Many retirees rely on their homes for financial security. According to the Federal Reserve’s Survey of Consumer Finances, home equity accounts for a substantial share of net worth among households aged 65–74.

But when it comes time to tap that value, often through a sale, converting housing wealth into cash doesn’t always go as planned for older adults.

A recent study finds that even when home prices are relatively strong, the proceeds older sellers receive can differ meaningfully from those of younger homeowners. Though timing and how the sale is managed play a role.

And while the research doesn’t point to a single cause for the disparity, it raises broader questions about how home-sale outcomes can affect retirement income and, yes, taxes. Here’s more to know.

Why older homeowners get less money for their homes

A study from the Center for Retirement Research at Boston College finds significant variation in sale outcomes for older homeowners. It analyzed roughly 10 million repeat home sales using CoreLogic deed records linked to demographic data to estimate sellers’ ages.

Researchers compared outcomes across age groups while controlling for home type, location, and broader market conditions and found a consistent gap.

A key takeaway? Older homeowners tend to realize lower proceeds when they sell compared with younger sellers with similar observable characteristics.

According to the study's findings:

• "Older sellers get less starting at age 70," with the gap "increasing with each additional year."
• There is an estimated 5% gap in realized sale proceeds over the average 11-year holding period for some cohorts.
• For a typical home, the differences can amount to tens of thousands of dollars, depending on market conditions. Per the study, for a median $400,000 home, that is roughly a $20,000 reduction in proceeds.

There appear to be several explanations for the gap. But the study points to two primary factors.

• First, older homeowners are more likely to sell homes with fewer recent updates, which can affect pricing even in strong markets.
• Second, the researchers report that in some cases, older adults are more likely to use off-market or less competitive listing channels than the Multiple Listing Service (MLS), which can result in fewer bidders.

Also worth noting: Some home sales at older ages are driven by life transitions like downsizing, health changes, or moves into assisted living, where speed and certainty matter more than maximizing the price. In some cases, that can mean accepting an early offer rather than waiting through a longer listing process.

How a lower home sale price affects retirement income

The impact of lower home proceeds can show up in how retirees adjust their broader financial picture after the sale.

A retiree may expect a home sale to generate a certain amount of cash, enough, for example, to fund a year or two of spending without significantly tapping retirement accounts. But if the actual sale comes in lower than expected, that shortfall might be covered elsewhere, e.g., through additional withdrawals from traditional IRAs, 401(k)s, or taxable investment accounts.

• Those withdrawals are generally taxed as ordinary income. As a result, a larger-than-planned draw in a single year can push a retiree into a higher marginal tax bracket, even if only part of their income crosses the threshold.
• The same increase in reported income can also eventually affect Medicare premiums (IRMMA surcharges), since those costs are tied to income levels from two years prior.

As a result, a lower-than-expected home sale price can have retirement planning implications beyond the transaction itself.

Capital gains tax on home sales over age 65

Even though the tax impact here is primarily about how income replacement flows through the rest of the retirement portfolio, capital gains are an important consideration in retirement.

The tax treatment of a primary residence remains unchanged, including the capital gains home sale exclusion of up to $250,000 for single filers and $500,000 for married couples. That tax break can shield many homeowners entirely from tax on the sale.

Note: A 2026 analysis by the Tax Policy Center and Brookings Institution finds that about 90% of households age 65 and older will likely remain within the current home-sale capital gains exclusion, while roughly 10% would have gains large enough to exceed it.

Still, other recent data indicate that approximately 8% of home sales resulted in gains that exceeded the home exclusion threshold. That's more than double the percentage over the last five years or so, according to a report from the consumer information and analytics company CoreLogic.

That rising share of taxable gains has prompted several proposals on Capitol Hill, including bills that would eliminate capital gains taxes on home sales and a recent legislative proposal to increase the capital gains exclusion to $1 million for homeowners age 65 and older.

Why is this happening? One issue is that the exclusion limit hasn't been adjusted for inflation, so the value of the tax relief provided by the home sale exclusion has eroded over time.

As a result, homeowners across the U.S., but more often in states with high property values, like California, New York, New Jersey, Massachusetts, Florida, and Colorado, are likely to see gains exceed the exemption limit.

Selling a home in retirement: Bottom line

If you're considering a home sale, it may help to speak with a financial planner or tax professional first to understand how the proceeds could affect your retirement finances.

Every individual's financial situation is different, and a trusted professional can help with a tailored strategy.

However, a few considerations:

• How the sale fits into your broader retirement income strategy
• Whether the proceeds could affect taxable income or Medicare premiums
• How the proceeds will be used, saved, or reinvested

It may also be worth considering whether the timing of the sale allows enough time to attract multiple buyers. As the study suggests, urgency can limit a seller's options and make it harder to maximize the sale price.

Related

• New Bill Proposes $1 Million Capital Gains Tax Exclusion for Those Over Age 65
• The Capital Gains Tax Exclusion for Homeowners Explained
• Capital Gains Tax Rates for 2026: What to Know Now
• Retirees Face a Growing Capital Gains Tax Trap

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at five tax questions for landlords who own residential rental property. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Taxes if you sell rental property

Question: I own a condo that I have been renting out to tenants for over 20 years. I plan to sell the condo this year. Will I qualify for the home sale exclusion?

Joy Taylor: Unfortunately, it doesn't sound like you will qualify for this break. Homeowners who own and use their home as their principal residence for at least two out of the five years before selling it get to exclude $250,000 of the gain when they sell. The gain exclusion is $500,000 for married couples who file a joint return.

Since you have owned the condo as rental property and not your primary residence, you would not qualify for the home sale gain exclusion. The gain or loss when you sell would generally be characterized as capital gain or loss. And, since you owned the condo for more than one year, it's considered a long-term capital gain or loss.

The capital gain will generally be taxed at 0%, 15%, or 20% — plus the 3.8% net investment income tax (NIIT) for people with higher incomes. However, a special rule applies to gain on the sale of rental property for which you took depreciation deductions.

When depreciable real property held for more than one year is sold at a gain, the federal tax law requires that previously deducted depreciation be recaptured into income and taxed at a top rate of 25%. This is known as unrecaptured Section 1250 gain, the number of its federal tax code section.

2. Inheriting rental property and taxes

Question: I own rental property. When I die, I plan to leave it to my child. Does he get a step up in basis in the property upon my death? Also, what happens to the depreciation that I had previously deducted on the property?

Joy Taylor: The answer to your first question is yes, your beneficiary would take a stepped-up tax basis in the rental property when you die. That means your child's basis in the inherited property would be its fair market value on the date of your death.

I haven't looked at the depreciation issue before, but it is my impression that your depreciation essentially disappears when you die. Again, your beneficiary takes a stepped-up tax basis in the property. If he decides to keep renting the property, he would depreciate it over 27.5 years, beginning in the year he inherited it and using the stepped-up tax basis.

3. The net investment income tax for landlords

Question: I own a triplex, and I rent out all three apartments in the building. I am thinking of selling the property in the next year or so. I know I will pay capital gains tax on the sale. Will I also have to pay the 3.8% net investment income tax?

Joy Taylor: Maybe. The additional 3.8% net investment income (NII) tax applies to single filers with modified adjusted gross income (AGI) over $200,000 and to joint filers with modified AGI above $250,000. The modified AGI threshold is $125,000 for married people filing separate tax returns. These modified AGI amounts aren’t inflation-indexed, leading to more filers paying the NII tax each year.

The NII tax, which is added to the regular income tax, is due on the smaller of NII or the excess of modified AGI over the threshold amounts. NII includes dividends, capital gains, taxable interest, annuities, royalties, passive rents and certain income from other passive activities.

4. Selling a rental that you previously lived in

Question: I own a home that I lived in from 2014 to 2017. I then married and moved into my wife's new home. I rented out my old home from 2017 until now. I plan to sell it this year. How do I establish my tax basis for purposes of determining gain or loss when I sell?

Joy Taylor: Your tax basis in the rental home is as follows: (1) the lesser of your original cost or fair market value of the home at the time you started renting it, plus (2) the cost of improvements to the home, less (3) depreciation taken on the home. IRS Publication 544, Sales and Other Dispositions of Assets, has more information.

5. Selling a duplex

Question: My wife and I own a duplex. We live in the upstairs unit, and a tenant lives in the downstairs unit. The upstairs and downstairs units each have separate addresses. We are now considering selling the full duplex. Can we take the full $500,000 home-sale exclusion when we sell?

Joy Taylor: The up-to-$500,000 gain exclusion applies only to the portion of your duplex that you used for residential purposes (not rental or business purposes). Below is relevant language from IRS Publication 523, Selling Your Home:

"You generally can’t exclude gain on the separate portion of your property used for business or to produce rental income. Examples are: (1) a working farm on which your house was located, (2) a duplex in which you lived in one unit and rented the other, or (3) a store building with an upstairs apartment in which you lived."

"[A]n allocation of the gain is required. For this purpose, you must allocate the basis of the property and the amount realized between the residential and nonresidential portions of the property using the same method of allocation that you used to determine depreciation adjustments. Report the sale of the business or rental part on [IRS] Form 4797."

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not, and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Will I be Audited by the IRS?
• Ask the Editor: Questions on Residential Rental Property
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: Reader Questions on QCDs

Memorial Day weekend often marks the start of summer fun, when many people pull patio furniture, kayaks and golf clubs back out of storage. But for households short on space, self-storage units can help keep seasonal gear, bulky items and overflow clutter out of the garage and basement until they’re needed again.

Self-storage has become increasingly common in the U.S. The industry now includes more than 2.1 billion square feet of storage space, and about one in three Americans currently uses self-storage, with another 18% planning to rent a unit in the future, according to SpareFoot.

In a recent survey of Kiplinger’s A Step Ahead newsletter readers, 61% of those surveyed said the main reason they rent a storage unit is a lack of space at home.

Furniture was the most commonly stored item at 72%, followed by seasonal decorations at 61% and sentimental items at 50%.

Still, storage only makes sense for certain items. Before renting a unit, think carefully about what you truly need to keep and whether the monthly cost is worth it. These 10 items tend to be some of the best choices for storage.

Furniture and household overflow

Sofas, tables, bed frames and spare mattresses are all big, bulky items that you can put into storage.

If you’re downsizing your home, preparing to move or rotating decor in your home, putting these items in storage can give you extra space while letting you swap favorite pieces in and out when you want a different look.

Before storing fabric items like couches and mattresses, cover them with furniture covers, sheets or breathable plastic wrap to help protect them from mildew, musty smells, dust and pests while they’re in storage.

Many basic furniture covers cost less than $20 and can help keep your items in better condition over time.

Seasonal decor and holiday items

Consider putting seasonal decor and holiday items, like artificial trees, inflatables and specialty decorations, into a self-storage unit. When you only use these items a few months out of the year, storing them can help reduce clutter in your everyday living space.

Clear plastic totes can make storage much easier since you can quickly see what’s inside without opening every box. Add simple labels to each tote so your holiday and seasonal items are easy to grab and go when you need them.

For bulky items you don’t want ruined, like wreaths, tree skirts or oversized decor, large clear zippered storage bags can help protect them from dust, moisture and damage.

A little planning can cut down on trips to your storage unit, too. When you drop off one season’s decor, pick up the next season’s items during the same trip.

Clothing and wardrobe overflow

A storage unit can be excellent for your overflow clothing items. You can store off-season clothes, like bulky coats and specialty items, until you need them, freeing up closet space.

Wash and fully dry the clothes before you store them, and use wardrobe boxes for any items that are usually hung. Be sure to invest in proper storage for clothes. These plastic storage bins are great for items like T-shirts and pants. Include some cedar chips or blocks to help repel insects.

Sports and outdoor equipment

Outdoor equipment like bikes, skis, golf clubs and camping gear take up a lot of space in your home, so consider putting these items in storage. While these items are bulky, if you use them regularly, you can probably justify the cost of storing them.

To keep everything organized and easy to grab, consider using a bike rack or rolling sports storage cart inside your unit. Keeping gear upright and grouped together can help prevent damage and make it easier to quickly load up for your next outing.

Business inventory and side hustle supplies

If you're running a business or side hustle, supplies like inventory, packaging materials, and tools can quickly take up space in your home.

A storage unit can be a good place for these essentials, and you can periodically draw down from your supply and bring home what you’ll need for the coming month or two.

Self-storage can be especially helpful if you run an eBay or Etsy shop or operate a small business from home. Keeping inventory, packaging supplies and seasonal products in storage can free up valuable living space while helping you stay more organized.

In some cases, you may also be able to deduct the cost of a storage unit used for business purposes on your taxes, so keep receipts and track your expenses throughout the year.

Documents and records (stored the right way)

You can declutter those documents and records you're storing at home by moving them to a self-storage facility, freeing up space in desks, drawers and filing cabinets.

Just make sure that you store documents and records the right way. Invest in quality document containers that will protect the paperwork inside in case of a flood.

Avoid storing any items that are irreplaceable or treasured. Consider digitizing documents so you can shred the paper copies entirely.

Durable collectibles and media

If you have durable collectibles, like books, vinyl and decor collections, you may be able to move these items to storage. Focus on choosing items that won't degrade easily, and pack them in sealable containers to help protect them from damage.

You may want to invest in a climate-controlled storage unit to help protect the items. If you'll be storing anything valuable, look for a facility with strong security measures, including security cameras and gated access.

Vehicles and large equipment

You can also rent space for cars, motorcycles, and lawn equipment, leaving your driveway and yard looking neater. Many storage facilities allow you to store vehicles in drive-up units, but be sure to verify the facility's rules ahead of time.

Keeping vehicles under a car cover can help preserve them while not in use, prolonging their life and helping maintain their value.

If you need to store tires independently of a vehicle, that can be a different story; tires are flammable, so they're usually prohibited. That said, facilities that let you store vehicles will usually let you store the vehicles with their tires on them, but you can't store extra, separate tires.

Appliances

If you’re in between moves, remodeling your home or planning a future upgrade, it might make sense to keep your current appliances instead of rushing to replace them. Storing appliances can save you the cost of buying new ones while temporarily getting these bulky items out of your home.

Before placing appliances into storage, clean and fully dry them to help prevent mold, mildew and odors from building up over time. Leaving appliance doors slightly cracked can also help improve airflow while they’re stored.

Kids’ items you plan to reuse

As the children in your life outgrow items like baby gear, toys and furniture, you may want to place some of those items into storage if you plan to reuse them in the future. Storing practical items like bassinets, high chairs, seasonal clothing and durable toys can save money if you expect to need them again for another child or grandchild.

Before storing children’s items, clean and dry everything thoroughly and place smaller pieces in labeled bins so they’re easier to find later. Be selective about what you keep, though.

Some products, including car seats, cribs and certain baby gear, can expire or fall out of current safety standards over time, making them better candidates for donation or disposal instead of long-term storage.

Storage makes sense when it solves a space problem — not when it delays a decision

Storage units can make sense when you use them for seasonal, bulky or high-value items that you'll use again. But it’s easy to fall into the trap of paying a storage fee month after month to hold onto things that you don't need.

If you're storing items that you truly no longer need, the cost can quietly add up and outweigh the benefit. Be strategic about what you decide to store and balance storing items with donating the things you won't use again.

Related Content

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A home sale falling through can be frustrating and discouraging, especially after you've already started planning your next move. With homes sitting longer on the market and more deals falling through due to financing hiccups, inspection surprises or buyer cold feet, many sellers are finding themselves back at square one.

But relisting isn't just about putting your home back online and hoping for a better outcome. In today's market, buyers are more cautious, and listings get scrutinized quickly. The good news?

A thoughtful reset can put you back in a strong position. Here's how to relist your home strategically and improve your odds of getting to the closing table this time.

Why relisting without changes rarely works

It's tempting to relist your home exactly as it was and wait for a different buyer. But most of the time, that approach backfires.

Buyers (and their agents) can see a property's history through the multiple listing service (MLS), including how long it was on the market and any price changes. If your home returns to the market unchanged, it can raise red flags, making people wonder what went wrong the first time. Instead of a simple relaunch, think of your relisting as a reset.

That means addressing past issues, adjusting your strategy and presenting the home in a fresh way.

Start with a post-mortem on what went wrong

Before you relist, take a step back and assess what caused the deal to fall through.

Common reasons can include:

• Financing issues or loan denials
• Low appraisal values
• Inspection problems
• Buyer remorse or contingency withdrawals

Talk with your agent and review feedback from showings, inspection reports and the buyer’s objections. This step is key because new buyers will likely ask the same question: Why didn’t it sell?

Having a clear, honest answer along with proof that you've addressed any issues can build trust and prevent repeat problems.

Use the Bankrate tool below to explore and compare some of today's top mortgage offers:

Reset your price for today's market

One of the biggest mistakes sellers make when relisting is sticking too closely to their original price, even when the market has clearly shifted. If your home didn't sell the first time, pricing is one of the first areas to revisit.

Start by looking at what's happening right now, not when you first listed. Are similar homes reducing their prices? Are new listings coming in lower to attract attention? Even small changes in interest rates or buyer demand can impact what buyers are willing (and able) to pay.

When a home is relisted, a strategic price adjustment is often key to success. That doesn’t always mean a drastic cut, but it does mean pricing with intention. For example, listing just below a common search threshold, like $399,000 instead of $405,000, can help your home appear in more buyer searches and generate fresh interest.

It’s also important to think in terms of momentum. A well-priced home can attract multiple showings quickly, which may lead to stronger offers and better negotiating power.

On the flip side, pricing too high can cause your listing to sit again, reinforcing the perception that something is off.

Fix the issues that killed the deal

If an inspection derailed your previous sale, don't ignore it. Address known issues upfront, whether that's repairing a roof, updating electrical systems or resolving plumbing concerns.

You may also want to consider a pre-listing inspection so there are fewer surprises this time around.

