Throughout the pandemic, the real estate market was on fire. Mortgage rates and home prices hit all-time lows, and people suddenly had the freedom to live wherever they chose, no longer bound to locations near their work or school. That “impossible” dream home you thought would never be available, let alone in your price range? Well, 2020 delivered it to the market with a major price decrease and owners eager to sell. Many, many people pulled the trigger and made relatively quick decisions to buy a new home and relocate. Based on U.S. postal service change of address requests, nearly 16 million people moved during the first 6 months of 2020 alone.
Now, we’ve turned a corner. The COVID vaccine is available to all adults who want it, New York City has announced aggressive reopening plans, and offices and schools are back in session…in person. Many people are rubbing their eyes for the first time now that the blur of the wild past year is behind us and realizing… Oops, I no longer want/like/need/can live in this house. Maybe you don’t like it as much as you thought. Maybe your new town is not your speed. Maybe your kids miss their friends. Maybe you need to be back in the office 5 days a week, and it’s 2 hours—or even a plane ride—away. What now?!
First off: Don’t panic.
The market is still strong, and the good news is that you might still be able to sell your home. 25 percent of my clients who left New York City last year felt like they made a mistake or simply wanted to be back in the city. They were all able to re-sell or rent out their homes. Here’s what you should do ASAP:
1. Call your agent.
Remember, you weren’t the only person who looked at your home, and those other people who were too slow or were out-bid might not have found a Plan B yet. Good agents keep track of those interested buyers and can reach out to them now with the good news that the house is available. In the best-case scenario, you can get a solid offer, flip your house quickly, hire movers, and rid yourself of the entire issue.
2. Do the math before you sell.
Now, some bad news. Even in a seller’s market, selling a home within 2 years will incur some extra costs. For one, there isn’t enough time for the home to appreciate, so the price you get for the home will likely be the same as what you paid, if not less. But the real issue is taxes—short-term capital gains taxes can be as high as 37 percent, so between those and your closing costs, you’re unlikely to break even. Do the math before you sell to make sure you’re comfortable with the loss—I explain these costs in more detail here. Remember: You can always rent out your home until you hit the 2-year mark, and sell it then, when the costs will be more favorable.
3. Do the math before you buy.
Does it make sense to sell a house you bought in a seller’s market just to buy a house in a seller’s market? Renting might make more sense. This way, you can try a new area before you pull the trigger and head straight back to the one you just left last year. After all, you moved away from there for a reason, right? Before you move back to the Upper West Side, consider renting for one year in Turtle Bay. Before you move back to Boca, consider renting for one year in Palm Beach. Two hasty moves don’t necessarily make a right.
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So, to recap: If you have some regrets about your new home, keep calm and call your agent! He or she will walk you through all the positives, negatives, and options.