The Market Is Hot! Should You Sell Then Rent?

Here’s a question I’ve been hearing a lot this year… “I have a ton of equity in my home. I’m thinking about selling and putting that money in the bank before the market goes down again. Should I?”

Of course, the answer is, it depends.

You still need to live somewhere, so are you planning to rent? Or buy a cheaper home? It makes sense to rent if you’ll be moving out of the area (because you’d be selling soon anyway). It also makes sense to rent if you can rent significantly cheaper than you can buy, and then you invest/save the difference. Or it makes sense to rent if you plan to share a home with someone else (making your rent much cheaper).

On the other hand, it makes sense to buy if you already want to downsize or have your eye on a less expensive location…and good properties are available.

What may not make sense…

Most financial experts will not recommend selling and renting at a high amount if you’re waiting for the market to cool off. It may be years before the market cools off enough to buy again at a lower price. In that time, you’re not building equity by paying off your home, and interest rates will likely rise, further offsetting any gain you might get through a lower price. (Although, no one knows for sure what will happen.)

Selling now might be the right decision for you or not. My advice is to do a lot of research. First, reach out to me to find out what your house is worth. Pick my brain about where the market is going, then compare rentals and homes to buy. If you decide to sell, we’ll cross that bridge when we get to it.

Is it worth renting right now?

I’m not one to keep anyone waiting, so my answer is No. Why? Rental rates have risen more the 12% since last year. Unlike owning a home, every year, rent will increase, especially in the Central Florida area. If you plan on renting in the same place, you might be able to work a deal with the landlord as most landlords would rather keep a good tenant in place than scare someone away when it comes time to renew.

But in most cases, you will see your rent rise about 5% every year. Depending on how long it takes the market to cool down, renting will more than likely offset any savings that you may have gained from selling high and buying low. If you decide to sell and purchase something for less, that is honestly the best solution here.