Being proactive helps reduce the risk of another deal falling through and gives buyers more confidence when making an offer.

Refresh how the home shows online and in person

When you relist, your goal is to make the home feel new again, especially to buyers who may have already seen it before.

Start with your online presence. Updated, high-quality photos can make a big difference, particularly if your original listing had poor lighting or didn’t highlight your home’s best features. Small tweaks like brighter rooms, cleaner spaces and better angles can completely change how the home is perceived in search results.

From there, focus on the in-person experience. Decluttering, light staging and simple upgrades like fresh paint or landscaping can help buyers picture themselves living in the space. Even minor improvements can shift a buyer’s first impression from "this needs work" to "this feels move-in ready."

Consider switching agents or strategy

If your home didn’t sell the first time, it’s worth taking an honest look at your approach, and that includes your agent. A different agent can bring a fresh perspective, especially one who has experience relisting homes or handling expired listings. They may suggest a different pricing strategy, new marketing channels or ways to better position your home against current competition.

Even if you stick with the same agent, your strategy should evolve. That might include rewriting the listing description, expanding marketing efforts (like social media or targeted ads) or adjusting how showings are scheduled and managed.

How to get to the closing table this time

Once you accept an offer, the focus shifts to protecting the deal all the way through closing which is something that's become more important as more transactions fall apart.

Start by looking closely at the buyer's financial strength. A strong pre-approval, a solid down payment and fewer contingencies can reduce the risk of delays or cancellations.

From there, stay engaged during key milestones. Be responsive during the inspection process, open to reasonable repair requests and be prepared for potential appraisal gaps. Flexibility can go a long way in keeping negotiations on track.

Finally, keep communication open between all parties, including your agent, the buyer’s agent and the lender. Many deals fall through due to avoidable misunderstandings or slow responses.

The smoother you can make the process, the better your chances of making it to the finish line this time.

A failed home sale can feel discouraging, but it’s increasingly common in today’s market. The upside? Relisting gives you a second chance to correct course. With the right mix of pricing, presentation and strategy, you can turn a setback into a successful sale.

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The red-hot real estate market of the past few years has cooled somewhat, and buyers now have more options. That shift puts more pressure on sellers to make a strong first impression, especially if you want your home to sell quickly.

Today’s buyers are more prepared. Many are touring homes with a clear checklist in hand. In fact, Redfin notes that buyers often rely on house hunting checklists to compare features, condition and overall value. That means your home needs to check the right boxes from the start.

The good news: You don’t need a full remodel to stand out. A handful of targeted upgrades can improve your home’s appeal and help attract serious buyers.

The exterior upgrades that can help your home sell faster

Boosting your home’s curb appeal often delivers the fastest payoff because it shapes a buyer’s first impression before they even step inside. And that first look matters. According to a RE/MAX poll, 46.2% of respondents said a shabby exterior is the biggest turnoff when touring a home.

Your home’s exterior sets expectations for what buyers will find inside. If it looks clean, well-kept and inviting, buyers are more likely to feel confident about the rest of the property and move forward with a showing.

Start with simple, high-impact updates. Painting the front door is one of the easiest ways to refresh your home’s appearance. Research from Zillow shows that door color can influence both curb appeal and sale price, with black front doors selling for about $6,449 more than comparable homes, and slate blue doors attracting premiums of around $1,537.

From there, focus on overall cleanliness and maintenance. Pressure washing siding, driveways and walkways can quickly make your home look newer and better cared for. A basic landscaping refresh, such as mowing the lawn, trimming bushes and adding fresh mulch, can further elevate the look without requiring a major investment.

Most of these upgrades can be completed in a weekend, but they can have an outsized impact by attracting more buyers early in the process and helping your home stand out in a more competitive market.

Refresh walls and lighting for a quick reset

Refreshing your interior walls can quickly transform how your home feels to buyers. Clean walls in a neutral, lighter shade help rooms look brighter, larger and more move-in ready, all of which can increase appeal during showings.

A fresh coat of neutral paint is one of the most cost-effective upgrades you can make, but it delivers a strong visual impact. While you are updating walls, take the opportunity to improve your lighting as well. Swapping outdated fixtures and using brighter, warm-toned bulbs can make spaces feel more inviting and highlight your home’s best features.

Look for simple ways to maximize light throughout the home. Replacing a large piece of wall art with a mirror can reflect natural light and create the illusion of more space. Lighter, neutral curtains can also help brighten a room, especially when they are fully open during showings to let in as much natural light as possible.

These small updates work together to create a clean, airy feel that helps buyers better picture themselves living in the space.

Make small kitchen updates instead of a full remodel

You can improve your kitchen’s appeal without committing to a full remodel. In many cases, smaller updates deliver a better return. According to WM Construction, minor kitchen remodels can yield returns of about 112.9%, compared with roughly 50% for full gut renovations.

Focus on simple, visible upgrades that modernize the space. Swapping out cabinet hardware and faucets is an easy way to give your kitchen a more updated look. Painting cabinets in a neutral color can achieve a similar effect to a full replacement at a fraction of the cost.

Other affordable updates, like installing a new backsplash, can quickly refresh the overall feel of the room. Replacing outdated fixtures and choosing stainless steel, energy-efficient appliances can also make a strong impression, signaling to buyers that the kitchen is both functional and up to date.

These targeted improvements can make your kitchen feel current and well-maintained, without the time or expense of a major renovation.

Clean, declutter and fix the little things

A thorough deep clean can significantly improve your home’s appeal to potential buyers. Start by decluttering and cleaning each room from top to bottom, or consider hiring a professional if you do not have the time to handle it yourself.

Pay close attention to odors, especially those related to pets or cooking. If possible, open windows to bring in fresh air and create a cleaner, more inviting environment during showings.

While you are preparing your home, take care of small repairs that buyers are likely to notice. Fix leaky faucets, chipped paint and loose handles, and regrout bathroom tile if needed. These minor updates are inexpensive, but they signal that the home has been well maintained.

Together, a clean, clutter-free space and a handful of simple fixes can make your home feel move-in ready and help buyers focus on its best features.

Create simple outdoor living appeal

Make the most of your outdoor space to help buyers picture themselves enjoying the home. Even a simple setup can create a strong impression. Consider adding a small seating area, a fire pit or outdoor lighting to a yard or patio to define the space.

Layer in a few finishing touches to make the area feel inviting. Potted plants, outdoor pillows, candles, a rug or a light throw can add warmth and comfort without requiring a major investment.

These small updates can make outdoor areas feel like an extension of the home, which is especially appealing to buyers. A functional, welcoming outdoor space can help your home stand out and may even contribute to a faster sale.

What not to do before selling

As you make a list of your home upgrades, be sure to avoid some common mistakes:

• Over-personalized upgrades: Avoid bold design choices that may not appeal to a wide range of buyers, such as bright paint colors, unusual flooring or themed rooms. The goal is to create a space that feels neutral and inviting, not one that reflects a specific taste.
• Luxury renovations: High-end upgrades like in-ground pools, marble countertops or adding a walk-in closet can be expensive and often do not deliver a strong return. In many cases, buyers will not pay enough of a premium to offset the cost. Focus on smaller, cost-effective improvements instead.
• Letting personal taste lead: It is easy to design for your own preferences, but what appeals to you may not resonate with buyers. Features like a pink front door or a bold-colored appliance can feel like projects buyers will need to undo. Stick with simple, neutral updates that appeal to the broadest audience.

Small updates can speed up your sale — without overspending

You do not need a full overhaul or a contractor to get your home market-ready. A series of simple, low-cost improvements can make a difference, especially when they are visible to buyers during a showing.

These updates help create a space that feels clean, well-maintained and easy to move into, making it easier for buyers to picture themselves living there. That emotional connection can be what turns interest into an offer.

Related Content

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• Thinking About Using Your Home Equity? What to Know About Rates, Risks and Timing First
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Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at five questions on the home-sale tax exclusion, calculating tax basis in your home and related topics. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Home-sale exclusion

Question: I am planning to sell my home in the next few months. I have lived in the home for many years. Will my gain be taxed?

Joy Taylor: It depends. Generally, if you have owned and lived in your main home for at least two out of the five years before the sale date, up to $250,000 ($500,000 for joint filers) of your gain when you sell the home is tax-free. Any gain above the $250,000/$500,000 exclusion amounts is taxed at long-term capital gains rates of 0%, 15% or 20%, depending on the amount of your taxable income. Losses from sales of primary homes are not deductible.

2. Calculating tax basis in a home

Question: What expenditures can be added to the cost basis of a home to reduce capital gains when the home is sold?

Joy Taylor: To figure the tax basis in your home, you would start with the original cost (including the mortgage if you financed the purchase), add certain settlement fees and closing costs, and add the cost of any additions and improvements that add to the value of your home, prolong its useful life or adapt it to new uses.

IRS Publication 523 has some examples of improvements that increase your tax basis in the home and those that don’t. Examples of big-ticket items that increase basis include adding a room, installing new air-conditioning, renovating a kitchen, finishing a basement, or putting in new landscaping or a pool. Smaller-ticket capital improvements can also increase basis. These include new doors and windows, duct and furnace work, built-in appliances and water heaters. Repairs, maintenance and improvements that are necessary to keep your residence in good condition but don’t add value or prolong its life generally don’t hike the basis.

Note that if you used a room or other space in your home exclusively or regularly for business, or if you rented out your home in the past, you must reduce the tax basis in your home by any depreciation deductions you were eligible for.

Homeowners who keep good records will find it easier to calculate the tax basis. It’s best to keep all your home improvement receipts and invoices in one folder. If you didn’t keep these records, you can try to estimate the costs by looking at old bank or credit card statements, or call the company that originally did the remodeling or put in the upgrade.

3. Selling a duplex

Question: My wife and I own a duplex. We live in the upstairs unit, and a tenant lives in the downstairs unit. The upstairs and downstairs units each have separate addresses. We are now considering selling the full duplex. Can we take the full $500,000 home-sale exclusion when we sell?

Joy Taylor: No. The up-to-$500,000 gain exclusion applies only to the portion of your duplex that you used for residential purposes (not rental or business purposes). Below is relevant language from IRS Publication 523, 'Selling Your Home':

"You generally can’t exclude gain on the separate portion of your property used for business or to produce rental income... Examples are: (1) a working farm on which your house was located, (2) a duplex in which you lived in one unit and rented the other, or (3) a store building with an upstairs apartment in which you lived."

"[A]n allocation of the gain is required. For this purpose, you must allocate the basis of the property and the amount realized between the residential and nonresidential portions of the property using the same method of allocation that you used to determine depreciation adjustments. Report the sale of the business or rental part on [IRS] Form 4797."

4. Inheriting a home

Question: My mom passed away a couple of years ago, and I inherited her home, which I have been using as a vacation home. I am now ready to sell that house. Will I be taxed on the sale?

Joy Taylor: When you inherited the home from your mom, your tax basis in the property was stepped up to the fair market value at her death. So when you sell, your gain will be equal to the difference between the sales price and your tax basis in the home. Your tax basis would start with the fair market value of the home upon your mom's death. You would add to this figure certain closing costs plus the cost of any improvements you made to the home after your mom's death that add value, prolong its life or adapt it to a different use.

If you have gained from the sale, then your gain would be treated as long-term capital gain, subject to the favorable 0%, 15% or 20% tax rates on long-term gains. If you have a loss from the sale, you cannot deduct it.

5. Tax basis in a home when one spouse dies

Question: My husband and I bought our Minnesota home in 1990 for $240,000. We moved out of state in 2010 and became Florida residents. My husband died in November 2025. I am now selling my Minnesota home for $610,000. What will be my taxable gain?

Joy Taylor: Since your Minnesota home isn't your primary residence and hasn't been for many years, you cannot claim the home-sale exclusion. But when your husband died, provided you and your husband owned the home jointly, you got a step up in tax basis in the home. Your basis after his death would equal to (1) half your original basis ($120,000) plus (2) half of any improvements made to the home that can be added to basis plus (3) half the fair market value of the home upon his death. Your taxable gain would be equal to the sales price of $610,000 less the amount from the preceding sentence. I am assuming for this answer that you kept the Minnesota home as a second residence and didn't rent it out or otherwise use it for business.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
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• Ask the Editor: Tax Filing Season
• Ask the Editor: Senior Deduction and Tax Filing
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: What Medical Expenses are Deductible?
• Ask the Editor: Questions on Inherited IRAs

After briefly dipping earlier this year, average 30-year mortgage rates have jumped from roughly 5.99% to around 6.38% in a short window, according to Freddie Mac.

That's not a dramatic spike compared with the highs of 2023, but it's enough to rattle a housing market that was already on edge heading into the spring buying season.

For buyers, sellers and homeowners hoping to refinance, the latest move underscores a frustrating reality: The housing market is not following a smooth recovery path. Instead, it's reacting in real time to inflation concerns, global instability and shifting expectations about where interest rates are headed next.

Mortgage rates are moving higher again

The recent rise in mortgage rates reflects a broader shift in the economic outlook. Rates don't move in isolation. They're closely tied to the 10-year Treasury yield, which has been climbing as investors price in renewed inflation risks.

Those risks have been amplified by rising oil prices, ongoing geopolitical tensions and concerns about supply chain disruptions.

Even a modest move from 6.0% to 6.5% can have an outsize effect on buyer behavior. Housing affordability is already stretched, and many buyers are highly sensitive to changes in monthly payments. When rates move quickly, hesitation tends to follow.

What's pushing mortgage rates higher right now

Several forces are converging at once:

• Inflation expectations are rising again. Energy costs, shipping disruptions and broader supply pressures are feeding concerns that inflation might stay elevated longer than expected.
• Oil price volatility is back in focus. Higher energy costs ripple through the economy, influencing everything from construction materials to transportation.
• Geopolitical instability is adding uncertainty. Global conflicts and trade disruptions are pushing investors toward safer assets and driving bond market volatility that directly impacts mortgage rates.

It’s also important to keep in mind that mortgage interest rates don't move directly with Federal Reserve rate decisions. Instead, they reflect where investors think inflation and economic growth are heading over the long term.

The housing market was already softening before rates jumped

This latest mortgage interest rate increase is landing on a housing market that was already showing signs of strain.

Recent data from Redfin shows that 13.7% of pending home sales fell through in February, the highest cancellation rate since 2017 and up from 12.8% a year earlier. That is a clear signal that buyers were already struggling to follow through on purchases.

Affordability remains the central issue. Even when home prices stabilize or dip slightly, higher borrowing costs can quickly offset any savings. In other words, the math matters more than the listing price.

Buyers are gaining leverage — but it's complicated

There is one notable shift working in buyers' favor: Inventory is rising.

In many markets, there are now more sellers than buyers, creating a near-record gap. That imbalance is giving buyers more negotiating power than they've had in years.

In many markets, this is showing up as:

• More price reductions
• Seller concessions (closing costs, rate buydowns)
• Greater flexibility around inspections and contingencies

Here's the catch: Higher mortgage rates can erase those advantages.

Even if you negotiate a lower purchase price, your monthly payment might still be higher than it would have been a few months ago. That tension is what's keeping many buyers on the sidelines.

What higher rates mean for monthly payments

Small changes in rates can translate into meaningful differences in affordability. For example, on a typical mortgage, moving from 6.0% to 6.5% can increase both your monthly payment and raise total borrowing costs over time.

That roughly $130 monthly difference can translate into about $48,000 more in interest over the life of the loan.

This is why buyer behavior tends to shift quickly when rates move. It's not just psychological; it's also mathematical. When monthly payments cross a certain threshold, deals are more likely to fall apart as budgets get stretched and buyers pause their search.

Refinancing is getting pushed further out of reach

For homeowners, the current rate environment is keeping refinancing activity subdued. Most borrowers locked in mortgage rates below 4% or 5% in recent years. Compared with today's ~6.5% mortgage interest rates, refinancing into a higher rate doesn't make financial sense for most.

That said, there are still a few scenarios where refinancing might be worth considering:

• Cash-out refinancing to consolidate high-interest debt or fund home improvements
• Borrowers who purchased at peak rates (around 7% or higher) who might benefit from even a modest reduction

Still, for the majority of homeowners, refinancing is likely to remain on hold unless rates fall substantially.

What to watch next

Mortgage rates don't move randomly. They respond to broader economic signals, many of which are shifting right now.

Energy markets will be a key factor to watch, particularly oil prices. Rising energy costs can feed into inflation, which tends to push mortgage rates higher. At the same time, inflation reports such as the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) will provide important clues about whether price pressures are easing or persisting.

Investors will also be closely tracking movements in the 10-year Treasury yield, which mortgage rates tend to follow. If yields continue to rise, borrowing costs for homebuyers are likely to remain elevated.

Within the housing market itself, trends in inventory, price reductions and buyer behavior (including cancellation rates and time on market) will help signal how much pressure higher rates are putting on demand.

Taken together, these factors suggest that mortgage rates might remain volatile in the near term, rather than settling into a steady downward trend.

What buyers and homeowners can do now

In a market like this, strategy matters more than timing perfection.

For buyers

Instead of trying to perfectly time the market, buyers might benefit from focusing on affordability and flexibility. This means prioritizing a monthly payment that fits comfortably within your budget, even if rates fluctuate.

It's also important to shop around and compare mortgage offers from multiple lenders, as interest rates and fees can vary more than usual in a volatile environment. Buyers might also have more room to negotiate right now, including asking sellers for closing cost assistance or temporary rate buydowns to lower upfront costs.

For homeowners

Homeowners should approach refinancing decisions carefully and avoid rushing into a new loan without a clear financial advantage. In many cases, keeping an existing low-rate mortgage will make more sense than refinancing at today's higher rates.

For those who need access to cash, alternatives such as a home equity line of credit (HELOC) or a structured repayment plan for other debts might be worth exploring instead.

For both

Both buyers and homeowners should be prepared for continued rate volatility and avoid making decisions based solely on short-term market movements.

