Why You Should (and Shouldn’t) Sell Your Home in 2021

Heading into 2021, housing market experts are predicting a year of high demand and rising home prices. After an initial drop in housing market activity last spring coinciding with stay-at-home orders and closed businesses, homebuying and selling rebounded quickly. Buyers are still eager to move, but the lesser supply of homes on the market in many parts of the U.S. is contributing to rising home prices. As a result, it remains a seller’s market that benefits homeowners who are choosing to sell now.

If you’re on the fence about selling, you have a few choices: You can put your house up for sale soon to take advantage of the current demand, you can wait out the pandemic (however long that takes) for a more vivid picture of the future of the economy, or you can opt to stay in your current home for the foreseeable future.

Here are three reasons you should sell your home in 2021, along with three reasons you may benefit from waiting:

Sell in 2021: Interest rates are expected to remain low.

Sell in 2021: You have a starter home.

Sell in 2021: You need to move.

Wait to sell: You just refinanced.

Wait to sell: You’re worried about affording your next purchase.

Wait to sell: You’re worried about finding your next home.

[Read: The Guide to Making a Contingent Offer on a House]

Sell in 2021: Interest Rates Are Expected to Remain Low

Even before the first known coronavirus cases in the U.S., economists and real estate professionals predicted mortgage interest rates would remain, on average, below 4% for the majority of 2020. The impact of the pandemic has lowered interest rates even further and drawn out that prediction into 2021 as well.

The average interest rate as of Dec. 10 was a record low of 2.71% for a 30-year, fixed-rate mortgage, according to Freddie Mac. This isn’t the first time since the start of the pandemic that mortgage rates have set a record — the first time was on March 5, when Freddie Mac reported the average rate was 3.29%, a 50-year low for mortgage interest rates.

While the low rates are promising for an affordable mortgage, there are not enough properties on the market compared to the number of shopping buyers. Expect rising home prices to balance out low rates, at least in part. “Unfortunately, the record low supply combined with strong demand means home prices are rapidly escalating and eroding the benefits of the low mortgage rate environment,” Sam Khater, chief economist for Freddie Mac, said in a press release discussing the drop in mortgage rates.

Interest rates are expected to rise as 2021 wears on — realtor.com predicts mortgage interest rates will reach 3.4% by the end of the year — but they should still remain low compared to historical averages.

Sell in 2021: You Have a Starter Home

Especially if you live in a place where home prices are climbing fast and bidding wars are common, homes at entry-level prices — often purchased by first-time homebuyers — are likely to see plenty of buyer activity through the rest of the year.

The price range that’s considered entry level depends on where you live — typically it’s considered the lower third of home sale prices for an area.

Danielle Hale, chief economist for realtor.com, explains that the lack of available homes on the market creates opportunities for sellers to benefit from eager buyers, possible multiple purchase offers and rising prices.

“Anyone who’s looking to sell, even if they get slightly below asking, is going to get a healthy sale price,” Hale says.

[Read: How to Tactfully Back Out of a Real Estate Deal.]

Sell in 2020: You Need to Move

If you need to move for any reason, it’s still possible to sell your home and find a new one. The need to move isn’t always positive, though. If you lost your job, you may be worried about your ability to continue to pay your mortgage. If that’s the case, selling may be a valid option.

If you’re in a market seeing fast home sales, the lack of inventory can help your home sell. By realtor.com’s predictions, a well-priced home, or one that establishes an asking price on par with its market value, will sell quickly while inventory remains low. “Demand has stepped back slightly from the really high levels that we saw this fall, but it’s still going to be fairly robust (in 2021),” Hale says.

Wait to Sell: You Just Refinanced

If you’re one of the many homeowners who have refinanced recently, there’s no reason to consider selling your home in the immediate future. Hopefully, your refinanced mortgage has helped ease financial woes by lowering your monthly payments.

If you haven’t considered it, r efinancing can be a valid alternative to selling your home. Especially if you’re not seeing the right home for you on the market, it’s OK to be picky. “(Homeowners are) looking at it and saying, ‘Maybe now is not the best time to go through the process of moving, but maybe I can refinance,'” says Mark Fleming, chief economist for title insurance company First American Financial Corporation.

Wait to Sell: You’re Worried About Affording Your Next Purchase

Even if you’re not unemployed, you may be furloughed from your job, have taken a pay cut or have been warned about layoffs on the horizon. All of these scenarios cast uncertainty on the future of your income, and in most cases you’ll be better off delaying the sale of your house and the purchase of another until you know what the future holds.

It’s also a good idea to be in contact with your lender if you’re experiencing any reduction or loss of income to discuss options for deferring mortgage payments for a short period of time or modifying your loan to ensure you can remain in your home for the long term.

[Read: Everything You Need to Know About a Pending Home Sale]

Wait to Sell: You’re Worried About Finding Your Next Home

The caveat of a strong seller’s market is that as a home seller, you may struggle to find a new home to buy. “I can’t just buy any home for sale. I have to find one that I like better than the one I’m in,” Fleming says of the dilemma many home sellers face now. “The matching problem of finding that one gets harder and more risky, so I choose not to sell for fear of not being able to find something to buy.”

You could expand your search to include new construction homes, which Fleming says are a key component that will help ease high demand in the coming year. But “that cannot be fixed fast enough, and not in a year,” Fleming adds.

Waiting for a more balanced market is a good idea for some homeowners, and it’s unlikely to hinder your ability to get a good price for the house you sell. In a market where supply and demand are more balanced, you’re less likely to see multiple offers and sale prices well above the asking price, but you’ll still see positive home value growth.

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Why You Should (and Shouldn’t) Sell Your Home in 2021 originally appeared on usnews.com

Update 12/15/20: This story was published at an earlier date and has been updated with new information.

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