What Jo Knows: When is the right time to sell my home?
When’s the Right Time to Upsize Your Home? Understanding the Market Gap
Selling a property is a big decision, and although reasons vary, they often stem from similar desires: improving lifestyle, finding more (or less) space, or making a lifestyle shift like a sea change or tree change. However, one important aspect that sellers often overlook is how market conditions impact the cost of moving up into a higher price bracket.
In any market, your focus should be on the gap between the value of your current property and the cost of your next one. Here’s a breakdown of why that gap matters and how market timing can impact your next move.
Understanding the Market Dynamics
It’s a given that market conditions fluctuate—whether it's a hot, buoyant market where prices rise quickly or a softer market with falling prices. These shifts don’t only impact home values; they also affect the gap between your current home’s value and the price of the property you want to buy. Understanding this can help you make an informed decision about when to move.
Imagine this: You currently own a $600,000 property and are looking to upgrade to an $800,000 property. In a hot market where property values increase by 10%, your home might now be worth $660,000. However, the property you want to buy will also have increased—by $80,000 in this case, making it worth $880,000. You’re now facing a $220,000 gap between selling and buying, requiring an additional $20,000 beyond your original budget.
The Advantage of Waiting in a Soft Market
Conversely, if you wait for the market to cool down, where properties might drop by around 10%, your home’s value could decrease to $540,000. But the $800,000 property would also drop to $720,000, narrowing the gap and actually putting you $20,000 ahead. This advantage can be significant, making it worth considering timing your purchase carefully.
Keep the Big Picture in Mind
Remember, once you own a property, buying and selling becomes less about what your property alone is worth and more about the trade between your current home and your next one. While a high sale price might be appealing, it doesn’t tell the whole story. The real consideration is how that sale price aligns with the cost of your next home.
In a nutshell, the focus should be on the gap between the properties, not on achieving the highest possible sale price. The timing of your move and the market conditions can make a big difference to the extra funds you’ll need—or save. So, before you decide to buy and sell, take a closer look at the numbers. Understanding these dynamics can give you a significant edge in your next property journey.
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