The best time to sell a home in 2023 will be BEFORE June
February 23, 2023
By Elena Garrett, February 23, 2023
Families looking to sell their homes in 2023 are strongly advised to get ready for the sale before June due to the increasing turbulence in the market.
The DFW home market is going through quite a bit of turbulence. If you are planning to sell your home and move, you need to understand how those changes may affect your financial calculations.
As hundreds of homes that have been sitting on the market unsold since the Autumn of 2022 can attest to, the home market in 2023 will be significantly more unforgiving than what we observed in the past 2 years. Why? In 2020 and 2021, buyers rushed to buy homes in the DFW due to artificially low interest rates that made the monthly payments on mortgages affordable despite the increased home prices. In the 2nd part of 2022, the Fed doubled the interest rate, at the same time doubling the new home shoppers’ monthly mortgage payments almost overnight. This immediately halted the rate of new home purchases and led to a period of market stagnation and massive home price reductions in the Fall-Winter of 2022. So, it is worth noting that it was the interest rates that led to a huge drop in home prices in 2022 (in some cases, an average home lost about $70,000-$100,000 in unrealized home equity).
In 2023, the interest rate threat is back on the horizon for home sellers. In January 2023, the market was just starting to recover from the mini-crash of 2022, showing the first signs of improvement, however, the interest increases in February (and further announced increases in March) are threatening to limit the extent of the improvement for the foreseeable future.
As the interest rates and costs of borrowing continue to fluctuate almost weekly in response to economic metrics, the home shoppers’ moods will likely fluctuate accordingly. Against the background of the overall market uncertainty, it is important to note that those home sellers who definitely plan to sell in 2023 at the top of the market need to time their sale to avoid selling past June, if possible.
Based on the historical sales data from the previous 4 years, my analysis suggests that the best time to sell in 2023 would be in May and June. See the sales data for the years 2018, 2019, 2021, and 2022 to see how May and June are usually better positioned to make more money for home sellers. However, in 2023 the market is being unusually affected by the changes in the cost of lending that are going to start affecting home buyers starting in March which is complicating the usual schedule.
Recommended timeline for families looking to sell in 2023
Based on the data posted below, my recommended timeline for home sellers would look like this:
- March 2023 – Meet with the Realtor to review your purchase plans, needed prep steps, and strategy to get you sold and moved on time (if you do not currently have a Realtor you can easily call, feel free to connect with Elena at 469-371-4961) to do the initial consultation). Understand the challenges of the rising rates and see how they may affect your projected profit from the sale, and the cost of buying your next home.
- April 2023 – Complete updates and repairs as discussed with your Realtor, do photos, drone photography, etc. If your Realtor advises (and the interest rates are favorable), consider going into the Active state of home sale sooner than would otherwise expect to avoid future market turbulence.
- May 2023 – Unless you started the sale in April, start the “Active” sale phase in May without delays. If your school situation allows, start the showings. To minimize inconvenience during the “active” stage of the sale, consider using 72Sold home sale program to sell within 1 weekend.
- June 2023 – Shop for your new home and get ready to close on your old home
- July 2023 – Close on your old home and move your family
- August 2023 – School starts
Please note, most homes in the DFW would sell at a profit at any time of the year, but in order to gain the most benefit from the sale (while minimizing your expenses and wait time), this year it is recommended to be especially attentive to the overall home market environment.
Detailed historical data for 2018, 2019, 2021, 2022
Below is the raw data showing median sale prices for 4 counties in the DFW for each month of the year (courtesy of NTREIS MLS).
How to measure sale profitability?
The data above indicate that, compared to the beginning of each year (January), the most “profitable” months to sell were May and June (pre-COVID 2018), May and June (pre-COVID 2019), June, July, and December (post-COVID 2021), and May (post-COVID 2022).
- Please keep in mind that those numbers indicate the final SOLD price, which means that the data for June will show homes that went under contract 14-30 days prior. That means that, in most years, the best time to go under contract would be April, May, and June.
The maximum profit from the sale could be seen graphically below (in the graphs, January represents a zero for each of the years, and the profit is calculated by checking whether the houses sold above or below the January prices).
Pre-COVID Years – The Profit Pattern
From the graph above, we can see that families that waited to sell their homes in May-June 2018 were able to increase their profit from the sale by $35,000 (Dallas county), $45,000 (Collin county), $40,000 in Denton county, and $32,000 in Tarrant county. In 2019, the same families would gain $41,000 (Dallas county), $60,000 (Collin county), $51,000 (Denton county), and $38,000 (Tarrant county) if they waited to sell in May–June rather than in January-February.
Post-COVID Years – The Profit Pattern
From the graph above, we can see that families that waited to sell their homes in May-July 2021 were able to increase their profit from the sale by $78,000 (Dallas county), $75,000 (Collin county), $84,000 in Denton county, and $57,000 in Tarrant county. In 2022, the same families would gain $92,000 (Dallas county), $128,000 (Collin county), $91,000 (Denton county), and $50,000 (Tarrant county) if they waited to sell in May rather than in January-February.
The Overall Historical Pattern
The explanation of consistency of the price peaks is usually explained by the fact that most families in the DFW wait for the school break to start moving their families from one ISD to another, creating a “traffic jam” of home buyers all rushing to buy at the same time, and generating frantic bidding wars on homes (especially if the supply of homes is limited, like it was in 2021-first part of 2022).
It is unlikely that the families selling in 2023 will see $128,000 profit increases during the Summer since the supply of unsold homes is currently higher than in 2021, but the overall trends are very clear both pre-pandemic and post-pandemic.
What to do next?
If you planned to sell your home in 2023 (in order to relocate, downsize, etc), do not wait until the last moment to start planning your move. Discuss your plans with your Realtor (or with Elena) and understand how the interest rates and projected home prices will affect the logistics and the timing of your move. Remember, with 72Sold program, many of the logistics of the sale are easier to manage, so make sure to understand how you can benefit from that program.
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