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With mortgage rates rising and inventory opening, many experts believe the red-hot housing market has peaked. That means homeowners are thinking of selling while their prices are still skyrocketing and renting until the market cools down, then buying again at a reasonable price and pocketing the difference.
It’s a great plan – as long as you can sell high and rent low at the same time.
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“I advise any home seller not to spend money unless they have a better, right sized, profitable and better livable house or apartment. . In other words, it is not a good idea to sell it for a high price and to rent it or rent it. “
The trick is to sell in a hot market and rent in a nearby cold one.
“The best markets to sell and then rent a home are often busy and in-demand job market towns and high tourism or waterfront towns where more affordable or rural rental properties are located several miles away from the sexier downtown,” Hanson said.
See where this strategy works.
Phoenix
When it comes to places where sellers hold all the cards, an expert who spoke with GOBANkingRates cited Arizona as the most common and Phoenix.
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“The Greater Phoenix housing market has been strong this year,” said Ava Martin, founder of Quality Water Lab. “The average property value in this area has increased by 31% and prices are expected to increase further over the next 12 months.”
Christina Casson, real estate investor and founder of Texas Family Homebuyers, is more emphatic in her opinion about the situation in the Southwest.
“Phoenix, Arizona, the market is very chaotic right now,” Kasson said. “More than 50% of homes sell for more than their list price. The average price increase was about 33%. On the other hand, the rental market has gotten better. Rents have stabilized, and it makes more sense to sell and rent your home.”
California Bay Area
According to Hanson, the best markets to sell and rent tend to be the more expensive metropolitan centers in the in-demand job markets, a description that fits the Bay Area perfectly.
“If you live in San Jose, California, you should be looking to sell and rent your home until the market cools down,” said John Ride, CEO of Easy Cash Florida. “As of 2021, the median home sales price in San Jose is over $1 million. Even if you don’t initially plan to move, this is a great opportunity to resist.
Due to the pandemic, the real estate market in the city is very hot right now, and you don’t know how long it will last, so now is the time to act. If you act fast, you stand to gain more than 30%.
Then of course, there’s the city the Bay Area is named after.
“San Francisco is one market where you should consider selling your home and renting it until the market cools,” says Tim Schroeder, licensed Realtor and owner of Learning Real Estate. “The huge imbalance between supply and demand in the city has led to an increase in housing prices. Currently, the average sales price is over $800,000, so it’s a great opportunity for homeowners to move. The ROI will be incredible. You can rent until the market cools, then buy again when the time is right. This way, you will be left with high profits.
Las Vegas
In Sin City, one key metric shows how unbalanced the seller’s market is — and if you can sell high there, Nevada offers plenty of cheap places to rent nearby.
“In Las Vegas in February, inventory was at 0.7 months,” said Jennifer A. Chiongbian, a real estate broker and founder of ProRealEstateWriter.com. “For March, it was two months. A balanced market has six to seven months worth of inventory. It makes sense to sell and rent your home now to take advantage of a tighter market and higher prices, which will eventually adjust.
Pittsburgh
The big city at the very tip of western Pennsylvania – with many low-cost rental cities nearby – is currently offering a golden opportunity for sellers. But not for long.
“In the Pittsburgh market, sellers now have a short window to take advantage of a very heavy and somewhat inflated seller’s market,” said Joanne Echtler, a Pittsburgh real estate agent. “With interest rates rising nearly every week, we are seeing signs of let-down by buyers, especially at lower price points.”
With money becoming more expensive to borrow, buyers can’t afford to buy more homes and can’t offer more than asking offers as they are now.
“This could mean a significant drop in equity for the seller,” Echtler said. I’ve had quite a few sellers choose this route over the past year.
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