New home value has skyrocketed. Should we sell now?
October 23, 2021 8:30 PM   Subscribe

We bought our house in March, 2021 and moved here from 1000 miles away. The value has gone up 35%. We know we don't want to stay here long term. Do we take the money and run? What is our sanity worth?

For starters, I loathe moving. We bought this house brand new and it was completed in the spring. It is a gorgeous home on an acre. When we bought it we thought we would stay in this state (Texas) long term. Then Texas went right off the deep end and we are now questioning the future here. My job is here and we have to stay for now.

I have posted about our yard issues before and we are looking at a $10k or so investment in the backyard in the spring. We want to get a shed. We still haven't put up any wall decor or anything because the yard was such a time suck earlier this year.

Why do we want to move? We are in the country. So far out we can't get broadband. We knew this when we closed (although not when we put a deposit down - this is definitely on me), but I didn't imagine it could be so bad in a subdivision of brand new homes in 2021 that is 6 miles from a reasonably sized town. We also can't *recycle*. We are so far from everything that we don't bother leaving the house during the week and going to Home Depot or Costco is an *event.* I will also have an absurd drive to work when the time comes, although thankfully only 3x a week.

There's of course other issues - we'd have to buy (or rent!) at the peak which would eat some of these profits, but we wouldn't buy a house that costs what this one would sell for - the price we paid at closing was already more than we thought we would ever pay for a house. We would look in an area where the market is already starting to slide a little. As far as tax concerns, my new office location is far enough away that we are within the safe harbor to avoid capital gains tax on the sale of the house.

Question: How does one balance mental health or well-being with the feeling that she is sitting on a literal pile of cash if she sells now? This is the third house I have bought and I have *never* not been upside down. Moving again after 8-9 months would no doubt be disruptive to us and our cats.

I have anxiety about money after being in an incredible amount of debt for a long time, and leaving any money on the table causes me to lose sleep. We are in a fine position financially so selling is not a *need*. I know this is a question that really doesn't have an answer. But we've been talking about this and we are just not sure what to do. Thanks as always for any thoughts!
posted by getawaysticks to Work & Money (18 answers total) 1 user marked this as a favorite
 
Is your mental health in favor of moving or staying?
If mental health favors staying, I would probably assume that, especially if you stay in the same area, If you stay in the same market, the houses will all move generally in the same direction. So if you sell in a hot market, you will also be buying in a hot market. Where I live, higher end homes tend to go up faster and down slower, at least on a percentage basis, so odds are that waiting won't do any harm - maybe not be true in your market.

On the other hand, if mental health favors moving, then general, spring/early summer is a better time to sell a home than right now, heading into the holidays. I was start by taking a serious look at where you would to move to. See if you find your "dream home" and get an idea of how much it would cost, how practical the dream is. Then you make a more specific choice - do you want the hassle of selling this home in order to buy the next?
posted by metahawk at 8:41 PM on October 23, 2021 [3 favorites]


Are you sure about capital gains? When you say "safe harbor", do you mean a 1031 exchange (which is for investment properties only)? If you stayed for 2 years you would have the section 121 exclusion but if you just moved in March you don't qualify. I don't know of any other ways to avoid paying capital gains taxes on real estate.

As far as your actual question...the best thing you can do for your sanity is NOT mark to market for assets you don't plan to sell. Do you know how much your TV could sell for? Or your laptop? Or your kitchen table? Probably not, right? Similarly, I try my hardest not to know what my house is worth but just to treat it with care and respect as a place where I live. I hope to live here for decades so it really doesn't matter to me if I'm up or down this year.

That said, it doesn't sound like you plan to stay where you are for decades at all! So I've got to ask: are you really sure that mental health and well-being is on the side of staying? (on preview: what Metahawk said)
posted by goingonit at 8:53 PM on October 23, 2021 [7 favorites]


Oh I see, you moved to a new job location that is more than 50 miles farther away from your house than the old one?
posted by goingonit at 9:06 PM on October 23, 2021 [1 favorite]


then general, spring/early summer is a better time to sell a home than right now, heading into the holidays

I was looking at the quarterly report from a big local realtor today and it said two things: it's a crazy sellers' market out there right now but it probably won't last past the new year.

To the OP: if you have true buyers' remorse and know based on your own local realtors' assessment that you can walk away with cash in hand after all of the costs and you want to be somewhere very much else then go for it, but you need to have an actual plan, whether it's "rent for X months and GTFO" or something else. But this isn't like trading stocks or cashing in chips at a casino. It's where you live.
posted by holgate at 11:26 PM on October 23, 2021 [3 favorites]


It sounds like you hate this house and have an out. I would take it.
posted by Bottlecap at 11:39 PM on October 23, 2021 [17 favorites]


Can you throw some of the profits towards things that make moving easier for you (like a more deluxe moving service that does more of the work)?
posted by needs more cowbell at 1:33 AM on October 24, 2021 [1 favorite]


Be sure to do on site house shopping in your target location to ensure that you are able to actually afford the next preferred housing option.
posted by mightshould at 3:18 AM on October 24, 2021 [7 favorites]


Do you have an offer for 35% above what you paid or there's an estimate that your home value is 35% above what you paid?