The most important factor is how a housing decision fits into your broader financial picture, including your income stability, long-term plans and comfort with monthly costs.

If you're curious about today's rates, use the tool below, powered by Bankrate, to explore and compare some of today's top offers:

Related Content:

• 5 Ways to Shop for a Low Mortgage Rate
• The Best Week to Sell Your Home in 2026 Could Boost Your Price
• What to Watch for When Refinancing Your Home Mortgage

If you're thinking about selling your home this year, timing could make a bigger difference than you expect.

New housing market data point to a key window in mid-April that might give sellers an edge. Listing during this period could lead to stronger buyer demand, higher offers and fewer price cuts compared with other times of the year.

There is no perfect week for every seller. But understanding seasonal trends can help you position your home more strategically and potentially walk away with thousands more at closing.

Why mid-April gives sellers an edge

Real estate follows predictable seasonal patterns, and spring consistently stands out as the busiest time of year. Within that season, mid-April often hits a sweet spot.

By then, buyer activity is ramping up, but inventory has not fully caught up. That imbalance can work in a seller's favor.

Several factors come together during this window:

• High buyer demand. Many buyers begin their searches in early spring and are ready to act by April
• Rising seasonal prices. Home values typically trend upward as the spring market heats up
• Less competition. More listings arrive later in the season, giving early sellers a head start

Warmer weather also improves curb appeal, making homes show better both online and in person. Buyers are also motivated to secure a home before summer, especially families hoping to move before the next school year.

How timing can impact your sale price

When you list your home can directly influence how much buyers are willing to pay and how much leverage you have during negotiations.

Homes that hit the market during peak demand periods, such as mid-April, tend to benefit from increased buyer activity. More buyers competing for a limited number of homes can drive stronger offers, sometimes even leading to bidding wars. That kind of competition often translates into a higher final sale price.

There are a few key ways timing can boost your bottom line:

• More competitive offers: When multiple buyers are actively searching at the same time, sellers are more likely to receive offers at or above asking price.
• Stronger negotiating power: Sellers might be able to negotiate better terms, such as fewer contingencies or flexible closing timelines.
• Fewer price reductions: Homes listed during high-demand windows are less likely to sit on the market, reducing the need for price cuts.

Even small differences in timing can have a meaningful financial impact. For example, selling for just 2% to 3% more during a peak week could mean an extra $6,000 to $9,000 on a $300,000 home, and significantly more in higher-priced markets.

The ripple effect goes beyond the sale price. A faster sale can reduce carrying costs such as mortgage payments, utilities and property taxes, while also lowering the risk of price cuts if the home sits on the market.

Why 2026 might look different

While seasonal trends still matter, the 2026 housing market isn’t identical to the frenzied conditions of recent years.

Inventory has been gradually increasing, and homes in some areas are taking longer to sell. According to the National Association of Realtors (NAR), existing-home sales rose 1.7% month over month in February but were still down 1.4% from a year earlier, a sign that demand remains uneven.

At the same time, price growth has slowed. The median existing-home price reached $398,000, up just 0.3% year over year, suggesting the market is stabilizing after years of rapid gains.

Supply is also improving, though not dramatically. Housing inventory increased to about 1.29 million homes, but economists note it's still growing slowly, which continues to limit affordability in many markets.

As NAR Chief Economist Lawrence Yun put it, "Inventory is growing, but sluggishly," adding that if demand outpaces supply, prices could continue to rise. At the same time, mortgage rate fluctuations continue to shape buyer demand and affordability.

That means:

• Buyers might have slightly more leverage than during the pandemic-era market
• Sellers might need to price more carefully and focus on presentation
• Timing alone won't guarantee a bidding war

Your local market matters more than national trends

National data can provide helpful guidance, but real estate is ultimately local. For example, some Midwest and Northeast markets might see stronger seasonal demand. Parts of the South and West might also have more inventory, increasing competition.

Micromarket factors such as neighborhood demand, school districts and local job growth can influence how quickly homes sell and at what price.

This is why it's important to review recent comparable sales ("comps") in your area and pay attention to how long homes are staying on the market. You might also want to work with a local real estate agent who understands your market dynamics.

When it might make sense to sell outside spring

While spring gets most of the attention, it's not the only time to sell successfully. In the fall, there is typically less competition, and buyers tend to be more serious.

During winter, the market does slow down, but buyers are often highly motivated due to job relocations or timing needs.

In many cases, your personal situation matters more than the calendar. You might need to sell because of a job change, family needs, financial goals or lifestyle shifts. In those situations, waiting for the "perfect week" might not be practical, and that's OK.

How to prepare now if you want to sell this spring

If you're aiming for a mid-April listing, preparation should start well in advance. Experts often recommend beginning at least four to six weeks before your target listing date.

A simple prep checklist includes:

• Decluttering and staging your home to appeal to buyers
• Handling minor repairs and touch-ups
• Setting a competitive price based on local data
• Interviewing multiple real estate agents to find the right fit

One of the most common seller regrets is waiting too long to prepare. Getting an early start can help you avoid rushed decisions and position your home more effectively.

The bottom line

Mid-April is shaping up to be a statistical sweet spot for home sellers in 2026, offering a potential boost in price and buyer interest.

But timing is only one piece of the puzzle.

To get the best results, focus on pricing strategically, preparing your home early and understanding local market conditions. Timing can help, but a strong overall strategy is what ultimately sells your home.

Thinking of making a move? Use the tool below to explore and compare some of today's top mortgage offers:

Related Content:

• 6 Myths About Downsizing in Retirement
• How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2026
• Kiplinger Housing Outlook: Existing-Home Sales Fall Despite Lower Mortgage Rates

Mortgage rates are still a lot higher than they were just a few years ago, and that’s making both buyers and sellers look for creative ways to make the numbers work. One option getting fresh attention in 2026 is the assumable mortgage.

It’s a little-known feature that could allow a buyer to take over a seller’s existing low-rate home loan instead of applying for a new one. In the right situation, that could mean locking in a mortgage rate closer to 3% when new loans are hovering around 6% or more. That kind of difference can significantly change monthly payments and long-term affordability.

While assumable mortgages aren't common, they're worth understanding, especially if you plan to buy or sell a home this spring and want to be prepared if the topic comes up.

So what exactly is an assumable mortgage?

At its core, an assumable mortgage is pretty simple: instead of getting a brand-new home loan, the buyer takes over the seller's existing mortgage.

That means the buyer assumes whatever is left on the loan like the interest rate, remaining balance, repayment timeline and terms. If the seller locked in a below-market rate a few years ago, the buyer may be able to keep that same rate today.

So rather than starting over with a new 30-year mortgage at current market rates, the buyer essentially steps into the seller's loan. It can feel a bit like inheriting a better deal from a different housing market era, but it still requires lender approval and careful planning.

In practice, finding a home with an assumable mortgage — and a seller willing to offer it — can take extra effort.

Why assumable mortgages matter right now

Assumable mortgages are getting renewed attention because of where interest rates are today.

Many homeowners purchased or refinanced when mortgage rates were between 2% and 4%. In early 2026, mortgage rates nationally are closer to the mid-6% range. That gap can make a noticeable difference in monthly payments.

For example, taking over a loan with a 3% rate instead of getting a new mortgage at 6.5% could save a buyer hundreds of dollars each month. Over time, that could mean tens of thousands in interest savings. One key detail: the loan term doesn't reset, so a mortgage with 25 years left stays a 25-year loan.

In a market where affordability is still tight, even modest payment reductions can help buyers qualify for a home or simply feel more comfortable with the long-term cost.

For sellers, offering a low-rate assumable mortgage can make a listing more attractive in a high-rate market and potentially help it stand out.

Which loans can be assumed?

Not every mortgage can be assumed, so this is where things can get a little more specific.

Most assumable loans are government-backed mortgages, including:

• FHA loans
• VA loans
• USDA loans

These programs typically allow assumptions, though buyers still need to qualify with the lender.

Most conventional mortgages, on the other hand, aren't assumable unless the lender specifically permits it and that's not very common. As a result, assumable mortgages remain more of a niche option than a mainstream financing strategy.

How the assumption process works

While the idea sounds straightforward, the process of assuming a mortgage involves a few extra steps.

Here's the general flow:

1. Buyer and seller agree on the purchase.

Both parties decide to move forward with a mortgage assumption as part of the sale.

2. Buyer applies with the current lender.

The buyer must go through a qualification process similar to applying for a new mortgage.

3. Lender reviews finances.

Credit score, income, debt and employment are evaluated to confirm the buyer can handle the loan.

4. The equity gap gets addressed.

If the home is worth more than what’s left on the mortgage — which is often the case — the buyer must cover the difference, sometimes with a large upfront payment or a second loan at today's higher rates.

5. Closing and transfer.

Once approved, the mortgage transfers to the buyer and the home sale is finalized.

The timeline can vary depending on the lender. Some are set up to handle assumptions smoothly, while others may take longer, so patience can be required. In some cases, assumptions can take longer than a traditional closing, depending on how quickly the lender processes the request.

When an assumable mortgage can make sense

Assumable mortgages tend to shine when a few key factors line up.

They can be especially appealing when:

• There’s a big gap between the existing mortgage rate and today’s rates
• The lower payment helps the buyer qualify more easily
• The buyer plans to stay in the home for many years
• The seller hasn’t built up too much equity yet
• The buyer has enough cash to cover upfront costs
• The loan is FHA or VA, which are commonly assumable

Over time, locking in a much lower rate can lead to meaningful savings. For buyers planning to stay put long term, the math often looks better the longer they hold the loan.

When the numbers don’t work as well

Even with a great interest rate, assumable mortgages aren't always the best move.

Here are a few situations where they may be less appealing:

• The seller has built significant equity, requiring a large upfront payment
• The buyer needs a second mortgage at today's higher rates
• A lot of cash gets tied up in the purchase
• Assumption fees and paperwork slow things down
• Sellers prefer faster offers in competitive markets

Sometimes a traditional mortgage, even with a higher rate, can be simpler or offer more flexibility.

Use the tool below to search for some of today's top mortgage offers, powered by Bankrate:

Watch for the less obvious costs

A low interest rate can be appealing, but buyers still need to look at the full picture.

Some assumable loans come with extra considerations, such as:

• Ongoing mortgage insurance: If the loan is an FHA mortgage, it may come with a mortgage insurance premium (MIP) that lasts for the life of the loan. That monthly cost can increase the total payment and should be weighed against the benefit of the lower interest rate.
• VA entitlement considerations: If a VA loan is assumed by a non-VA buyer, the seller’s VA entitlement may remain tied to the property. That can limit their ability to use a VA loan again until the mortgage is paid off or refinanced. In some cases, this can be avoided if another eligible veteran assumes the loan and substitutes their entitlement.
• Assumption and processing fees: Lenders typically charge administrative and assumption fees to transfer the loan. While often lower than traditional closing costs, they can still total several hundred to a few thousand dollars and should be factored into the overall deal.
• Escrow and servicing differences: Assuming a mortgage means taking over the lender’s existing servicing setup, including escrow requirements for taxes and insurance.
• Second financing costs: If the home's value exceeds the remaining loan balance, buyers may need a second loan or a large cash payment to cover the difference. That additional financing will likely come at today's higher interest rates, reducing some of the assumed loan's savings.
• Potential appraisal or repair requirements: Some lenders may still require a home appraisal or certain property conditions to be met before approving an assumption. Any required repairs or updates could add to the buyer's upfront costs depending on how the contract is negotiated.

These details don't necessarily make an assumable mortgage a bad deal, but they're worth understanding before moving forward.

Compare all your options first

Before committing to an assumable mortgage, it helps to run the numbers side by side with a traditional loan.

Look at:

• Monthly payments under each option
• Total interest paid over five, 10 and 20 years
• Cash needed at closing
• Flexibility to refinance later
• Overall long-term affordability

In some cases, a new 30-year mortgage could still offer lower monthly payments, especially if the assumed loan has a shorter remaining term or high insurance costs.

It’s a niche tool, not a shortcut

Assumable mortgages aren't for everyone, and they're not a magic fix for affordability challenges. But in the right situation, they can be a powerful tool.

They tend to work best for buyers who are financially prepared, planning to stay in the home long term and are comfortable navigating a slightly more complex process. For sellers, having an assumable low-rate mortgage can help a home stand out in a higher-rate market.

Even if you don’t end up using one, understanding how assumable mortgages work can help you ask better questions, or answer them, as the spring housing market gets underway.

Related Content:

• Why a 15-Year Mortgage Could Be the Key to a Larger Nest Egg
• 5 Ways to Shop for a Low Mortgage Rate
• We Retired at 62 With $6.1 Million. My Wife Wants to Make Large Donations, but I Want to Travel and Buy a Lake House.

For much of the past three years, the U.S. housing market has felt frozen in place. Millions of homeowners who locked in mortgage rates below 3% during the pandemic-era boom have been reluctant to sell, knowing that any move would likely mean trading a historically low monthly payment for a far more expensive one. That dynamic, known as the "lock-in effect", has been one of the biggest forces constraining housing supply.

But new data and early 2026 market signals suggest that the grip of that effect may be starting to loosen.

Mortgage rates have eased from their 2023 peaks, even if they remain well above the ultra-low levels of the pandemic years. At the same time, more homeowners now carry mortgages closer to today's rates than to yesterday's bargains. Together, those shifts are starting to change both the financial math of moving and, for some sellers, the mindset around whether it finally makes sense to list.

What the lock-in effect is, and why it matters

The lock-in effect refers to the financial hit homeowners take when their existing mortgage rate is far lower than what's available in the current market. If you bought or refinanced in 2020 or 2021, there’s a good chance your rate is under 3%. Even after the recent easing, today's rates are still hovering in the low-6% range.

That gap can translate into a dramatic jump in monthly payments. For many households, moving would mean paying 50% or more for a similar-priced home, simply because of the higher interest rate. The result has been fewer people listing their homes, which in turn has kept inventory tight and prices elevated in many markets.

Low turnover doesn't just affect buyers. It also limits job mobility, downsizing options for retirees and the ability of growing families to move up to larger homes.

More homeowners now hold higher-rate mortgages

A January 2026 analysis from Realtor.com highlighted a milestone that hints at a shift in the market's underlying dynamics: for the first time since the pandemic-era boom, the share of outstanding mortgages with rates above 6% now exceeds the share with rates below 3%.

That may sound like a technical detail, but it carries real implications. It means a growing portion of homeowners are no longer sitting on once-in-a-generation rates. Instead, their existing loans are closer to what they’d face if they sold and bought again.

In practical terms, the "penalty" for moving is shrinking for this group. While trading one 6% mortgage for another still isn’t painless, it’s a far cry from giving up a 2.7% rate and replacing it with something more than twice as high.

Why the lock-in effect has been so powerful

The sheer scale of the pandemic refinancing wave made the lock-in effect unusually strong. In 2020 and 2021, homeowners rushed to lock in ultra-low rates, pushing the average 30-year mortgage rate below 3% for months at a time.

That created a massive pool of households with monthly payments that are, by historical standards, exceptionally cheap. When rates surged in 2022 and 2023, the financial logic of staying put became overwhelming.

For many sellers, it wasn't just about paying a little more. It was about hundreds or even thousands of dollars a month in additional housing costs. That reality kept listings scarce, even as buyer demand ebbed and flowed with rate changes. Higher insurance premiums, property taxes and everyday living costs only made the prospect of moving feel even riskier.

Signs the lock-in is loosening

Several indicators suggest the market may be entering a new phase.

First, as the Realtor.com data shows, more homeowners now carry mortgages above 6%. That means fewer people are anchored by rock-bottom rates, and more are closer to today’s market reality.

Second, mortgage rates themselves have settled into a narrower range. While still elevated compared to pre-pandemic norms, they've come down from their highs, making the jump from an existing loan to a new one feel less extreme for some households.

Finally, lenders are seeing modest upticks in mortgage applications and refinances, a sign that more buyers and homeowners are at least testing the waters. It's not a surge, but it does suggest that activity is stirring after a long period of stagnation.

If you're curious about today's rates, use the tool below, powered by Bankrate, to explore and compare some of today's top offers:

Affordability pressures persist

None of this means the housing market has suddenly become cheap.

Even with rates easing, they remain well above the levels that fueled the buying frenzy of 2020 and 2021. Home prices, meanwhile, have stayed resilient in many regions due to limited inventory and strong underlying demand.

For first-time buyers in particular, monthly payments still consume a large portion of their income. Higher insurance costs, property taxes and maintenance expenses add to the strain, reinforcing hesitation even as more listings trickle onto the market.

In other words, a fading lock-in effect may help with supply, but it doesn’t solve the broader affordability challenge on its own.

Regional variations in the lock-in effect

The impact of the lock-in effect isn’t uniform across the country.

In coastal and high-cost markets, where home prices, and therefore mortgage balances, are larger, the difference between a 3% rate and a 6% rate can be staggering. That has kept many would-be sellers on the sidelines, especially in parts of California, the Northeast and major metro areas.

In more affordable regions, particularly across the Midwest and parts of the Northeast, the payment gap tends to be smaller in absolute dollar terms. That has allowed inventory to circulate a bit more freely, even during periods of higher rates.

These regional differences help explain why some markets are already seeing more listings and price moderation, while others remain tightly constrained.

Life changes vs. financial math

Another force quietly weakening the lock-in effect is time. Life doesn't stop for mortgage rates. Job changes, growing families, divorce, retirement and health considerations all create pressure to move, regardless of what the financial math says.

At the same time, many longtime homeowners are sitting on significant home equity after years of price appreciation. That equity can soften the blow of a higher rate, especially for sellers who plan to downsize or relocate to more affordable areas.

For this group, the decision increasingly becomes less about securing the perfect interest rate and more about finding a home that fits their next stage of life.

