When you buy a home, how long should you live in it before you sell? Well, according to conventional wisdom, waiting at least five years is generally the best move from a financial standpoint. This advice, often referred to as the “Five-Year Rule,” is largely rooted in the fact that it typically takes at least that long for homeowners to recoup the cost of their down payment and to see any sort of significant appreciation in their home.
There are instances in which breaking this rule is for the best, though. Here are four of the most common exceptions:
1. Your neighborhood’s home values have skyrocketed in a short amount of time. In the last couple of years, some people have seen their properties double in value. If this is the case for you, it may be time to cash in on that appreciation and sell your home. Better yet, there are no tax-related repercussions to doing so as long as you’ve lived in the home as a primary residence for at least two years and the profits don’t exceed $500,000 for married couples or $250,000 for single home sellers.
2. Your neighborhood’s home values have plummeted in a short amount of time. A significant drop in home value is generally not a good sign. No one wants to sell at a net loss, but sometimes you have to know when enough is enough. If values are set to keep dropping in the future, you may want to cut your losses and move on.
3. Current interest rates are too good to pass up. For many people, this is currently the case. Rates are at all-time lows right now, meaning that buying a home is more affordable than ever—especially in the case of move-up buyers.
4. You just aren’t happy in your current home. Numbers aren’t everything. Staying in a home where you feel miserable isn’t worth it. After all, you only live once. The good news is that our current market holds a lot of opportunities for buyers and sellers alike, meaning that, if you’re ready to find a new, better home, it’s a great time to do so.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.