1) Are you going to use a real estate agent to sell again? Peel something like 3-6% off the top for their fees.

2) The sticker price vs. what you'll reap after closing are two different things. I have never sold a house in TX but in my experience knock off some $$$ on the sale price as you finalize the deal when the buyer wants this or that remediated or knocked off the sale price before closing.

3) Aside from the disruption, hiring movers and putting down deposits on rentals are going to tap into your profits as well.

4) I am not you but I consider the disruption of moving and having to pack/unpack to be a real cost in terms of time and comfort.

Long story short - if you have estimates that your house has increased 35% I wouldn't assume you'd pocket anything near that. Of course, depending on the cost of the house, even 20% profit could be fairly significant. Pocketing that and liberating yourself from the house debt might be worth it.

Look deep inside and ask if you are posting this to find reasons to do this or not to do this. If you hate the place and see this as an opportunity to undo a mistake and not be penalized -- that is, it sounds like you won't lose money on the deal -- then take the money and run. If you're hoping that people will explain why this is a bad idea, then stay put.
posted by jzb at 6:12 AM on October 24, 2021 [6 favorites]


It sounds like you have too many items in your consideration pile to choose a next step. Best to unpack this somewhat before going further.

Your time and energy getting to your current house is a sunk cost so unrecoverable. You have a nice home now with considerations you didn't take into account that kind of suck.

Your current situation potentially has some potential remediation to make it more livable. Maybe Starlink broadband is available. Maybe you could have more items shipped to you rather than driving to get them. Maybe you could get a truck and drive your recyclables to a depot.

You have a 'get out of jail free' card, which is selling our house now, doing a flip. What cash profit margin would make it worthwhile to do this? After taxes and all the time and energy to do this?

If you made a set of judgements leading to this purchase, you have now learned some unfortunate lessons about what you actually wanted or needed in a living situation Have you codified them so you know what you would want to buy instead?

You have various actions you could take. You could sit tight. You could sell and rent while figuring out what to do next. You could rent your house out and then rent. You could sell and buy...
That's a lot to consider.

If the living situation you have is truly unrecoverable, meaning you really don't want to be there, I'd ask whether the profit you might make from a sale (taking the worst case sale price as the lowest you would accept) after taxes would pay for everything you need to do to get into a new place to live that meets your criteria. If so, then do it.
posted by diode at 6:26 AM on October 24, 2021 [2 favorites]


Sell--if you liked the house, this wouldn't even be an option on your mind after less than a year. It sounds like you don't like the location and better to do it now and reap the profit than hate the house for years.
posted by kingdead at 7:53 AM on October 24, 2021 [2 favorites]


My advice is going to be "out there" but here me out: get a new job first, then move.

This may not be as onerous as you think. It's a GREAT time to be looking for a new job. You should not have a problem getting something pretty damn good in 6-8 weeks, possibly something that even pays more.

When you have a new job in a different state, then I suspect you will have demolished major barrier to moving as soon as you please, and the decision to move will start seeming like not just something you're doing for your peace of mind but something you obviously *need* to do in order to do your job. In other words, you will have shifted from "I must move for reasons that seem personally indulgent" to "I must move for Real Professional reasons". Even though your reasons right now *aren't* indulgent, it won't hurt to put yourself in a position where moving out of state is concretely and "objectively" the best choice for you.
posted by MiraK at 8:38 AM on October 24, 2021 [7 favorites]


That 35% is going to dwindle quick after selling and moving costs. But if you truly hate it, move. Honestly, I think you should see if its possible to rent it out for a year or two so it can appreciate some more while you find a better house that you actually like. Yes, you'll have to rent during the interim, but that ideally would be offset by the rental income from your current house. Then when you sell you'll have that much more appreciation to go towards a better place.
posted by ananci at 10:02 AM on October 24, 2021 [1 favorite]


Response by poster: I wanted to clear a couple things up - we ADORE the house. If I could pick this house up and move it closer to town 20 miles I would do so right now. But the location is killing me for all these reasons above. The yard work is expensive but that's what we get for me insisting on an acre in a new sub :-/

@jzb - yes, the comps in our same sub (and the sub next door) show it will be about 35% up. We would pocket about 20% of our initial investment after all the costs and fees and commissions from every estimator I've run.

@MiraK - I work at my dream company and I can't imagine leaving. But otherwise I understand what you're saying :) Although, I can move to a different location with my company.....