What this means for buyers and sellers

For buyers, a gradual easing of the lock-in effect could translate into more choice. Even a modest increase in listings can reduce competition and, in some markets, temper price growth.

For sellers, the conversation is shifting. Instead of focusing solely on the rate they'd be giving up, more homeowners are weighing lifestyle goals, equity gains and long-term plans.

Mortgage rate forecasts also play a role. If rates briefly dip below 6% later this year, as some predict, that psychological threshold could nudge more buyers and sellers off the sidelines at the same time.

Where the housing market goes from here

The lock-in effect hasn’t vanished and millions of homeowners still hold mortgages that are far cheaper than anything available today. But its hold on the market appears to be loosening.

As rates stabilize and the composition of outstanding mortgages continues to change, the housing market in 2026 may regain some of the mobility it's been missing. More listings won’t solve every affordability problem, but they could help thaw a market that’s been stuck in place for far too long.

For both buyers and sellers, that movement alone could be a sign that the long freeze is finally starting to break.

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You don’t need ghosts in the attic to scare off homebuyers. Sometimes a home’s past is spooky enough. Even the most beautiful homes can give buyers pause if their backstory raises eyebrows.

Whether it’s a murder, a suicide, a notorious crime or even a rumor of paranormal activity, homes with unsettling histories are known in real estate as “stigmatized properties.”

For sellers, that stigma can raise difficult and occasionally eerie questions. Do you have to tell buyers your house is haunted? And could it hurt your home’s value? Here’s what to know about disclosing (and marketing) a home with a haunted reputation.

What is a “stigmatized” home?

A stigmatized property isn’t physically defective; it’s psychologically or socially marked in a way that might make buyers uneasy. That could include:

• A death on the property
• A crime, such as a murder or drug activity
• A history of paranormal reports or local lore
• Past ownership by someone notorious or controversial

Even when a home is in excellent condition, perception can be as powerful as reality. A death on the property might be enough to turn them away, and that’s not always something sellers can easily prove or explain.

Others might simply fear the unwanted attention that comes with a home known for ghost tales or true-crime rumors.

Stigma can influence a sale, from fewer showings to lower offers. Still, not all stigmatized properties lose value. As a young real estate agent, I was often surprised by how many of these listings drew extra interest from buyers eager to own a piece of history.

I once helped a client purchase a commercial property in Detroit, rumored to have ties to the mafia in the 1920s. The basement still showed traces of its past with remnants of a speakeasy that hinted at the city’s bootlegging era. Rather than scaring buyers away, the building's story added intrigue. The couple who bought it were thrilled to own a slice of Detroit's history.

In that case, the seller didn’t have to disclose it, but depending on where you live, the rules around what sellers must reveal can be surprisingly different.

The surprising patchwork of state disclosure laws

When it comes to disclosing a home’s haunted history, the rules are far from uniform, and in some states, silence is perfectly legal.

Only a handful of states have specific statutes addressing stigmatized properties.

• California: Sellers must disclose any death that occurred on the property within the past three years.
• Alaska: Agents must disclose a murder or suicide that happened on the property within the past year.
• South Dakota: Sellers must disclose any homicide or suicide that occurred while they owned the property.
• Massachusetts, Minnesota and New Jersey: Sellers don’t have to disclose alleged paranormal activity, but if a buyer asks directly, they can’t lie.

In most other states, the rules are broader. Sellers generally must disclose material facts that could influence a buyer’s decision, and whether a haunting qualifies often comes down to interpretation.

It’s also worth noting that many real estate agents are bound by ethical disclosure rules that go beyond state law. If something about the property’s reputation could influence the sale, most real estate agents will err on the side of transparency. Real estate works best when you lead with honesty, even if it means revealing a skeleton or two in the closet.

How to price a home with a spooky reputation

Does a haunting hurt your home’s value? The data is mixed. A Zillow survey found nearly 70% of buyers would consider a haunted house if it met their other must-haves: price, location and amenities. Most said they’d expect a discount only if the haunting were well known or the property had been the site of a serious crime.

If your home has a complicated past, stick to facts, not folklore. Work with an agent who knows your state’s disclosure laws and can help position the property to get top dollar.

A spooky story doesn’t always scare off buyers. Some of the most notorious homes in America have sold for millions, proving that the right blend of history and intrigue can still attract serious offers.

Haunted homes that still sold for a scary good price

Even the most infamous properties can find buyers. These haunted or historically notorious homes prove that reputation doesn’t always stop a sale, though it can influence the price.

The Conjuring House

Location: Burrillville, Rhode Island

Last sold for: $1.53 million (2022)

Built in 1736, this farmhouse inspired The Conjuring after reports of paranormal activity from the Perron family in the 1970s. It now operates as a destination for ghost tours and investigations.

LaLaurie Mansion

Location: New Orleans, Louisiana

Last sold for: $4.3 million

Once owned by socialite Madame Delphine LaLaurie, the mansion is infamous for the abuse of enslaved people in the 1830s. Actor Nicolas Cage later owned it before losing it to foreclosure.

Winchester Mystery House

Location: San Jose, California

Last sold for: $135,000 (1922)

Heiress Sarah Winchester spent decades expanding this labyrinth of a mansion, believed to be haunted by the spirits of those killed by Winchester rifles. It’s now valued in the millions.

Amityville Horror House

Location: Long Island, New York

Last sold for: $605,000

Made infamous by the 1974 DeFeo family murders and the Amityville Horror book and films that followed, this colonial-style home sold for well below market value due to its tragic history. Despite renovations and address changes, its reputation remains one of the most notorious in American real estate.

What to say (and not say) when listing your home

If your home has a history buyers may have heard about, be mindful of your wording to prevent any Halloween-style surprises at closing.

Be honest, but not sensational. You don’t need to include “Murder House on Maple Street” in your property description, but you shouldn’t conceal facts that might be easily discovered with a Google search.

Answer questions directly. If a buyer asks, “Has anyone died here?” and the answer is yes, say so plainly. Honesty builds trust and reduces the risk of disputes later.

Avoid feeding rumors. If neighborhood gossip claims your house is haunted, you don’t have to validate it, but it’s smart to acknowledge what’s public record or widely known. “The home has been part of local folklore” is a neutral way to address it. When possible, provide documentation, news coverage or public records to clarify the facts.

Focus on positives. Emphasize the home’s strengths, updated systems, modern design, great location while being prepared to discuss its history privately if asked.

A not-so-scary ending for sellers

Haunted or not, every home has a story. If yours happens to include one that’s a little darker, you don’t need an exorcist, just a disclosure strategy.

Understand your state’s laws, be transparent when asked and work with a knowledgeable agent who can guide you through sensitive buyer conversations. After all, one person’s nightmare listing might just be another’s dream home.

Luckily, your home insurance policy doesn’t require you to disclose any ghosts. Use the tool below to explore and compare some of today’s top home insurance offers, powered by Bankrate:

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Spring and summer are the best times to sell a home. After hiding inside all winter, spring is when many buyers come out to scour the market for what’s available. If there’s enough interest in your home, that could mean a bidding war and possibly top dollar.

The Federal Reserve is expected to begin cutting rates as soon as September, with CME FedWatch signaling a likely quarter-point reduction. A cut could make mortgages more affordable, potentially drawing more buyers into the market.

Even though the Fed held rates steady at its last meeting, the prospect of cuts ahead makes timing more important than ever. Here’s what to consider before deciding whether to sell now or wait.

How to figure out if it’s time to sell your house or wait

Economic factors significantly influence homebuying. If you’re thinking about selling, the decision isn’t just about timing the market — it’s about asking yourself the right questions.

Looking at mortgage rates, housing demand, the cost of re-buying and the risks of waiting can help you decide whether to list your home now or hold off.

1. What are mortgage rates like?

Right now, mortgage rates are still high. As of August, a 30-year fixed-rate mortgage averages 6.58%. That’s up from this time last year and nearly three times the rate in January of 2021.

While treasury yields have a higher influence on mortgage rates than the rate set by the Federal Reserve, Fed interest rate changes still impact loans and lending products. When the Fed makes benchmark interest rate changes, other groups usually fall in line with them.

For example, if a prospective buyers want to lock in a low rate, they might want to hold off until the Fed cuts interest rates.

At the same time, if sellers really want to sell now, there might not be as much buyer interest. This might mean having to lower the asking price. Timing matters.

Explore and compare some of today's best mortgage offers with the tool below, powered by Bankrate:

2. Is there high demand?

No one can time the market perfectly, but we can get a sense of whether conditions favor buyers or sellers. In a buyer’s market, there are plenty of homes on the market at competitive prices, giving buyers the upper hand to negotiate.

In a seller’s market, demand outpaces supply. With more buyers than available homes, competition can push sale prices higher — sometimes well above asking.

If you see signs that a seller’s market is on the horizon, listing sooner could work to your advantage. But if your neighborhood is already flooded with new listings, it may be wise to wait until conditions shift back in your favor.

3. What’s the cost to re-buy?

Selling your home at top dollar is nice but think about the steps after that. For example, where are you planning to live and can you afford your new place?

Factor in everything — mortgage rates, property taxes, home insurance, and potential homeowners association fees — since these costs can add up quickly. It might help to use a mortgage calculator to see how much home you can afford.

Remember, you’ll still need to repay your lender any of the outstanding balance of your existing mortgage. Do the math first. Get an idea of how much money will be left after all the bills have been paid and what you'll likely pocket when the home transfer is done.

4. Is it risky to wait?

Home prices remain higher than they were five years ago, but sales have slowed recently. That raises a tough question: if you wait, do you risk your home losing value?

If you’re not moving for work or don’t have the financial flexibility to relocate, there may be no need to rush. But waiting too long could mean more of your neighbors deciding to list their homes for sale, increasing competition.

More listings can quickly shift the market in buyers’ favor, which could force you to lower your asking price and reduce your final sale proceeds.

Is it time to sell your home right now?

Ultimately, trying to time the market doesn’t usually work. Rather than figure out what the competition is doing, think about how selling impacts you and your family. If it costs more to stay where you are, you may want to sell your home to stop bleeding money.

If you don’t need to move but just want to, crunch the numbers to compare the cost of your new living space and where you’re at right now.

If you can afford to hold off or can’t find a better deal than what you’re paying, staying put might be worth it.

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Does this sound familiar?

Our longtime client Dr. "G" dropped by the office with a question: "Beave, I want to sell the home I inherited from my parents years ago as is and by myself, without a real estate agent. Why pay a large commission? I'm educated. How complicated can it be?

"I haven't lived in it since I was in high school, and it has been a rental for over 20 years. Frankly, I have no idea of its condition, and the tenants never complained about a thing, and because we kept the rent low, they took care of all repairs themselves.

"I read an online story that said putting 'as is' on the sale ads and the contract means that if anything goes wrong with the home, the seller can't be successfully sued for anything.

"Is that true? Or do you think I should have my own real estate agent?"

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Do you know what you are getting into?

When I ran this question by Southern California-based real estate attorney Luke Carlson, he said, "Your client is correct — it is possible to sell a home without having a seller's agent. But should you? Do you know what you are getting yourself into?"

He pointed out, "There are two issues here — selling a home yourself and selling it as is. Both have significant risks if you do not understand and meet your legal obligations."

To that, I would add there are enough moving parts to the sale of a house by the owner (known as an FSBO) to give anyone unfamiliar with the complexity of this transaction motion sickness.

Carlson listed some of the pitfalls of an FSBO:

1. You could overvalue or undervalue the home

Do you know how much homes in your area are actually selling for? Ask too much and the house just sits on the market.

Underpricing may raise suspicions that there's something wrong with the property. Or you could end up selling for far less than the market price.

A real estate agent has the tools to establish a reasonable price for your neighborhood.

2. It can become an emotional roller coaster

Selling the home you grew up in or where you raised your family can evoke a wide range of feelings. Realizing that you are not going back there again can be a deeply emotional experience.

An experienced real estate agent can be that shoulder to lean on at this time.

3. Lack of knowledge: You don't know what you don't know

Without the guidance of a real estate agent, you may not be aware of all the necessary legal documents or how to properly complete them.

The closing process is complex, and it can involve a number of steps that are typically handled by lawyers or legal professionals, depending on the state where you reside.

4. You could waste valuable time dealing with unvetted buyers

When selling privately, folks often lack experience in sniffing out unvetted buyers and can wind up dealing with people who aren't financially qualified to purchase the home.

The result is frustration, disappointment and wasted time when the deal falls through.

Myth: Selling your home as is frees you from all responsibility

Carlson also highlighted a risky assumption some as-is buyers make. "Dennis, one of the most dangerous beliefs floating around is that (some sellers think that) simply writing 'as is' on sales material, contracts — anything connected to the sale — is a get-out-of-jail-free card, and they are immune from being sued. The false message is that the seller can just walk away from any issues the house could have."

The legal requirement is transparency, he noted. "Using the words 'as is' when selling doesn't mean you can sweep problems under the rug. Do so, and don't be surprised if you find yourself in hot water, as there still is a legal obligation to disclose known issues with your property."

If after the sale, a buyer discovers an issue that they feel should have been disclosed, "You may be given a choice," Carlson said. "'Pay to repair the damage, or we go to court.'"

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So what would be considered "known issues"? Carlson pointed out, "This typically means revealing serious problems, such as water damage, structural issues or hazardous conditions like asbestos, lead paint, electrical problems, tendency to flood — the list could go on for pages."

Carlson suggested a seller should invest in a home inspection and give the written findings to the buyer. "This would prove valuable in the event of a claim that you covered something up," he noted.

What does selling your home as is really mean, then?

"Listing your home 'as is' means that it is in its current condition, and you are not making repairs," Carlson explained. "You are disclosing all the defects of which you are aware, and the buyer is accepting the house as it is."

Carlson concluded our interview with this caveat: "Sellers often choose to sell as is when they can't or don't want to invest in repairs. Common situations include inherited properties, estate sales or financial issues. Selling as is typically results in lower offers and fewer interested buyers."

Bonus tip: For anyone whose homeowners association (HOA) is driving them nuts, Carlson's recently published book, Bad HOA: The Homeowner's Guide to Going to War and Reclaiming Your Power, is filled with useful tips. It is currently an Amazon bestseller, and I will be discussing I in an upcoming article.

Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

When you're thinking about retiring, downsizing could come to mind — swapping your big house for something smaller and more compact.

It's often seen as a smart move for retirees, but it's not for everyone. You might not have the funds, energy or interest to pack your belongings and move to something smaller, and that's OK. But if the idea truly suits you, downsizing can be a practical way to ease into retirement.

However, before you start boxing up the last 25-plus years of your life, don't buy into the common false narratives, such as expecting a big cash windfall from the sale or drastically slashing living costs — things that often don't hold up.

Instead, approach your retirement planning with perspective and steer clear of these six myths.

Myth 1: Everyone downsizes in retirement

Not true. While many retirees choose to move into a smaller home when they retire, most stay put for a variety of reasons — including the cost of buying a new home, leaving years of memories and the relationships they’ve made with neighbors, among others.

Kelly Z Homes reports that 3.6 million baby boomers are expected to downsize by 2037, and 51% of retirees age 50-plus have already moved into smaller homes. That might be true, but among boomers who own homes, 54% say they never plan to sell the house they live in, according to a poll from Clever Real Estate.

Many states with a higher share of older adults, such as Florida and West Virginia, also see retirees staying rather than moving, often due to strong ties to the community, high housing costs, rising mortgage rates, pleasant weather and health or family ties.

Myth 2: You’ll see a significant financial gain

A paid-off mortgage might lead you to expect a substantial profit when selling your home, but that’s not always the case. Selling can be challenging, particularly if your home hasn’t been updated in some time, and you might not get enough to afford the skyrocketing price of new homes.

In the last several years, the housing market’s prices have soared. Add in a lack of new homes for sale and interest rates from 5% to 6% to the mix, and there seems to be little financial benefit to buying a new home. Redfin says the median price of a new home is now $398,771, down 0.37% year-over-year. The Fed lists the price at about $514,600, and Zillow puts it at $368,198.

Myth 3: Selling your stuff equals a cash windfall

Downsizing and thinking of holding a garage sale to offload furniture, extra dishes, knick-knacks and clothes? It might sound like a great plan, but when you factor in the hours spent pricing items, setting up tables and haggling with strangers to earn an average of $500 to $1,000, all that work might not be worth it.

If you'd rather skip the work and list your items on Facebook Marketplace, jot this down: Only 16% of Facebook users regularly shop or buy items from Facebook Marketplace.

Besides that, your stuff might be more valuable to you than to someone else, and sadly, it can be tough to find someone to take it off your hands. If you have unique pieces but aren’t sure of their value, have an expert evaluate them before putting them up for sale.

All things considered, you might earn a bit of extra cash, but selling your stuff likely won’t cover the cost of your move.

Myth 4: You won’t have to borrow to move

It’s tempting to daydream about how much cash you’ll pocket from selling your home. While you might get enough money to buy a smaller home outright, that’s not guaranteed in today’s housing market, and you might need a new mortgage to avoid tying up all your cash in the property.

To put that into perspective, let's say you purchase a $400,000 home and use the profit from your home sale for the 20% down payment. A 15-year mortgage at 5.25% would result in monthly principal and interest payments of approximately $2,577.

On top of that, you’d face closing costs, property taxes and possibly HOA fees, which can quickly add up. Depending on your location, taxes and insurance costs could be even higher, further increasing your expenses.

Quick tip: Don't discount the cost of moving itself. Less than 250 miles can cost around $600 to $5,000; a cross-country move can cost $12,000 or more.

Myth 5: You’ll have fewer living expenses

A small home in a high-cost city, such as San Francisco or New York, can cost more than a larger one in a rural area.

For instance, a 600-square-foot condo in a pricey neighborhood might exceed the price of a 2,000-square-foot house in a less expensive region. If a smaller home requires significant renovations to meet your needs, costs can increase even further, and smaller spaces could prompt you to spend more on items such as sheds or storage units, gym memberships and dining out if the home lacks sufficient space.

