Home Sales Surged in February Despite Rising Prices. Ask Yourself This Question Before You Decide to Sell

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It seems to be a seller’s market. But should you list your home? Read on to find out. [[{“value”:”

Today’s housing market conditions are far from friendly to home buyers. In February, the median existing home sold for $384,500, according to the National Association of Realtors. That’s a 5.7% uptick from a year prior.

In spite of rising home prices and expensive mortgages, home buyers are still biting. Existing home sales surged 9.5% in February on a monthly basis. And in light of that, you may be thinking of putting your home on the market.

See, any time there’s a lack of housing inventory, sellers have the potential to command higher prices for their properties. And as of February, there was only a 2.9-month supply of homes on the market — well below the six-month supply that’s commonly needed to meet buyer demand in full.

But before you put your home on the market, there’s an important question you’ll need to ask yourself. And it’s one you should think about carefully before giving your answer.

Can I afford to buy a new home in today’s market?

It may be a good time to sell a home since property prices are up. But before you rush to take advantage of relatively strong buyer demand, ask yourself whether you can afford to buy a new home given today’s market conditions.

A big reason so many buyers are struggling to purchase homes is that mortgage rates are high. If you’re downsizing and can buy your next home in cash, this may not be as much of a problem for you. But if you know you’ll need to finance the purchase of your next home, then you’ll have to think about what you can afford based on today’s borrowing rates.

Another factor to consider is elevated home prices. You may be looking to upsize, and you may be in a position to command a higher price for your home than you would’ve a few years ago. But just as you might come away with a larger number, another seller might also ask for a higher price for their home. So what you gain in one regard, you lose in another.

All told, any home you buy after selling your current one should be one you can pay for with 30% or less of your take-home income. And that 30% should include recurring expenses like property taxes and homeowners insurance.

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Crunch those numbers carefully so you don’t get in over your head. If you buy a replacement home you can’t afford, you risk losing it — or landing in debt due to an inability to cover your non-housing bills.

Inventory could be an issue for you, too

Another snag you might hit in the course of selling your home is not being able to find a suitable replacement home. The whole reason you may be able to get more for your home today is that inventory is down, so buyers are willing to pay more for the limited properties that are available. But you might also struggle to find a new home that meets your needs within your price range.

All told, it’s a good time to be selling a home, but it’s not a good time to be buying one. And often, it’s hard to do one without the other. So think carefully about whether listing your home right now is really a good idea.

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