@diode - It sucks because we cannot find anywhere that will take our recyclables, period. I've called all over. Starlink - I've been on the waiting list for 8 months and my next door neighbor for a year. I guess this is all the right questions though - what is the dollar amount that would convince us to move? And as @needs more cowbell said - we could use some of the profits to just have someone do the work for us on the move. Hmm

@holgate - thank you for the info about the market! We keep wondering if we should wait until March when families/etc would be more likely to look for a house...

@metahawk - all good questions - I will ask my husband. It seems like we keep feeling like we've made a decision (usually, to stay) and then a couple days later someone asks again. We both come from money issues but we are also in our mid-40s and are more financially stable so walking away with a huge payday isn't as important as it once was. But it's still in the back of my mind...

@goingonit - yes, the office location post-COVID will be more than 50 miles from my house. A CPA said this was enough because my 'official' work location now is 'home office' and my original office location when I started the job in December was 1000 miles away. I will double check this before we make any final decisions.

Thank you so much everyone (even if I didn't mention you here) for your feedback! We are really considering all of this and driving ourselves a little crazy about it. All opinions are so helpful.
posted by getawaysticks at 8:24 PM on October 24, 2021


You have to live somewhere. What are other houses *that you would actually want* selling for *right now*? Not 3 months ago, but today?

If that number is about the same as what your house sells for, then you don't have a profit. If there's nothing on the market that you like, then you don't have a good option after moving out.

My opinion is that you should not sell your house until you have another one lined up, because what looks like piles of money can evaporate REALLY fast when house prices are going up and up and up and you don't have a house.
posted by inexorably_forward at 12:16 AM on October 25, 2021 [2 favorites]


If you are in a new subdivision, unless very few to no houses are being constructed, there is no way that your property is the same price as new construction. People who want new houses want *new* houses, not ones that are 1 year old. I doubt your home is up 35%.

Also, internet provider companies like Frontier and AT&T seriously love new subdvisions where they can get lock-in on their original fiber installation costs, so if your subdivision doesn't have a provider, you are not going to be getting one for a very long time. Some cable company may come in later and give you some ok internet. I hope Starlink works out for you.
posted by The_Vegetables at 7:31 AM on October 25, 2021 [1 favorite]


My thought is basically the same as inexorably_forward's. Are you really confident that you can find another place you want to live—right now, without planning on some future decrease in housing prices?

I know some friends who abruptly sold their house after learning that it had appreciated in value around 30% from when they bought it a few years ago (and they weren't too crazy about the house). But now, they are somewhat stuck: it's not like their house was the only one to appreciate by that much; basically all the houses and SFH rentals in their area did as well. So now they are out a house, paying rent, and housing prices are still creeping up month after month. In the end, I suspect they will end up losing a substantial amount of money to get back into a house like the one they left, if indeed they do; more likely they will end up being forced to downsize.

Trying to "time the market" is almost always a bad idea w/r/t any investment, but it seems to be doubly true when dealing with housing, which is primarily a plywood box in which you live, and only secondarily (and IMO distantly) an investment vehicle. I would use extreme caution and be very sure that your current house is worth what you think it's worth, and also that you will be able to get a new/different home that you prefer to live in, for what you think it will cost.

And I would absolutely not bank on the assumption that housing prices are at a peak, irrationally inflated, or will come down in the future. Housing prices may in fact be irrationally inflated, but there is an old saying that the market can stay irrational longer than you can stay solvent.
posted by Kadin2048 at 9:30 AM on October 25, 2021 [2 favorites]


Man, I recently sold a house that according to all the comps would go quickly and for 35% more than we bought it for a few years ago. I was really confident that we had it in the bag. We put it on the market in July.... and waited, and waited, and finally sold it last Friday.... for exactly the same price as we bought it for (so a loss when realtor fees, repairs, moving costs, etc. were added in). Sell it and move if you want, but nothing is a sure bet when it comes to real estate.
posted by rabbitrabbit at 11:14 AM on October 27, 2021 [1 favorite]


Response by poster: One more reply for any readers later - we are one of the last 8 or so houses in the sub, they are finishing the last two right now. This builder is very high in demand, builds in just a tiny area, and doesn't have any other communities coming up in this entire 'city' for the time being. We feel like we're in a unique position, but of course your feedback here has been so helpful.

A neighbor just took their home off the market. I feel like it was priced a little high (as did the realtors I spoke to), but really, who wants to move around Thanksgiving or Christmas? As far as a resolution, we have tabled the discussion until January 15 - just for our own sanity, and to see if Starlink is going to come through or not. Maybe I'll know more about my commute, maybe we will be more sure we want to sell. This way at least we get to have a holiday season at our gorgeous new home :)

Thank you all!
posted by getawaysticks at 9:21 AM on October 31, 2021


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