Smaller homes can appreciate more slowly in some markets, impacting long-term financial benefits, and it’s possible to pay thousands more in property taxes, depending on where you relocate.

In many cases, smaller homes could reduce some expenses, such as utilities, maintenance and insurance. However, location, lifestyle and customization needs can offset any real savings.

Myth 6: You won’t miss the extra space

Not to be a buzzkill, but transitioning from a 4,000-square-foot home to a 1,200-square-foot one requires major adjustments.

Choosing which furniture and family heirlooms to keep or pass to your children can be challenging. If your family lives out of state, accommodating their visits could also be a concern.

Rather than dramatically downsizing, say from a 3,000-square-foot home to a 1,000-square-foot home, you might consider a home that still offers enough space to entertain.

Downsizing in retirement — the choice is yours

It’s easy to fantasize about downsizing in retirement — less upkeep and fewer living expenses, a new town, friends and memories. It might be the right move for you.

If done correctly, downsizing can be a good idea, and you might walk away with a substantial amount of money from the sale of your current home.

A word of advice: Run the numbers before you start packing.

If you downsize too early, you might miss the opportunity to benefit from additional equity growth in your current home. Apart from that, holding onto your home could provide more flexibility later, such as renting it out for an extra influx of money each month.

Downsize or stay put; ultimately, the decision is yours.

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Editor's note: This is the first of a two-part series. Part two is Seven Financial Considerations When Downsizing for Retirement.

During COVID, I had two clients sell their Washington, D.C.-area homes to move to Florida. Within 12 months, they had sold their Florida homes to re-buy in D.C.

It turned out the place they vacationed wasn't quite the same when you don't get to eat out every meal and you must endure a Florida summer.

The cost? Capital gains taxes, transfer taxes and agent commissions ate into about 20% of the home equity each client had built.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Research, including The Harvard Study of Adult Development and the University of Michigan Health and Retirement Study, dives into the drivers of happiness in retirement. Most studies find physical and emotional health, social relationships and financial security to be highly correlated with retiree contentment.

When thinking about possibly downsizing or moving, it's helpful to use these three components of happiness in retirement as the basis for your decision framework. Let's break the thought process down.

1. Health factors to consider in a move

About two years after my clients' ill-conceived moves, a good family friend relocated from Maryland to Texas. Our friend had some pre-existing health conditions, and it turned out to be harder than expected to replace their network of doctors in Maryland.

I don't know if this would have caused them to change their decision, but frequent trips back to the Old Line State for care proved to be costly and stressful.

Physical and mental health are often considered to be the No. 1 driver of retirement happiness. But this is not just about where your doctors are. It's being in a place that allows you to maintain your health and age well.

Are there good places to walk (to maintain mobility)? Is there easy access to public transportation and ride-sharing apps?

2. Social relationships: Will they be better or worse?

Grandkids top all when it comes to a retirement relocation. As a parent of three young kids with local grandparents, I am very thankful for this.

However, you need to also consider where your friends are, especially those who are in a similar life stage, and whether you can make new friends easily.

The trouble with evaluating a relocation based purely on kids and grandkids is that they are probably in their busiest stage … just as you are entering your least busy stage.

Once- or twice-a-week meet-ups are great, but they won't fill your schedule. Unless, of course, you are providing daycare.

Continuing care retirement communities (CCRCs) tend to be easy places to find friends as there is a large cohort of folks living and playing bridge together. Think college, but 60 years later.

There are also what are often referred to as naturally occurring retirement communities (NORCs), which are exactly what they sound like. These condo buildings don't have age restrictions but have naturally become majority retirees.

3. Cost: Try not to make it your top deciding factor

Imagine joining a pool that's half the cost of the one down the street. The problem with the cheaper pool is that you don't have any friends there and it's too deep for you to stand.

If you can afford the more expensive pool with the shallow side and friends, it probably makes sense to pay up.

I often advise clients not to move primarily based on cost unless it's necessary. Said differently, I believe health and social relationships matter more.

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Of course, once you do decide to move, you will want to take cost into consideration. At that point you should know that cost is not just cost of housing, although that's the big one.

You also need to consider state income taxes, property taxes, taxation of retirement distributions and estate taxes.

We tend to rely on financial planning software to get an idea of how much more you can spend per month if you move to a lower-cost area. If you're interested, you can access a free version of that software.

Our tax planning software allows us to change the state return and see how much more or less your state income taxes would be if you moved. Unfortunately, there's no free version of that one.

In part two (link in the Editor's Note above), I dig deeper into how to evaluate the most important cost considerations. Hold your breath.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

When you finance your home with a mortgage, your lender will likely require you to maintain an escrow account. With this setup, a portion of your monthly mortgage payment is set aside to cover your annual property taxes and home insurance premiums.

Lenders want to protect their financial investment when they loan you money; an escrow account acts as a forced savings account to ensure those property expenses are paid on time and in full, says Ed Santiago, a branch manager with Fairway Independent Mortgage in Wayne, Pa.

Lenders hold back one-twelfth of the estimated annual expenses each month to pay your taxes and insurance. Some lenders require an additional cushion of up to two months' worth of expenses to avoid potential escrow shortages. If you end up with an overage because you get a cheaper insurance policy or your property taxes decrease, your lender will send you a refund check.

Because property-tax assessments and insurance rates tend to rise over time, the amount collected for escrow can fluctuate. So while your principal and interest payments remain the same for the life of a fixed-rate mortgage, your total monthly payment may change from year to year.

Homeowners felt the sting of both higher property-tax bills and soaring home insurance premiums in 2024. According to data from Intercontinental Exchange, home insurance premiums rose by an average 14% from the previous year, and 2024 property-tax bills jumped 2.7%.

Escrow rules

Government-backed mortgages — Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) loans — require escrow accounts regardless of the down payment amount.

For conventional loans, most lenders require an escrow account if you put down less than 20% on the home purchase. In some cases, though, you can get an escrow waiver with a loan-to-value ratio of 95% or less, a good credit score, and no recent mortgage payment delinquencies or defaults on past escrow waivers. However, you’ll pay 0.25% of the loan amount for an escrow waiver.

A waiver makes sense only if you have sufficient disposable income to cover larger (but less frequent) tax and insurance payments and the financial discipline to keep up with them independently, Santiago says. Check how often your locality collects property taxes — some collect only once or twice a year, leading to bigger bills, while others collect quarterly.

If you get an escrow waiver, you could put money to pay your insurance and tax bills in a high-yield savings account, earning interest on the funds. (But for this to be worthwhile, your interest earnings would need to be greater than the fee to waive escrow.)

Additionally, if you switch home insurance providers or successfully appeal your home's assessed value for property taxes, you may not face as much hassle and paperwork. But most loan servicers offer online account management, so updating your account isn't as cumbersome as it used to be, Santiago says.

And the flexibility of managing escrow expenses on your own isn't without some risk. Failing to pay your property taxes could result in your county filing a tax lien against your home, potentially leading to foreclosure.

Likewise, if you don't pay your homeowners insurance premiums and let the coverage lapse, you're breaching your agreement to maintain home insurance as a condition of taking out a mortgage. In that event, your loan servicer can require force-placed homeowners insurance, which is usually costlier and less comprehensive, Santiago says.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on topics submitted by readers. This week, she’s looking at questions on home sales and calculating tax basis in a home. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Selling a Home Early Because of Job Change

Question: I am married, and I bought my home 14 months ago. My company is relocating, and I must move out of state for work. I plan to sell the home next month. Can I exclude any gain from the home sale?

Joy Taylor: Generally, if you have owned and lived in your main home for at least two out of the five years before the sale date, up to $250,000 ($500,000 for joint filers) of your gain when you sell the home is tax-free, and you would pay capital gains tax on the excess gain. In your case, you don’t meet the two-out-of-five-year ownership and use periods. However, you are not out of luck. Some people who sell a home early may still be eligible for a portion of the exclusion, depending on the circumstances. For example, early sales due to job changes, illness, or unforeseen circumstances qualify for the partial exclusion. The percentage of the $250,000 or $500,000 gain exclusion that can be taken is equal to the portion of the two-year period that you used the home as a residence. You can use days or months for this calculation.

For example, say you bought your home for $740,000 in April 2024, and you sell it for $790,000 in July 2025 because of your out-of-state job move. The maximum gain exclusion in this instance is $312,500 ($500,000 x (15/24)). So, your $50,000 gain would be fully excluded from income and be tax-free.

2. Unforeseen Circumstances

Question: Does COVID qualify as an unforeseen circumstance for purposes of the home sale exclusion?

Joy Taylor: I am not entirely certain what you mean here. For example, are you referring to a homeowner who was sick and in the hospital, or are you referring to someone who decided to temporarily relocate during the pandemic? The tax code doesn’t define an unforeseen circumstance for purposes of the home sale exclusion, but the underlying regulations provide more detail. You can find the applicable regulation section here. Note that the regulations set forth safe harbors and factors to consider. But just because a scenario isn’t listed as a safe harbor doesn’t mean that it would not otherwise qualify as an unforeseen circumstance. The IRS has issued private letter rulings in various scenarios over the years, but I don’t see one related to COVID. At the end of the day, this is a facts-and-circumstances analysis and a judgment call.

3. Calculating Tax Basis in a Home

Question: I am thinking of selling my main home that I have owned for many years. I know I will have a large gain that exceeds the home sale exclusion, so calculating my home’s tax basis is very important to me. Can you tell me how to figure my tax basis in my home?

Joy Taylor: To figure the tax basis in your home, you would start with the original cost (including the mortgage if you financed the purchase), add certain settlement fees and closing costs, and add the cost of any additions and improvements that add to the value of your home, prolong its useful life or adapt it to new uses.

IRS Publication 523 has some examples of improvements that increase your tax basis in the home and those that don’t. Examples of big-ticket items that increase basis include adding a room, installing new air-conditioning, renovating a kitchen, finishing a basement, or putting in new landscaping or a pool. Smaller-ticket capital improvements can also increase basis. These include new doors and windows, duct and furnace work, built-in appliances and water heaters. Repairs, maintenance and improvements that are necessary to keep your residence in good condition but don’t add value or prolong its life generally don’t hike the basis.

Note that if you used a room or other space in your home exclusively or regularly for business, or if you rented out your home in the past, you must reduce the tax basis in your home by any depreciation deductions you were eligible for.

Homeowners who keep good records will find it easier to calculate tax basis. It’s best to keep all your home improvement receipts and invoices in one folder. If you didn’t keep these records, you can try to estimate the costs by looking at old bank or credit card statements, or call the company that originally did the remodeling or put in the upgrade.

4. More on Calculating Tax Basis

Can the cost of the following items be added into my home’s tax basis?

• Replacing windows with better ones or installing energy-efficient windows or skylights
  Joy Taylor - Yes ✅
• Replacing the driveway two times over 35 years
  JT - Yes ✅
• Replacing my water heater, furnaces and air conditioning systems with better ones
  JT - Yes ✅
• Removing trees that could come crashing down on my home
  JT - Probably
• Planting perennials, shrubs and fruit trees on my property
  JT - Probably
• Installing a more modern sprinkler system
  JT - Yes ✅
• Paying a lawn service to come out each year to maintain my lawn/shrubs
  JT - No ❌
• Replacing carpets
  JT - Yes ✅ (if wall-to-wall carpeting)
• Periodic painting of the home to protect the life of the wood underneath
  JT - No ❌
• Replacing cedar siding
  JT - Yes ✅

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter and The Kiplinger Letter can ask Joy questions about tax topics. You'll find full details of how to submit questions in The Kiplinger Tax Letter and The Kiplinger Letter. (Subscribe to The Kiplinger Tax Letter or The Kiplinger Letter.)

We have already received many questions from readers on topics related to IRA contributions, modified adjusted gross income, qualified charitable distributions and more. We’ll answer some of these in a future Ask the Editor round-up. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

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Manny Varas takes his wine seriously — so seriously that he built a wine cellar at home to house his 900-bottle collection.

The contemporary space features a domed ceiling, insulated glass and club seating for tastings. Forgoing the classic wooden cellar look, Varas opted for stone walls and metal display racks.

"I have about 150 bottles displayed and 800 hidden away. It just shows a difference in style where a lot of our clients and I are trying to do 'less is more,' " says Varas, founder of construction company MV Group USA in Miami. "It's there, but we don't have to have everything exposed like the old traditional wine cellars."

As wine cellars become more popular in higher-end homes, some homeowners might wonder if the investment is worth it — for their wine collection or their wallet.

Passive wine cellars, for the casual enthusiast

Before assessing the value, it helps to understand the two types of wine cellars — passive and active.

A passive wine cellar isn't refrigerated and typically has less storage. "A passive wine cellar can still be in a separate room with a door. A lot of times we'll do the frame of glass — though the cellar is for storage, it's mainly for looks," says Audrey Frances Doty, founder of Audrey Frances Design in Atlanta.

Passive wine cellars are often installed in cool, dark places (such as finished basements) and can start at around $5,000. "Usually, the person is not a serious wine collector," says Doty. "They're into it, they love drinking it, but don't have an extensive collection."

Leveling up and keeping cool with active wine cellars

For serious collectors, active wine cellars offer more control of refrigeration and humidity — and have the price tag to match.

Instead of drywall, active wine cellars use mold-resistant blue board and spray foam insulation to protect the room from heat. Varas says a 300-foot wine cellar usually starts around $60,000.

Some people install wine fridges within their cellars so they can store different types of wines — such as Champagne, which is kept at a cooler temperature than Merlot — in the same space.

Do wine cellars add resale value to a house?

It depends.

"It's hard to put a dollar amount on it, but what we see, especially in homes above $5 million, is you need a hook," says Harvin Greene, a real estate agent with Dorsey Alston Realtors in Atlanta. "You need something that pulls people in and is unique."

Luxury cellars add a unique element that can set a house apart, and at that price level, a wine cellar is almost expected, even if they’re not always used for wine.

"We're starting to see people use them a lot for bourbons, tequilas and also cigars," says Greene. In homes under $2 million, she finds that cellars aren't as appreciated because space is more limited, and owners aren’t storing high volumes of wine.

In these homes, wine cellars won't raise the appraised value, but a thoughtfully integrated wine feature, such as a wine fridge or a small-scale cellar, stands out. "That's a nice feature that doesn't take up a lot of square footage and doesn't require a massive amount of wine to fill it," says Greene.

Who really 'needs' a wine cellar in their home?

Wine cellars make the most sense for wine enthusiasts investing in their collections, which often means buying in bulk and tracking maturation dates.

"I like to be able to understand when a wine is going to be at its maturity and peak," says Varas. "It's a fun investment strategy where you buy a bottle that you're not able to drink for several years and you’re getting it at a discounted rate."

For example, you might buy a 2021 bottle of Château Lafite Rothschild that doesn’t mature until 2029. "That bottle you could purchase today at $200 and a fully matured one that's ready to drink, it's $1,500," he says. "But you're able to buy it at an 80% discount because of the wait."

Apps such as InVintory help track when bottles are ready.

Wine cellars don't have to be luxurious to be functional. In Napa, Stevie Stacionis, a wine strategist and restaurateur, recently built a wine cellar in her garage for about $2,200 with the help of her handy husband. Industrial Metro rack shelving lines the 72-square-foot room, the wine bottles reside in stackable cardboard tubes, and thick rubber mats cover the concrete floors (in case of earthquakes). The cellar stays at a cool 57 degrees with controlled humidity to keep the corks plump.

Protecting the wine’s integrity was paramount; the aesthetics, not so much.

"About 90% of the wine in our cellar, I'm going to drink it very soon," says Stacionis. "However, I do care about how intact it stays, and I know that I don't keep my house at a proper temperature."

Stacionis mostly buys wines made with minimal intervention, so they're more sensitive to temperature fluctuations. "You want to protect the wine from heat, light and oxygen," she says.

The bottom line on home wine cellars

Ultimately, a full-fledged wine cellar isn't for everyone, especially if you're not buying wine by the case or trying to design a showpiece. It's not all or nothing, however. For those who don't want to invest in a wine cellar, a wine cooler is a step in between.

Stacionis suggests a EuroCave wine cooler, which mimics a wine cellar's temperature and humidity settings without taking up too much space.

"If you're buying wine and your house is never going to be more than 70 degrees, and you think you're going to drink the wine within the next few months, just keep it in the fridge," says Stacionis. "If you're really looking to save it for longer than a year, it just needs to be at a proper temperature in a wine fridge."

Whether you’re growing a Burgundy collection or stocking up on enough Sauvignon Blanc to last through summer, properly stored wine is a luxury itself — club seating optional.

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When Barbara Corcoran bought her dream home in 2015, she didn’t just spend $10 million to own it — she invested at least another $2 million in renovations. Now, a decade later, she’s putting the home on the market for $12 million.

Corcoran, a star on the wildly popular investment show “Shark Tank,” is feeling the effects of aging. Now 76 — and her husband, Bill, 80 — are looking to downsize from their two-story luxury penthouse to a home that better suits their evolving needs.

Corcoran’s situation isn’t unique. According to a Merrill Lynch study, more than half of Americans aged 50 and older move into smaller homes after retirement. If you’re planning to age in place or find a home that better suits your current and future needs, here’s how to make the transition.

Downsizing dilemmas: Why affordability and availability could make finding your next home tough

For many Americans, downsizing was always part of the retirement plan. After all, when your kids move out and you no longer need the larger space, you may want to find a more comfortable home with fewer square feet to maintain and make life easier.

Nowadays, pre-retirees and those approaching retirement aren’t putting as much emphasis on moving. Home prices are holding folks back not only from buying, but also from selling what they already have.

In the first quarter of 2025, the median sale price of a home was $416,000, according to the Federal Reserve. Ten years ago, when Corcoran bought her dream home, the median home sale price was $289,200.

