspections to position their offers as more attractive," explains Mark Washburn, a realtor in Naples, FL.
But with one in five sellers dropping their asking price in May, the days of listing your home as-is and still attracting multiple offers above asking may be coming to an end.
🗣 "Sellers need to understand that the real estate market is softening," advises real estate agent Sean Gilliam, meaning buyers are holding off on making offers on properties that don’t have all of the boxes checked.
"Buyers are still willing to pay high prices," Gilliam continues, "but only if the house is move-in ready, in a great location, and is one of the best homes on the market."
Homes will need to be fixed up and prepped for showings. Otherwise, he suggests, you may need to get comfortable having your home sit on the market.
Given the shifting market, Gilliam suggests, home sellers need to get the price right — especially if the home isn't in the best condition or neighborhood.
"If sellers get too eager and overprice their listing," he says, "they may have to do a price reduction or accept a weaker offer."
If you're curious how much a seller might pay for your home, you can ask a real estate agent for a comparative market analysis (CMA). This will give you an idea of your home's fair market value — and most realtors will provide one for free in an effort to earn your business.
FAQs about selling a house in 2022
There's no universal answer. But the longer you've owned a house, the more money you might be able to walk away with once you sell it since you'll have had time to build equity.
If you've owned your home for less than two years, you'll have to pay capital gains tax on any profits, which could offset a high sale price.
There's a strong demand for houses right now because inventory is low — so now might be a good time to sell your house if you want to get maximum value.
However, it really depends on your goals and next steps. If you're going to buy another house, the profits you make from selling in a peak market might be canceled out by the high cost of buying in the same hot market.
In the past 12 months, the average home was listed on the open market for just 15 days (as of May 2022).
However, the average closing time of a sale is 30–45 days, so factor that into your timeline if you're looking to sell your house fast.