Housing Prices Keep Climbing: Should You Sell Your Property or Wait?

by | BiggerPockets.com

Most real estate investors have a particular strategy they like to follow. Some flip houses with the goal of profiting on a few flips per year. Some investors use a buy and hold strategy, hanging onto their properties for the long term. Others are wholesalers who invest in tax liens. There are a number of strategies real estate investors can choose to use.

For that reason, you may find yourself wondering which strategy is the best for you. What should you do if you find yourself considering changing strategies midstream?

A Possible Investing Scenario

Let’s imagine you have a full-time day job doing something unrelated to real estate. You occasionally flip homes on the side. You’re generally happy if you can flip one or two houses per year.

A few months ago, you bought a house at a great price with favorable financing. You’ve been slowly fixing it up, and now you’re thinking about listing it. There’s just one thing holding you back: Housing prices are climbing in most parts of the nation. You start to wonder if you should hang onto the house for a year or two.

Should you sell your property right now as you had originally planned? Or should you switch to becoming a temporary buy and hold investor for at least a year in hopes of securing a higher payout?

In other words, should you wait for prices to climb even higher before you sell? There are arguments in favor of both strategies. Let’s examine them before I offer my two cents.

Related: “I’m Moving. Should I Rent My Home Out, Sell it & Reinvest in Other Rentals, or Trade Up?”

The Case for Holding a Property

Prices Are Rising

In most parts of the US, housing prices have been rising over the past several years. If this trend continues, there’s a good chance a property you own today will be worth more within 6 to 12 months. Obviously, the specifics of this depend on a wide variety of factors, such as where the home is located, the price point of the home, etc. But according to Core Logic, houses nationwide saw a long term rise in value of nearly 7 percent between April 2014 and April 2015.

Earn as You Hold

There’s a good reason some people choose to become long term buy and hold investors: Cash flow is an excellent thing. Unlike many other investments, housing gives you the opportunity to earn a steady stream of cash while you hold for the sake of equity appreciation. If that’s not a win/win, I don’t know what is.

The Case for Selling Now

Stick With Your Strategy

Unless there’s a very compelling reason, it’s generally wise not to make impulse decisions about your investments. Did you go into this deal with a clear strategy? It may be better to stick with your original plan unless you can come up with a good reason why you shouldn’t. If you’re on the fence, that might be a sign you’re better off sticking to your guns.

Things Can Change Fast

Just because the housing market has historically been rising in value doesn’t mean the trend will continue. Anything can happen at any time, and the harsh truth is we can’t predict the future. I think it’s reasonable to say we’re not going to see another crash similar to the one we experienced in 2008. However, we don’t know if housing prices will be significantly higher one year from today. Furthermore, all real estate is local. The hot property market in Arizona or Maine doesn’t necessarily translate to whatever city or state your properties are in.

Interest Rate Risk

There’s a good chance the Federal Reserve is going to raise interest rates within the next 6 to 12 months. Homes may become less affordable if that happens. In theory, this means homes might be a little harder to sell, and demand may slow down. On the other hand, there’s also a chance the Fed might delay raising interest rates. Higher interest rates could also result in higher priced housing.

The Real Questions You Should Be Asking

While there’s a good chance housing prices will continue to grow at a slow, steady, and sustainable pace, you may not want to base your investment strategy on market projections. Instead, take a good look at your personal situation and preferences to find out whether you should sell now or sell later. Consider the following three questions.

Can You Cover the Holding Costs?

You’ll need to pay for property taxes, insurance, utilities, maintenance, repairs, and loan servicing. This may put a large dent in your budget, even if you’re receiving rental income on the property to cover those bills.

This is particularly true if you bought this property as a flip rather than as a rental. That means this particular property you own may or may not be a very strong rental candidate.

Related: 6 Factors to Consider When Deciding to Sell Your Home or Rent it Out

What Are the Specifics of the Neighborhood?

As we say, all property is local. Only you can be the best judge of what the future may hold for the particular street or area of town your property is located in.

Can You Keep Your Cash Tied Up?

Holding onto a property means you’re tying up a substantial portion of your equity and available assets. Are you okay with this?

Would you rather free up that money so you can make another investment? Or is it worth keeping your money tied up in real estate so you can take advantage of any potential market gains?

Figure Out What Works for You

Ultimately, there’s no correct or incorrect decision. You need to make a choice based on the specifics of your own situation as well as your goals. Talk to other investors, mentors, and real estate agents who you know, like, and trust. They can offer specific insights custom tailored to your situation to help you out.

What’s your take on making this decision?