The National Association of Home Builders says 57% of American households can’t afford a $300,000 home. Which could explain why more than one-third of retirees or pre-retirees aren’t moving or planning to move when they retire.

That means more people focus on aging in place and not moving to another home as they enter their golden years.

How to plan for a forever home right now

Whether you’re downsizing in retirement or staying put, it’s important to plan for your forever home. Buying a home in today’s market — whether it’s your first or fifth — requires long-term thinking. You might be choosing the place where you’ll spend the rest of your life.

If that’s your plan, be prepared to make some compromises now to accommodate your future needs. For instance:

• Ditch the stairs. Your 60-year-old self may not be able to get up and down the stairs like your 40-year-old self can. Consider single-story homes or properties with minimal steps to reduce the risk of falls.
• Upgrade essential systems. When touring a home, ask about the electrical panel. Has it been updated recently? Are there smart features like motion sensors, security systems or programmable thermostats? Integrating smart home technology now can make maintenance easier as you age.
• Installing safety features. Take note of rooms with poor lighting, unsecured paneling, or loose flooring. Can you add under-cabinet lighting in the kitchen or motion-sensor lights in your bedroom to make nighttime trips safer? Think about installing grab bars or adding seating in the bathroom for more stability.

For those already living in their dream home, think about making some of these improvements where you can to accommodate the future you in the same space.

When your dream home no longer fits: Exploring better options

If you’re living in your dream home like Corcoran was but aren’t sure it’s the best fit for the older version of you, think about moving into a more accommodating space.

For instance, move to another area closer to where you’d like to live when you retire. Say you live in Minnesota but would like to retire in Florida, consider moving earlier to explore the state before your golden years.

Also, consider downsizing or making compromises where you think it’s most necessary. This could be opting for a single-story home rather than a townhome or two-story house. Or it could be buying a smaller home than you originally wanted, but you know a larger home isn’t where you’d prefer to age in place.

Buying a home is a major decision, no matter your age or the economic climate. However, not everyone has the financial flexibility to purchase a home in their ideal location.

For many, buying a home means making significant sacrifices, and it’s not always feasible. If you want to plan for the long term, start right by making big decisions on where you live — or want to live — as you age.

Downsizing isn’t always best for everyone. For instance, the big changes in your life — from less traditional work to adult kids moving out of the home — can feel like a lot. Moving to a new home could feel like there are a lot of major changes happening at once, causing additional stress and anxiety during these transition periods.

For Barbara Corcoran, the realization that her dream home no longer suited her lifestyle prompted her to make a change. If you can picture your future self, think about the type of home that would best support aging in place. Consider how your decisions will affect your partner, family or anyone else who may live with you or provide care.

The bottom line

As Barbara’s story shows, even dream homes may not always be the best fit as we age. Whether you’re planning to downsize, relocate, or make your current home more age-friendly, thoughtful planning is key. Consider your future needs, your mobility, and the costs associated with moving or renovating. By making strategic decisions now, you can create a forever home that supports you for years to come.

Curious about current mortgage rates? Compare some of today's best mortgage products with the tool below, in partnership with Bankrate:

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In some ways, now is a challenging time to take the plunge and buy your dream home. Many homeowners who locked in ultra-low mortgage rates a few years ago continue to stay put — limiting the supply of homes for sale — and it remains to be seen how the new presidential administration’s policy decisions will affect the housing market.

But the general consensus among some of the country’s most respected housing economists is this: If you need to buy, then buy. And if you do decide to buy, make an informed decision.

“Trying to time the housing market is a fool’s errand,” says Joel Berner, a senior economist at Realtor.com. “The right time to move is the right time to move for you, as long as you can find a place that meets your budget and fulfills your needs.”

Some people have no choice but to move. Perhaps they have a new job and are relocating to a new city. Maybe they have a new baby and need more space, or they got divorced and need less.

Others opt to move to improve their lifestyle — to be closer to work, for example, or to have a backyard for the kids to play in.

In early February, Nhu Vien Nguyen and her fiancé, Brian Timko, were on track to close on the purchase of a two-bedroom, two-bath condominium in Cambridge, Mass., after “watching and waiting” for months for a unit to hit the market in a building they love.

The commute is just 15 minutes to Timko’s job, and even though the couple are paying $845,000 for the unit and will be responsible for a monthly condo association fee of $693 in addition to their mortgage payment, the numbers work in their favor.

Nguyen says she previously paid $3,900 a month in rent, plus a $110 pet fee for her dog, Kevin. Now, the couple’s mortgage payment and association fee total $5,079, saving Nguyen $1,470 a month on her $2,540 share of the monthly expenses.

“We weren’t so concerned about interest rates because we can always refinance,” says Nguyen, 40, an insurance-industry client advocate. “But the inventory in that building in Cambridge is limited, and two-bedroom units don’t open up frequently.”

Housing market fundamentals

Supply and demand are the primary drivers of the housing market. When supply — the inventory of homes available for sale — is down, prices tend to go up. Conversely, when there is a glut of inventory on the market, buyers have many choices, and sales prices often drop as sellers compete.

Other factors that play into the outlook include the state of the job market, consumer sentiment, fiscal policy, interest rates and inflation.

While most economists agree that the U.S. economy is strong, the housing market faces headwinds. Some buyers are hesitant to commit to a long-term mortgage when rates are hovering around the 7% mark, so they’re postponing a purchase in the hope that rates will drop later this year or next year. That reduces the demand for homes.

Those who either purchased or refinanced during the peak of the COVID-19 pandemic — back in 2020, when mortgage rates averaged 3.11%, or 2021, when they were 2.96%, according to LendingTree — are reluctant to sell and give up their low rates.

According to Redfin, homeowners are staying in their homes nearly twice as long as they did in 2005, a trend that’s driven largely by older adults planning to age in place.

And according to a Redfin survey released in January 2025, more than one-third of U.S. homeowners said they will never sell their home — further evidence of the constraints on the inventory of existing homes available for sale, and a factor that is likely to increase home prices further. Realtor.com forecasts that home sale prices will increase by 3.7% this year.

Despite the challenges, some positive signs are emerging. A Realtor.com monthly housing report released in January showed a promising change in seller activity, as the number of newly listed homes increased 37.5% month over month.

And Morgan Franklin, a real estate agent with Coldwell Banker Realty in Boston, says that the buyers he represents are now putting in offers after being on the fence for months.

“All of a sudden, people are starting to pull the trigger,” he says. “I think it’s because they are learning that they can’t wait for interest rates to come down.”

Realtor.com forecasts that the inventory of available homes for sale will grow both for existing homes (with an expected growth rate of 11.7%) and for newly built homes (expected to increase 13.8%) in 2025.

That would help create the first balanced market in nine years, meaning that neither buyers nor sellers would have a competitive advantage, according to Realtor.com.

Of course, all real estate is local, so expect to see differences depending on where you live. Limited inventory in a particular market may keep prices high, with buyers vying for available properties. A glut of new homes for sale could have the opposite effect.

Mortgage rates outlook

Mortgage rates are a key factor that drive demand for housing. If buyers perceive rates to be too high, they’ll stay on the sidelines. But mortgage rates may never return to the levels buyers enjoyed in 2020 and 2021, experts say.

“There is a lot of uncertainty in the debt markets right now, driven mostly by the potential for higher inflation from tariffs and tax cuts that could significantly increase the nation’s debt,” says Ken Johnson, a housing economist and the Christie Kirkland Walker chair of real estate at the University of Mississippi School of Business Administration.

“That uncertainty should result in a bumpy road for mortgage rates in the next six months to a year, so my advice to home buyers is this: If you see a rate that you are happy with, you might want to lock it in now.”

Depending on which new policies the Trump administration implements — tax cuts, blanket tariffs or mass deportations — mortgages may trend well above 7% later in 2025, according to a LendingTree outlook.

Sam Khater, chief economist for Freddie Mac, notes that mortgage rates have averaged between 6% and 7.5% for most of the past two years. He predicts that the average rate for a 30-year, fixed-rate mortgage will drift down closer to 6.5% by the end of 2025.

“That’s predicated on slower economic growth,” he says. “We expect inflation to moderate some, but not much. So I think there is some room for rates to come down, but I don’t think they’re going to drop to the low sixes — at least not this year.”

While potential buyers may balk at a rate of 7%, rates have been much higher in the past. Fixed rates on 30-year mortgages peaked at more than 18% in the 1980s, and over the past 45 years, they’ve averaged 7.48%, according to Freddie Mac.

So a 7% rate is on par with the historical average since 1980.

Use the tool below, from Bankrate, to explore and compare interest rates:

Paying for your house

The best move you can make to keep your home purchase affordable is to save up as much as possible for a down payment. That will reduce the amount you have to finance, as well as your monthly housing expense.

Thanks to the economy’s strength and the rapid rise in home values since the end of the Great Recession in 2009 — the median sales price of a home increased from $222,900 in the first quarter of 2010 to $419,200 in the fourth quarter of 2024, according to the Federal Reserve Bank of St. Louis — many existing homeowners are sitting on a substantial amount of home equity that will be freed when they sell their current homes.

These funds can be applied to the down payment on their next home. According to Intercontinental Exchange (ICE), a technology and data provider, at the end of the third quarter of 2024, the average homeowner with a mortgage had $319,000 of equity.

If you need a mortgage, get quotes from different lenders. According to a Freddie Mac analysis, buyers can potentially save $600 to $1,200 annually by applying for mortgages from multiple lenders.

Laine Edathikunnel, 35, a communications manager at a construction company in Kansas City, and her husband, Tom, are searching for a home in the $500,000 to $600,000 range.

After renting in New York City for many years, the couple — who now have a 3-year-old son and 1-year-old daughter — relocated to Kansas City, where Laine grew up.

Although they were initially preapproved for a mortgage that would allow them to buy a much pricier home, Laine became concerned when she realized how an interest rate of about 7% would affect their monthly mortgage payment.

The couple are now looking at smaller and older homes than they did at first to keep their monthly housing expense at a more comfortable level.

“We don’t need a 4,000-square-foot home, which was the size we could get with our initial price point,” Laine says. “Just going from a 1,500-square-foot apartment to a 2,200-square-foot home will still feel like a huge upgrade to us.”

The National Association of Realtors just ranked Kansas City among its top 10 hot spots for the 2025 housing market, so the Edathikunnels are aware they’re trying to buy in a highly competitive market.

“I don’t want to delay,” Laine says. “We can always refinance, so I think it’s not worth renting for one more year to wait for the interest rates to change.”

Tips for buyers and sellers

Buyers should purchase a home when the time is right for them — if they find a home they love at a price they can afford. Don’t overextend your budget, which can put you at risk if you lose your job or have some other change in your financial status.

Before you start shopping for a home, get preapproved for a mortgage so you know how much you can afford.

Berner, the Realtor.com economist, advises buyers to evaluate the climate risks associated with a property as well. When you look up a home on Realtor.com, you can see data on the risk of flooding, fires, high temperatures and more.

If you find that a home is in an area prone to flooding or wildfires, think twice about owning it. Plus, in certain parts of the country, it may be too expensive or even impossible to secure homeowners insurance because of high environmental risks.

Those interested in buying a newly constructed home will find that many builders are offering buyers incentives, such as mortgage-rate buydowns or free options or upgrades.

“New homes also feature modern materials and systems, requiring less maintenance,” says Odeta Kushi, deputy chief economist for First American Financial Corp. “Buyers can customize their homes, and new homes often come with warranties and modern amenities.”

A January 2025 report from Realtor.com states that list prices for newly built homes in the fourth quarter of 2024 were down year over year, while new-construction inventory levels continued to improve, making new homes an attractive option, particularly in markets where the inventory of existing homes for sale is low.

But new homes, which incorporate building products such as lumber from Canada and gypsum (used for drywall) from Mexico, are likely to get more expensive if the U.S. imposes tariffs on imports from those countries for a prolonged period.

And if mass deportations take place, that would reduce the number of construction workers available to build homes. So if you’re planning to buy a new home, it might be prudent to sign a contract and lock in a price sooner rather than later.

If you own a home and are thinking about selling it, the advice is similar to that for buyers: If you have to sell — say, because of a change in your job or family situation — then sell.

If the sale is discretionary, however, give it some thought. Find out what your house is worth and consider the expenses that come with selling, including commissions paid to real estate agents, any capital gains taxes due on the proceeds, closing costs and moving expenses. You might just find that it makes more financial sense to stay than to move.

“Do some investigative work,” says Maria O’Dell, a real estate agent with Real Broker in Overland Park, Kan. “Can you envision yourself aging in the home? Consider tapping some of your equity and remodeling your house so you can stay there long term.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Although the spring home-buying season is several months away, buyers and sellers have some motivation to come off the sidelines. In early September, a 30-year fixed-rate mortgage had an average 6.35% interest rate, down from 7.12% a year earlier, according to Freddie Mac. And a $418 million settlement reached earlier this year with the National Association of Realtors led to new requirements for real estate transactions in ways that could save you money on the purchase or sale of a home.

The settlement stemmed from class-action lawsuits that claimed the industry-wide practice of requiring seller’s agents to specify the commission being offered to buyer’s agents artificially inflated real estate commissions. The NAR, which agreed to settle the lawsuits but denied the allegations, says commissions have always been negotiable, but they’ve generally held at 5% to 6% of the sale price for years.

Under rules that took effect in August, listing agents are prohibited from offering commission splits to buyer’s agents on Multiple Listing Services, which real estate professionals use to share information about homes for sale in a particular area. Sellers who list a home on an MLS can negotiate a fee with a seller’s agent and decide whether to pay the buyer’s agent.

Meanwhile, home buyers who choose to work with a buyer’s agent will be required to sign an agreement that details how much they’ll pay for the agent’s services. When the buyer agrees to purchase a home, the money to pay the buyer’s agent can come from the seller’s agent, the seller or the buyer, depending on the terms negotiated.

In the long run, the change could result in lower home prices, according to The Kiplinger Letter. Although buyers haven’t paid for commissions directly, they’ve paid for them indirectly through the higher prices sellers sought to cover the agents’ fees. Under the previous rules, Americans paid roughly $100 billion in real estate commissions a year. A homeowner looking to sell a $500,000 home, for example, could expect to spend up to $30,000 on commissions alone.

What buyers need to know

Home buyers who use a buyer’s agent will probably be the first to notice how the rules have changed, because they’ll be required to enter into a written agreement that details how much they’ll pay the agent in commissions if the seller doesn’t agree to pay the full amount. (Some states required written contracts before the new rules took effect, but now buyers in all states will have to sign contracts.) 

In the past, home buyers would typically work with a buyer’s agent without a formal contract in place because it was understood that the seller would pay the entire commission. 

Don’t commit to a long-term, exclusive contract until you’ve had an opportunity to view several homes and determine whether you want to work with the agent, the Consumer Federation of America (CFA) says. 

Zillow, the online real estate brokerage, recommends signing a seven-day touring agreement before entering into a contract with an agent. Its website contains samples of state-specific touring agreements (not all states are represented). Zillow’s touring agreement states that buyers won’t be charged a fee for touring services and stipulates that if the buyer wants to hire the agent for additional services, the parties will reach a separate agreement. 

Consumer Advocates in American Real Estate, a nonprofit group, offers a template for an agreement to tour homes. The site also offers templates of compensation agreements for buyer’s and seller’s agents. 

If after touring homes you decide to hire a buyer’s agent, don’t hesitate to negotiate, says Steve Brobeck, executive director of the CFA. He recommends offering 2% of the sale price or lower, depending on the services required. 

If you’re willing to do some of the work yourself — for example, you prefer to do your own home search but want help making an offer — the agent may be willing to accept a flat fee for specific services, says Richard Hopen, founder of SmartBuyers AI, which provides education and advice for home buyers. Some real estate brokerage firms are already experimenting with new pricing models, such as offering buyers and sellers a menu of services, with a billing rate for each service available. 

When reviewing a contract, look for red flags, such as a requirement to compensate an agent before you decide to become a client, or a provision that combines compensation for the listing agent and buyer’s agent, which violates the spirit of the new rules, the CFA says. 

Because you must enter into a contractual agreement, it’s more important than ever to work with a competent, reputable real estate agent, Brobeck says. Start by asking friends and relatives who have purchased homes for referrals, with the goal of identifying at least three prospective agents to interview, he says.

Use real estate websites such as Zillow and Realtor.com to research an agent’s recent sales and customer reviews. Finally, a prospective agent should provide you with a copy of the contract, be willing to discuss the terms and give you plenty of time to review it. 

What sellers need to know

If you have decided to put your home on the market, you still have the option of offering compensation to a buyer’s agent. This decision will depend on several factors, including your local housing market and whether you think paying a buyer’s agent or broker will make your home more attractive to potential buyers. 

Your own real estate agent (if you use one) must receive your approval for any agreement to pay a buyer’s broker, as well as the amount of the payment. The terms of the agreement must be disclosed to you in writing. 

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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If you have owned a house or commercial property for several years, chances are that someone has recently either phoned with or mailed what appears to be an offer to buy it.

In March 2023, an article in The Star News of Medford, Wis., noted, “Area residents are seeing a flood of unsolicited mail from people seeking to purchase their properties, often at greatly discounted amounts.”

“David” is the executor of his parents’ estate and received a “Solicitation and Agreement” to buy 40 acres of land not far from Medford. And, just as Jaymi Kohn, Taylor County, Wis., Register of Deeds, told The Star News that she found when researching other companies making such offers, no physical business address was found.

Red flags were flying

After receiving the offer, David phoned the telephone number included with the offer. “It was a Saturday,” he said, “and the phone rang and rang with no voicemail, which immediately raised my antenna. Who sends out a solicitation to purchase property and provides a telephone number without an answering service or voicemail?”

