I plan to retire soon. Should we sell our house while prices are high and rent for two years?


The Big Move’ is a MarketWatch column that looks at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage. Do you have a question about buying or selling a home? Do you want to know where your next step should be? Email Jacob Passy at TheBigMove@marketwatch.com.

Real estate prices are at an all-time high here in Kitsap County, Washington. I am thinking of retiring and moving out of state in about two years. Would it be worth trying to sell our house now that prices are high and rent it for the next two years? Or should we stay home and hope the market remains high? Sincerely, Stay or Go Dear Stay: It is more than understandable that you want to ensure that you can get the best possible asking price for your home. After all, home ownership is one of the biggest drivers of wealth accumulation for most Americans, and that money certainly comes in handy in retirement. We are in a seller’s market right now, at least in most markets. As you know, home prices are on the rise, so you’re sure to get a strong price for your home right now. And I applaud your instincts: greed can be the downfall of a person. But reading between the lines of your letter, I think you really want to ask a completely different question: Are we in the middle of a housing bubble? And if so, would you get more bang for your buck on a home if you sell it now and rent it for two years? No one can really see the future, and I’m sure if you had surveyed economists in the early 2000s, most would not have anticipated the housing market crash and the resulting recession. “Scheduling a home sale to maximize profits is a bit like trying to time the stock market – you only know that prices have peaked after they start to fall,” says Rick Sharga, executive vice president of real estate data firm RealtyTrac. “We have now reached a stage where prices are increasing at a rate that was only truly matched in the run-up to the Great Recession,” said Jeff Tucker, Senior Economist at Zillow Z, -4.48% ZG, -3.31% . That is especially true in your forest area. In Kitsap County, home prices were up 15.9% compared to last year, Tucker said, a really impressive price appreciation. In fact, that number is even higher than in nearby Seattle, where home prices have risen 12.8% year-over-year. The Past Provides Useful Context Prices are rising today for a very different reason than in the early years. The current rise in house prices is driven by supply and demand. In the wake of the Great Recession, homebuilding activity practically came to a halt, only last year returning to the pace it was before. Home construction didn’t keep up with home formation, which means there are many renters desperately looking to buy houses right now and can’t find much for sale. Additionally, the pandemic has moved the timeline forward for younger adults, with millennials now entering the home buying market in droves. And they are not looking to buy in urban areas in recession. With the pandemic that has led to the large-scale adoption of the remote work lifestyle, people are looking to get more for their money by moving to more distant places, as they will not necessarily have to commute to an office every day in the future . . Places like Kitsap County will especially benefit from these trends. That’s a very different situation than in the run-up to the Great Recession. The last housing bubble was caused by speculative credit practices. In short, the lenders made it too easy to get a loan, creating problems and building more homes. Many home buyers were saddled with debt they couldn’t pay and disaster struck. Lending standards have improved significantly since then, and have even become stricter throughout the coronavirus crisis. Renting is not always cheaper than homeownership It does not say how far you’ve researched the cost of renting in your area, but it simply says that there is a reason people want to own their own home. If your mortgage is paid off, the rental costs alone could be much higher. At the same time, Seattle is one of the cities nationwide that has seen rental prices drop due to the pandemic, economists said, so there could be bargains if you plan to move to the other side of Puget Sound during this interim period. But you must also consider ancillary costs. Selling now and renting temporarily means paying for at least two moves, if not more, because after all, the landlord could choose to sell or decide not to renew their lease. If you’re downsizing, it can be difficult to get all your possessions at once, so you’ll be paying the bill for a storage unit.

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“‘Even in a strong housing market, it doesn’t make sense to sell and then pay more each month in the same market until you make a permanent move.’ ”- Elizabeth Miller, Founder and President of Summit Place Financial Advisors in New Jersey

“Even in a strong housing market, it doesn’t make sense to sell and then pay more each month in the same market until you make a permanent move,” says Elizabeth Miller, founder and president of Summit Place Financial Advisors in New Jersey. “Since employers are generally more open to remote work options these days, maybe you should apply for the option to work remotely indefinitely, and now you can buy your retirement home out of state,” says Danielle Hale , chief economist at Realtor.com. There’s the same chance that home prices will continue to rise in your dream retirement destination, so perhaps now is a good opportunity to consider taking that leap.