Weigh in with a comment!

About Author

Joshua Keen

Joshua and his brothers have worked as Atlanta real estate brokers for more than 15 years. As real estate investors themselves, they are experts in helping investors navigate the dynamic real estate landscape of the metro Atlanta and Decatur, Georgia area, particularly the Intown Atlanta neighborhoods. When Josh isn't following the Atlanta real estate market, you'll find him running, playing with his dogs, or hanging out with his family.


  1. Gene Livingston

    On rate risk.. Consider what a “rise” in rates will likely mean at this stage. If Janet Yellen raises rates, well, that could be a .125% raise(!). There’s no rule that the Fed has to bump in 25 basis points increments. And further, I’m skeptical that they have the ability to raise rates much AT ALL, due to the level and trend in government debt. They simply cannot afford to raise rates even if they wanted to. The financial crisis is not over. That’s the thing that people just don’t understand. It’s been painted over, not solved. How do they undo their massive QE? When has the US government EVER, in its history, undone a massive QE? The answer is that they never have and never will. Rates will rise due to inflation, not due to responsible management at the Fed. Given all that, the question to ask is “at what interest rate will home prices begin to be impacted?” I don’t know the number, but I’d guess its 7%-8%. I really don’t see rates going there anytime soon. The last thing the Fed wants to do is send the economy back into recession (we’re already on the edge of recession again, as of Oct 2015). Chicago PMI is under 50 (48.7, a recessionary number) even with rates at zero-bound..what does that say about the strength of this economy?!

  2. Terrence Arth

    Certainly one thing to consider, if you are a flipper as in the example, are you prepared for the rigors of property management? The other thing that comes to mind is wear and tear. If you are lucky and get a good tenant you might have an almost new ex-rental ready to sell if prices do go up. Unfortunately, the more normal thing is to get n average tenant that puts about 3 year of wear and tear on your newly finished flip in just about 6 months. Often, the types of wear and tear are not the kind you can slap a coat of paint over to hide. Think broken corners off that nice granite countertop, doorknob holes n walls or door knobs ripped off doors, the handle missing off that once new stainless microwave, the front door out of kilter and now not closing properly. Think I’m exaggerating? Ask a landlord. My advice, stick to your strategy unless there is overwhelming evidence pointing to major appreciation.

  3. Kevin Yeats

    Stock market investors (indeed EVERY investment type) has this same problem.

    If your Apple stock, or Microsoft or Amalgamated Widgets has increase every month this year … and is up another 5% in September, do you sell or hold on hoping for another increase in October?

    Do you look at outside factors like what is the consensus on what the Fed will do? What was the latest jobs report? etc etc (up to analysis paralysis) and then make a decision or just wait one more week to make up for last week’s decline in value.

    As other mentioned, transaction costs in real estate are very high and you can only sell whole units, so the decision is hard to reverse. In stocks, I could chose to sell only half of my Apple stock and wait and see with the remaining shares. Tough to do with a house or apartment. I could also sell half of the shares then buy call options hoping for future increases. Or I could just buy some put options that will protect my stock market investment against declines. Very tough to do in real estate.

    But those are just some of the differences between financial instrument investment and real estate investment. I just pointed out that an investors face a similar decision of whether to hold or sell.

  4. wesley c.

    As a buy and hold investor, one thing I like to weigh is when the next big ticket improvement needs to be made. For instance, I’m buying a short sale that needs a new HVAC but already has a newish roof. If I rent it for five years I can recoup the cost and still impress buyers with the relative newness of these big ticket items. If I wait 10 years to sell, then these items are considered “old” and then they become a liability. Since I am in a market that doesn’t have wild swings up or down, these things make a big difference. In this market, a new roof can make or break an investment. So I do everything in my power to work my timeline around minimizing these big ticket expenses.

  5. Adam P

    The market was going up like crazy in 2006 as well. If you are an investor, set your strategy, and then sell if it makes sense / you have better ways to deploy your funds.

    Profits in real estate are made through market arbitrage (buying under market, selling at market), therefore whether the market is going up or down tomorrow shouldn’t be a major factor (since if you could accurately predict that, you are making far more money investing in other areas).

  6. Jeff S.

    Just in the midst of listing a rental that I decided to sell. One year ago I moved out of it and held it as a rental because of the insane appreciation. Did a top to bottom paint and clean up but left the old carpet and rented it on a one year lease to great tenants. One year later I am going through it again but replaced the carpet, all the woodwork and built a new deck.

    Holding it for the year has been profitable but an entire clean up and repaint with all the patching from posters and hanging pictures has been tough.

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