He called again the following Monday. “While I still felt it was likely to be fraudulent, as I am the trustee of an estate where that property needs to be liquidated to carry out the wishes of the trust, I felt a duty to explore if this was a legitimate offer. I spoke to a ‘receptionist,’ who did not answer using a business name. After inquiring where I could find properties the company has transacted, I was told, ‘I’m only a receptionist. Call Adam.’ Which I did — without a return call. So I phoned again, got a different receptionist.” He expected a different outcome, but when he asked the same questions, he received the same replies.

By this time, David said, he “was pretty certain something crooked was going on, especially with no call from Adam. So I texted the number as the letter instructed, and once again, there was no reply.”

Speaking with the receptionist again, but being far more assertive this time, David point-blank asked if the company was involved in some type of fraud. “Are you targeting older people who have owned parcels of land for extended periods of time and offering them a fraction of what their property is worth?” he told me he asked. “I told her that I planned to send a letter to the Arizona attorney general. Even that got no reply.”

Concluding our chat, David raised an important point about this unsolicited offer: The company claimed the right to cancel at any time. “None of this made sense,” David said. “Dennis, these 40 acres are worth over $400,000. And what do you think these people offered? $38,000!”

Analysis by two real estate attorneys

I asked Hanford, Calif., real estate attorneys Ron P. Jones and Robert B. Zumwalt — both friends of this column — for their takes on these unsolicited offers.

Jones: Interesting. I haven’t seen one quite like this before. What my wife and I usually receive in the mail is a postcard, often with a photograph of the subject property, telling us that we will get a cash offer with no contingencies that will close in 30 days.

The problem with these things is that they’re usually offering 25% to 35% of the market value — and sometimes much less. Somebody older, living in their house for many years, who bought the house for $15,000 cannot comprehend their house is worth $250,000 or even far more, depending on the area.

So, if they get an offer for $75,000 or $95,000, they think it’s a gold mine. The biggest part of the scam is that these snakes are making offers to people who don’t know better at 25 cents to 35 cents on the dollar and then reselling the property and making an unscrupulous profit.

Zumwalt: This solicitation has a “fill out the contract yourself” section, and that’s the first time I’ve seen something like this that invites trouble. It could very well be that these solicitations are designed to gather personal information about people with no real sale in mind in order to steal their identity.

There is an assignment clause in that contract. I have seen at least one case in which the “buyer” is acting more like an unlicensed real estate agent. My guess is their real intent was always to quickly sell the contract to the real buyer for a fee without ever putting up any money of their own. So, they bear none of the risks of investing their own capital and none of the ethical obligations of a licensed agent.

What to do if you receive an offer and do want to sell

Real estate brokers and attorneys recommend being aware that many of the people who send these offers are banking on you not knowing the value of your property. A lowball offer should be thought of as potential elder financial abuse, given older property owners.

If you get one of these unsolicited offers and are interested, ask for the person’s name and contact information and tell them you need to think about the offer and run it by your family attorney before making any kind of decision. It is important to verify the identity of the person making the offer before accepting any offer. Do some research on the person or company making the offer.

Your land isn’t going anywhere, so there is no hurry. Do not feel pressured.

Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Condo prices in Florida have been steadily falling, fueled by an increasing rate of motivated sellers.

Certainly, high interest rates are a part of this trend, but a closer look suggests that changes to the Florida Condominium Act — the state’s laws governing condominium associations — may be a major factor behind the market trend and also suggests that a development boom could be coming.

Fundamentally, real estate demand in Florida has remained strong. The Sunshine State saw a significant influx of migration during the pandemic, according to the Census Bureau, and those trends have largely remained steady.

What’s changed, though, is a major amendment to the Florida Condominium Act covering condo associations, which was passed following the collapse of the Champlain Towers condominium complex in 2021. That tragedy was likely due to significant deferred maintenance issues and a lack of adequate reserves to address the structural maintenance issues.

Under the new amendments, condo associations have new standards that mandate that associations maintain adequate reserve funds for maintenance and repairs.

By the end of this year, condo associations in Florida must obtain a Structural Integrity Reserve Study that outlines what reserves must be collected to finance the repairs and maintenance of critical components of the building over the next 10 years based upon the current condition of the building. If any components of the building, such as the roof or balconies, are past their estimated useful life, it is likely those components will be required to be repaired or replaced right away.

What does this mean?

All this means that condo owners in Florida — especially those in older buildings in need of more attention — are suddenly facing (or are soon to face) dramatic hikes to their monthly condo association fees and, potentially, significant special assessments.

The scramble to bring buildings into compliance means that condo association fees in many cases may increase to an amount that is more than owners’ mortgage payments — potentially leading middle- and fixed-income Floridians into financial chaos.

Owners who anticipate that they will not be able to afford the mandated increases are understandably moving aggressively to sell their units, bringing a flood of motivated sellers into the market.

But buyers don’t want a unit in an aging building requiring expensive mandated upgrades with hefty COA fees and special assessments. For a comparable price, buyers can likely purchase a unit in a much newer building, avoid surprise increases in COA fees and special assessments and get vastly better value for their money.

It’s hurting the middle and lower end of the condo market. There is a serious concern that if the values of these condos drop too fast and a high percentage of unit owners cannot pay their COA fees, mortgage lenders will no longer be willing to lend against the units in those communities. That would essentially make those units unsellable since no buyer could get a regular mortgage loan to finance the purchase. If this happens, the condo associations may fail and be forced to declare bankruptcy.

Owners of luxury condos can handle increased costs

In contrast, the luxury condo market in Florida is still going strong. For the most part, luxury buildings and luxury owners aren’t facing the same sort of squeeze that middle-income buildings are seeing since owners in these projects are more able to afford any increased COA fees and special assessments. Also, the majority of luxury condo projects are newer, but even the older buildings have generally been better maintained than middle- and lower-end condos.

For developers of luxury properties, the situation faced by older condo buildings may create more development opportunities.

Even before the recent changes in the condo act, many of the older condo buildings in South Florida were facing extremely high repair and replacement costs as buildings deteriorated and the cost of replacement components increased. In many cases, the unit owners determined that it no longer made sense to keep their units since the cost of maintaining the condo building would continue to increase, but the value of their units would continue to gradually decrease.

Because development sites are in short supply, in many cases, the land value per unit exceeds the market value per unit for older condo buildings. For many condo communities, the real asset is the value of their share of the land under their building.

Increasingly, condo owners are uniting to bring their units to market and sell in bulk to a developer, who can in turn terminate the condominium, demolish the existing structure and develop a new building. In 2023, South Florida saw the highest number of bulk condo buyouts since 2019.

What should condo owners do?

Condo owners need to move quickly if they want to maximize the value they receive for their units. If they wait too long, they’ll lose a lot of the leverage they need in negotiations. In order to get the best offer for their building, owners should be unified as a COA to bring their properties to market.

Typically, a strong majority of owners is necessary to get a deal done. The exact number varies based on the language in the condo documents and whether the current version of the condo act applies. In some cases, percentages as low as 75% are sufficient. However, under the current version of the condo act, 95% of the voting interest is required to terminate a condominium. An experienced condo attorney should assist the condo association to determine what percentage would be required for a particular condo association.

COA leadership should be actively considering what’s in the best interest of their owners and educating them on how these deals can be structured. If you’re a condo owner in an older building in Florida and your COA hasn’t brought up the idea of a sale, ask your directors if they have considered the idea.

These bulk condo buyout deals can be difficult and risky transactions for developers, as they tend to result in litigation from minority unit owners who do not vote in favor of a bulk sale. A recent decision by a Florida appeals court may further complicate the ability of older condominiums to terminate.

Florida has also instituted a number of incentive programs to encourage developers to continue to invest in the state, including programs designed to boost affordable housing. The Live Local Act, for instance, has spurred a slate of development that’s targeted toward homes for middle- and lower-income families that could relieve some of the pressure generated by the condo law changes.

For now, those laws are turning loose powerful market forces that will cause real pain for certain condo owners but create real opportunity for condo developers. It will make for a fascinating period in the state’s fabled real estate history.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

One of my clients is in his early 70s with about $1.5 million in equity in his home. He refinanced into a 3% mortgage in late 2020. Sounds like a pretty good situation, right?

Here are some of the issues. Things in his home are starting to break. His lawn isn’t getting any bigger, but it is getting harder to take care of as he gets older. He enjoys his home less than he did in 2020, but because real estate values have exploded, so, too, have his property taxes.

“Boo-hoo,” say the Millennials who want to buy his home but can’t afford it with the current mortgage rates. Everyone is at a stalemate. My client is a mortgage prisoner.

Here are three options if you find yourself in a similar situation.

1. You could rent.

Being a homeowner for the last 30 years is not a good enough reason to rule out renting for the next chapter. In fact, many of the benefits of renting should be more appealing to Baby Boomers than they are to younger generations.

The maintenance is not on you as the tenant. If you end up needing to move into assisted living later in life, there is no house to unload. If your friends, kids or grandkids move out of the area, you can move, too.

In the case of my client, let’s say he nets $1 million after paying off the mortgage and capital gains tax. If he invests that money and pulls 5% per year, it’s likely that will cover his housing costs for the rest of his life. This alone is a good reason to make the decision to rent. You can use the free version of our planning software to plug in a new location and renting vs. buying. (For more info on making these decisions, see my articles Four Reasons to Rent When You Downsize for Retirement and Four Reasons to Buy When You Downsize for Retirement.)

2. You could renovate.

If, like my client, you’re enjoying your home less than you did, you could make changes. My in-laws are in the process of drawing up blueprints to renovate their home. They will move the primary suite downstairs, which will allow them to age in place. This is not a cheap endeavor, but it allows them to stay put. They live on 10 acres, and the idea of moving into an apartment building is unfathomable.

The current interest rates make this strategy significantly more challenging than it was just a few years ago. Between 2010 and 2020, you would more than likely have funded this project with a HELOC. But as of May 6, 2024, HELOC rates were floating around 8.5%. In this environment, I would probably recommend this option only if you can pay with cash or from a taxable investment account.

3. You could refinance (after you downsize).

In this scenario, my client finds another place he likes for $1.25 million. While it’s significantly less expensive than the $1.75 million property he is selling, the math is not apples-to-apples. Because mortgage rates have more than doubled since his refinance, his all-in housing cost is likely to be higher than it is today. Now he has to decide how much a mowing-free weekend is worth to him.

One option is to finance the modest mortgage of about $250,000 with an adjustable-rate mortgage (ARM). That should shave about 1 percentage point off the rate, depending on the specific product you go with. When interest rates fall, you will probably have the opportunity to refinance at a significantly lower rate. Once again, lean on your financial planner, your financial plan and a mortgage broker to decide if this option makes sense for you. (For another angle on this option, see my article Should You Pay Cash When You Downsize? Here Are Three Scenarios.)

It's easy to look at the current environment and conclude that it’s not a good time to downsize. I’ll counter by saying that there is never a good time to downsize. Go too early and you may miss some of the appreciation in your home. Not to mention, you may have to do it again later in life. Go too late, and it was probably a decision that you didn’t have complete control over. These moves are typically health-related.

I suggest you nail down your numbers. What could you rent if you sold your home? What can you afford to buy if you decide to move to a condo? Can you afford to move into a retirement community? This will make the decision easy when you find a place you actually like. The move itself? Probably not so easy …

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…

Spring is a popular time for selling a home. Knowing how to calculate tax basis is vital. It can help reduce your gain when you sell. And learning the rules even before you buy a home will make the process of figuring out taxes much easier when you do decide to eventually sell your place. 

Lots of home sale profit isn’t even taxed. That’s because of the home sale exclusion. If you have owned and lived in your primary home for at least two out of the five years before the sale date, up to $250,000 of the gain — $500,000 for joint filers — is tax-free. Gain in excess of these amounts is taxed at long-term capital gains rates. Many homeowners won’t crack the $250,000/$500,000 gain exclusion limits. But those living in pricey areas, or who’ve owned their homes a long time, may. If you’re in this boat, you should know what counts toward your home basis so you don’t pay more tax than necessary. 

In calculating gain or loss from a home sale, start with the selling price and subtract selling expenses and the adjusted tax basis of the home. As you can see, the higher the tax basis, the lower the gain from the sale. Figuring out the tax basis starts out easy. Begin with what you paid for the home, including the mortgage if you financed the purchase, and add in certain settlement fees. Tracking these costs is simple if you kept your settlement sheet from the purchase.

Your home’s tax basis doesn’t stay static over the years that you own it. Here are common adjustments to tax basis: 

• Additions and improvements: The cost of additions made to your home and improvements that add to its value, prolong its useful life, or adapt it to new uses will increase your home’s basis. Examples of big-ticket items include adding a room, installing new air-conditioning, renovating a kitchen, finishing a basement, or putting in new landscaping or a pool. Smaller-ticket capital improvements also hike basis. These include new doors and windows, duct and furnace work, built-in appliances, water heaters and more. Repairs, maintenance and improvements that are necessary to keep your residence in good condition but don’t add value or prolong its life generally don’t hike tax basis. 
• Eco-friendly upgrades: If you are putting in energy-saving improvements that qualify for tax credits or subsidies, you must first reduce the cost of the system by the tax credit or subsidy that you received before increasing your home’s tax basis. 
• Prior depreciation write-offs: You must reduce the tax basis in your home by any depreciation deductions you were eligible for if you used a room or other space exclusively or regularly for business or if you rented out your home in the past.

Homeowners who keep good records will find it easier to calculate tax basis. It’s best to keep all your major home improvement receipts and invoices in one folder. If you didn’t keep these records, estimate the costs by looking at old bank statements, or call the company that originally did the remodeling or put in the upgrade.

This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe. 

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The peak season for real estate sales typically hits its stride from April to June, and this year there’s more pent-up demand than usual. Even with mortgage rates dancing around the 7% mark, compared to two years ago when lenders offered 3% home loans, buyers tired of sitting on the sidelines and waiting for interest rates to settle are ready to make a move. At the same time, sellers used to 3.5% mortgages can afford to sit tight and wait to get their ideal price.

If you want to make a move this spring or summer, now is the time to sharpen your pencil. The combination of elevated mortgage rates, sky-high home prices and record-low housing supply are the thorns among the roses for home buyers this spring — and possibly for the foreseeable future. Hotter-than-expected inflation and robust payroll figures could prop up mortgage rates.

In the face of these obstacles, Fannie Mae forecasts offer a glimmer of hope, predicting an uptick in home sales transactions compared to last year as impatient buyers and sellers adjust to the reality of mortgage rates between 6% and 7%. It’s important to remember that becoming emotionally attached to a transaction can lead to financial loss. It’s easy to feel discouraged or frustrated by factors beyond your control, which underscores the importance of managing what you can.

Here are the essential insights that will help you navigate the potentially tumultuous housing market this spring and early summer.

Buying: First-timers, investors and flippers

Given the uncertainty surrounding interest rates and home prices, the most pressing question for most buyers is: Is now the right time to buy?

Maybe. Maybe not. But it doesn’t hurt to explore your options. Dave Rowan, president of Rowan Financial, a fee-only financial adviser and housing expert who’s part of the Wealthramp network, tells clients, “It may not always be the best time to buy, but it’s always time to look, whether you’re a first-time buyer or an investor.”

For first-time buyers and investors, he stresses the importance of getting educated on how to purchase your first home or investment property. In addition to considering home prices and mortgage rates, Rowan advises paying close attention to four additional expenses: taxes, insurance, maintenance and utilities.

Taxes and insurance can vary significantly by location, and it’s crucial to be aware of potential insurability crises in areas like Florida and California. A useful guideline for annual maintenance costs is 0.5% to 0.6% of the home’s purchase price. However, for older properties, such as buildings over 150 years old, annual maintenance expenses can rise to 1% to 1.5%. Utilities, on the other hand, can be estimated more straightforwardly based on the property’s square footage.

You should also identify your buyer profile and any associated advantages. For example, if you’re a veteran, you can benefit from the VA home loan program, which typically offers no down payment requirement, competitively low interest rates and no need for private mortgage insurance (PMI).

However, with housing prices tripling in absolute terms since 2000 and more than doubling when adjusted for inflation, finding a “forever home” on the first try has become increasingly challenging.

Rowan says a potential solution for first-time buyers or those eager to delve into real estate investing is “home hacking.” This approach involves purchasing a property, residing in part of it and renting out the other parts. One of the significant benefits is the ability as an occupant to qualify for an FHA loan with as little as 3% down. In areas with high rental costs, the financials could be more favorable than renting.

Basically, it allows you to occupy the property for a few years, make improvements, then rent it out entirely and move on to your next home hack, effectively becoming a serial investor. “It’s a win-win from the standpoint of getting into a home earlier than you might otherwise, reducing your monthly cash outlay compared to renting and starting your path as a real estate investor,” Rowan explains.

Look for deals elsewhere

Investors should also look beyond the MLS for deals by collaborating with national or local wholesalers or forming connections with banks eager to offload properties, perhaps through a short sale rather than the foreclosure process.

While house flipping remains a favored investment strategy, especially at the market’s bottom, current conditions — high prices and slowing price acceleration — make it an inopportune time to start flipping. Despite the FOMO induced by social media and TV shows, Rowan highlights a crucial consideration: Success in these ventures often depicted on HGTV is typically due to one partner having construction expertise and the other design skills, allowing them to eliminate these costs from their budget.

From an investment perspective, it’s also important to recognize real estate returns have historically lagged behind the stock market. Although real estate can present lucrative opportunities, it shouldn’t be regarded as a guaranteed long-term, safe investment.

When considering a purchase, affordability is key to avoid becoming house-poor. Keep in mind, in real estate you make your profit when you buy. The true profit in real estate comes from purchasing at the right price, not from selling.

Selling: Market drivers

What about selling in this market?

Many homeowners, having secured ultra-low interest rates or hesitant to sell amidst soaring home prices, find themselves in a tight market where demand consistently outstrips supply.

That means if you’re a seller, you're mostly in the driver’s seat.

But even for those prepared to sell, such as retirees looking to relocate or downsize, the era of effortlessly attracting buyers with mere listings, reminiscent of times with rock-bottom rates, has passed. Despite the low supply, high rates and home prices have led to a more cautious and discerning buyer base.

Strategic thinking is essential for sellers in this environment. Rowan suggests “partnering with a Realtor who has in-depth knowledge of your local market (and neighborhood) and understands the specifics of your home and the type of buyer it will appeal to.” He emphasizes “the importance of pricing the home correctly — not too high to scare buyers away, yet not so low that it undervalues the property.”

A significant trend that sellers, particularly on the East Coast, should note is the burgeoning demand for historical homes. Buyers are seeking properties with character and are willing to pay for that unique charm.

Different expectations for historical homes

Rowan highlights a crucial distinction in preparing homes for sale: While newer constructions must be updated, immaculate and well-maintained, historical homes are treated differently. They should be presentable and show well, but it’s not necessary to fix everything, as they do not require the same level of perfection for listing.

This spring and early summer real estate market, whether as a buyer or a seller, requires a nuanced understanding of current trends, strategic planning and a bit of savvy.

The main thing to keep in mind is that the right time to buy or sell is not dictated by the market alone, but by your personal circumstances and the thoroughness of your preparation. Real estate is one very important financial asset. Just keep in mind how it fits into your larger financial picture. It may be smart to collaborate with a fee-only financial adviser to get unbiased advice and guidance on how your next real estate transaction impacts your whole financial life.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

It's still a rough time in the housing market for many Americans, between steeper mortgage rates and limited housing supply. Yet despite the lingering "low-rate house arrest" effect, home sellers have more to smile about than buyers. Those planning to sell their property by the end of 2024 won't want to miss the upcoming sweet spot, revealed in a new report from Realtor.com.

The top week to sell a home this year

Realtor.com combed through its deep vault of home listing data since 2018 to determine the best week for sellers to make their move in 2024. They chose the "best week" by identifying an ideal blend of market conditions that should give sellers a significant leg up, compared to the rest of the year. 

The factors considered include seller competition, listing prices, days on market, price reductions, and homebuyer demand. Notably, this calculation does not include mortgage rates, because they are not typically tied to seasonal selling and buying trends.

The Realtor.com team projects that the week of April 14-20 represents home sellers' best combo of market conditions for the remainder of 2024. These five factors make this time frame a homeowner's ideal selling window:

• The week of April 14-20 should have 40% less inventory compared to pre-pandemic levels, and 13.7% fewer than an average week in 2024. 
• This week also sees 22.8% more buyer views per listing than the average week.
• Realtor.com expects this week to feature 17% faster home sales vs. the average week. 
• Listing prices are $34,000 higher than at the start of 2024.
• 24.6% fewer homes feature price reductions compared to an average week.

Key next steps for home sellers

Report author Hannah Jones notes that spring is generally the high season for real estate activity, with a higher population of active buyers than later in the year. Realtor.com's data shows that 53% of home sellers need a few weeks to a month to get their home ready to list. Motivated sellers should start their preparations now in order to benefit from this spring's ideal market conditions.

Consider the following steps to get your home ready for its closeup:

• Peruse our list of 13 home features today's buyers want most, to find projects that can  increase the curb appeal of your home.
• Consider our rundown of reasons to use a real estate agent to handle the finer points of your home sale.
• Or consider handling the home sale yourself. 
• Be sure to check your local market statistics and set the right price for your home well before any listing goes live. 

The report also acknowledges the trend of homeowners feeling “locked in” at their current residence, hesitant to trade a below-4% mortgage for a 7%+ mortgage on a new home elsewhere. This was a major factor in keeping home listings low throughout 2023, according to Realtor.com's data.

The Federal Reserve has signaled it may cut interest rates this year, but a string of stubbornly-high inflation reports has seemingly pushed those plans further back than originally predicted. Homeowners intent on selling now may have to contend with elevated mortgage rates for a while longer. It could be that renting is smarter than buying for successful sellers in the short term, at least until the mortgage landscape improves.

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I was an early COVID mover. I bought a newly renovated, but quite old, home in June 2020. About a month after moving in, we had water in the basement. The thing about water in the basement is that it tends to happen again and again until you fix the problem. After many trials and tribulations, we fixed the problem. In December of 2020, I got home one day to find water coming from the ceiling right inside the front door. I called an emergency plumber. After inspecting all of the plumbing, he told us that we had a cracked pipe … and that we should probably replace the faucets in the kitchen for efficiency purposes. That last piece of advice I could have done without. Just fix the pipe!

Prospective clients often come to me with “leaking pipe” problems. Things that are time-bound and important enough that they will cause damage elsewhere if not solved quickly and properly. Figuring out whether you should pay cash for a home falls into that category.

The spring housing season is heating up, and because you wanted to get ahead of it, you put a contract on a new condo. The proceeds from selling your home allow you the flexibility to decide whether you will pay cash or get a mortgage for your (single-level) dream (retirement) condo. Here are three scenarios to help you decide whether you should.

1. If you’ll never need the equity from the house for retirement income, pay cash.

In other words, you have plenty of savings and you will never be reliant on the equity component. This really has to do with the current interest-rate environment. With mortgage rates hovering around 7%, you may be in a negative arbitrage situation. In English: The rate of return on what you invest in with the equity may end up being less than 7%, and you’d end up losing. Two years ago, with mortgage rates at 3%, the equation was flipped the other way.

If you have specific numbers you want to plug in to figure out whether you should pay cash, you can access a free version of the planning software we use: Obviously, if you move that mortgage rate up or down, it may have a significant impact on the outcome.

2. If the math is tight, take the mortgage (and pray for rates to drop).

You don’t have quite enough saved to maintain your current lifestyle and could use the cash cushion. You should probably at least inquire about financing. Current five-year adjustable mortgage rates are about 1 percentage point less than 30-year fixed rates, so it may make sense to take out the loan and watch for an opportunity to refinance when rates drop.

Paying cash for a home is like putting money into a piggy bank with an incredibly small slot. It may take drastic measures, like a hammer, to get the money out. In the case of home equity, that means a home equity loan, reverse mortgage or sale.

3. If you have a large gain, do some math before choosing to pay cash or take out a mortgage.

I know this seems like an uptown problem, but the reality is that many of the Baby Boomers who are downsizing have been in their homes for 30-plus years and will owe some money in taxes. That tax bill can come as a surprise.

Assuming you meet the requirements to qualify for the 121 exclusion, a married couple is able to avoid taxes on $500,000 in capital gain ($250,000 per person). If you know that you are going to have more than a $500,000 gain, you should have your CPA or financial planner calculate the tax due. This can end up being over 30% of the gain because it may move you into the top capital gains tax bracket from a federal perspective. Depending on where you reside, you may also owe state and local taxes.

The worst outcome here is that you pay cash and realize a year or two down the road that you overextended yourself and have to get creative. Once again, the best way to avoid this is to have a financial plan that clearly lays out what you can afford and how you should pay for it. But if you have a leaky pipe and are closing next week, the above guidelines should help you decide what makes the most sense.

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• Buying a House Could Be the Best Investment You Ever Make

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The National Association of Realtors (NAR) has agreed to pay $418 million over four years and change certain rules to settle a series of lawsuits over the industry’s sales commission fees, a move expected to greatly decrease home-selling costs.

“No longer will homeowners be required under NAR rules to offer compensation to buyers agents," Michael Ketchmark, lead attorney for the plaintiffs in the case, told Kiplinger in an interview. The new rules "will return the sale of homes to the free market and allow technology to benefit sellers of homes."

Those changes will provide a huge opportunity for the cost of selling a home to drop dramatically, he added.

Under the settlement, which is pending court approval, NAR agreed to stop requiring homeowners to pay buyers agents commissions when they sell their homes, a practice in the U.S. that has been around for nearly 100 years, Ketchmark said. The average total commission rates in the U.S. — split between buyer and seller brokers — are 5% to 6% of the sale price, according to court documents.

NAR, which admits no wrongdoing in the case, has also agreed to draft new rules that prohibit broker compensation offers on its Multiple Listing Service (MLS) property database and that require MLS participants working with buyers to put their agreements in writing. These changes are set to become effective in mid-July.

The MLS has been used “as a vehicle for propping up and inflating commissions," Ketchmark said. “Probably the most significant part of the settlement is the changes to the way that homes are sold."

NAR, whose 1.5 million members make up the nation’s largest trade group, did not respond to a request for comment. In a statement, NAR sad it continues to encourage members to use buyer brokerage agreements that help consumers understand the services and value that will be provided.

“Ultimately, continuing to litigate would have hurt members and their small businesses,” Nykia Wright, interim CEO of NAR, said in the statement. “While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances.”

The settlement follows NAR’s loss in a district court case last October involving a conspiracy to artificially inflate commissions on home sales. A jury in that case ordered NAR and several real estate brokerages — including Berkshire Hathaway Energy-owned HomeServices of America — to pay about $1.8 billion in damages to roughly 500,000 home sellers in Missouri.

Non-negotiable commission rule challenged

In their suit, the home sellers challenged NAR’s rule requiring them to make non-negotiable commission offers to brokers to list their homes on MLS databases. A separate case involving similar charges and covering 14 states was also filed in Illinois.

NAR’s proposed settlement will resolve the Missouri and Illinois cases for all of those defendants — except for HomeServices of America, which is still litigating the Missouri judgement, Ketchmark said.

Wright said that NAR has worked hard for years to resolve the litigation “in a manner that benefits our members and American consumers.” The goal has been to preserve consumer choice and protect the group’s members to the greatest extent possible, she said, adding that the settlement achieves both of those goals.

The settlement is currently unavailable for the public to view but is expected to be filed next week. For more on the Missouri case, you can view the District Court for the Western District of Missouri Western Division filing here.

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Mortgage rates were on a downward trend for 40 years from 1981 to 2021. As a general rule, when rates fall, real estate values rise, as you can now buy more for the same monthly payment. Now, here you are, 30 years in your forever home and considering calling it quits. But that $50,000 commission on your $1 million sale makes you feel sick to your stomach. I get it.

As the quarterback of my clients’ financial lives, I care that they end up with the highest amount possible in their bank account and that they can sleep at night through the process.

Here are six scenarios/situations where I think the agent can justify their cost.

1. You don’t want to move (but need to).

Whether it’s your kids, your knees or both telling you that you need to move, it’s probably not at the top of your wish list. When I started in this profession, a downsize was typically financially driven. Sell the $1 million house, buy the $500,000 condo in cash and pocket some of the money to increase your monthly cash flow.

In the market we’re in now, the new condo now costs the same as the house. The downsize is driven by health and maintenance. And you’re healthy enough, right? Once you engage an agent, it can be tough to get off that treadmill. Their job is to sell your home, and they will be in your ear to get that process started. This sounds negative, but I don’t mean it that way. It’s the same as getting in shape: You may want to hire a trainer to push you a bit.

2. Your home needs some work.

The “some” in that sentence is key. If your home is a wreck, and/or it’s in a very desirable location, that may move you into the category of selling directly to a builder, which is one of the reasons I list in my article Three Reasons Not to Use a Real Estate Agent When You Sell.

I view good agents as master allocators; i.e., they can tell you what to fix and what not to so you can get the biggest bang for your buck when you sell. Often, agents have ways for you to finance these projects as a loan. The loan is then paid back at closing. I would elect this option only if it is 0% interest, or if you don’t have the liquidity to fund the project on your own.

3. It’s a make-or-break financial move.

In metro areas like Washington, D.C., homes are expensive. Therefore, home equity often represents a significant portion of one’s balance sheet. If that’s the case, the outcome of your sale will have a domino effect on the rest of your financial situation. I view the DIY route as too risky in this scenario.

4. It’s a buyer’s market.

In a market where there are more sellers than buyers, it’s better to have more people on your team helping you sell. The agent plays many roles, but the two I view as most important in this scenario are how they market your home and the pool of buyers they bring to the table.

I have sold three homes with three different agents. On the selling side, I have always sought out those folks whose names I see on the most signs in my neighborhood. They have always been very present in the community, and I had little doubt about their ability to market the property.

More important, they have buyers. In their other transactions in the neighborhood, there were other interested parties who did not buy the home. This is a big advantage in an environment where buyers are harder to come by.

5. You’re uncomfortable negotiating.

The 5% commission you are worried about paying can be made up in the negotiation process alone. The best agents are adept in this arena, as they have the most at-bats.

However, negotiation does not come naturally to most people. If you want to sharpen your skills, I’d recommend reading the book Never Split the Difference by Chris Voss.

6. You don’t have a lot of time.

Yes, it may feel like you have more time once you’re retired, but the reality is you have less of it than you did yesterday. Scheduling showings, communicating with buyers’ agents and wiping the crumbs off the counter every time someone who is somewhat interested in your home comes through the door is a nightmare. You may have the space in your calendar to make it happen, but what is your time worth?

Selling your home is a big deal — a very big deal. Just as you wouldn’t get your knee replaced by a family friend doing their first surgery, you shouldn’t sell your home with your friend’s kid who’s banking on you for their first listing.

Your other financial professionals (CPA, attorney, financial planner) should have relationships with reputable professionals who they can coordinate with throughout the process. Happy selling!

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

I’ll start by saying that I have had five real estate transactions in my life. I used a Realtor every time. However, I have had several clients go the DIY route, both with and against my advice, and lean on me to fill some of the roles the agent would typically have. While I rarely recommend that clients take this route, here are three scenarios where I would lean toward DIY.

1. You have a teardown.

This takes knowing you have a teardown. If you have the smallest house on the block, odds are it won’t be there for long. Having recently helped a client navigate this route, even here there can be land mines. I spent lots of time talking to agent and builder friends to make sure I knew how to price the home and how to negotiate the terms. The financial and tax side, I am very adept at.

If you have those resources at your fingertips, the builders will pay more without an agent, for obvious reasons. Once you know where you want to price it, you can reach out directly to the builders with your price. The bigger they are, the more likely they have an end buyer for your land.

2. You have a known buyer.

This is definitely a more common scenario for a rental property where the tenant is buying the home. However, I have seen it come up more recently with Baby Boomers selling their homes to their Millennial kids who have been priced out of the market. In this scenario, or any in which you already have a buyer and an agreed-upon price, I would not use an agent.

You will have to hire a real estate attorney to make sure the transaction is handled properly. There are also tax considerations when selling a home below market value. However, the hourly cost to sort out those issues will be much lower than the commission you’d pay an agent.

3. The cost of selling makes a difference in your plan.

I get it. You’d like to sell your home for $1.5 million but will have to dish out a $75,000 commission at closing. There’s a reason I put this situation last. I have seen too many scenarios where folks chose the DIY or, in real estate language, FSBO route and lost much more than the 5% commission. Take the ex-client who listed their home at $1.3 million and very clearly took their own pictures on their very old iPhone. That home sold almost a year later — at $950,000.

Now, there are scenarios where saving on the cost of selling is a good enough reason to sell on your own. Take the situation where the equity is very tight. You need to sell your home for $(fill in the blank) to make the next chapter of your life work financially. If the home doesn’t sell at that net price, you won’t make the move. I don’t think you want to show up at the closing writing a check because a commission put you in the red.

If it’s not already clear, I view the DIY as risky, especially if your equity represents a significant portion of your assets. Additionally, this is not something you want to try and then switch to a Realtor if it doesn’t work out. Seeing a stale listing with multiple price cuts sets off alarms and is likely to turn off a significant portion of your prospective buyers.

My last sale included a negotiated leaseback, documentation to ensure we didn’t have to pay capital gains taxes and an uncomfortable amount of money moving in and out of accounts. Rely on your financial planner (and your financial plan) to quarterback this portion of the process.

See my related article, Six Reasons to Use a Real Estate Agent When You Sell.

Related Content

• Why Luxury Home Sales Are Surging Right Now
• If You Want to Buy or Sell a Home, the Market Is Improving in 'Fits and Starts' So Far In 2024
• Best Time of Year to Buy a House
• Four Reasons to Buy When You Downsize for Retirement
• Four Reasons to Rent When You Downsize for Retirement

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Many prospective U.S. home buyers stayed away from the market last year as prices climbed and inventory sank, pushing existing home sales to their lowest level in nearly 30 years.

Last year, existing home sales — including single-family homes, townhomes, condominiums and co-ops — dropped to 4.09 million, the lowest level since 1995 when these sales totaled 3.85 million, according to a new National Association of Realtors (NAR) report. The median sale price last year hit a record high of $389,800, the association said in the report.

Low inventory and affordability were the primary reasons for the drop, NAR said. But while total housing inventory in December sat at just 1 million units — the equivalent of 3.2 months' supply — it was a 4.2% improvement from the prior year when inventory was only 960,000 units.

"Despite sluggish home sales, 85 million homeowning households enjoyed further gains in housing wealth," Lawrence Yun, NAR chief economist, said in a statement. "Obviously, the recent, rapid three-year rise in home prices is unsustainable. If price increases continue at the current pace, the country could accelerate into haves and have-nots.”

Yun pointed to mortgage rates, which are "meaningfully lower" than they were two months ago and said that more inventory is due to enter the market in coming months. Freddie Mac put the average 30-year fixed rate mortgage at 6.6% as of January 18, down from 6.66% the prior week but up from 6.15% one year ago, NAR said.

Demand is improving

The NAR report comes as recent data from the Mortgage Banker Association (MBA) shows that mortgage demand slightly improved for the week ending January 19. This was the third consecutive week of improvement despite still-high mortgage rates, MBA said.

“More folks are trying to get a head start before the beginning of the spring selling season by applying early for a mortgage,” the Kiplinger Letter’s housing editor Rodrigo Sermeño said in a statement about the MBA data. “With mortgage rates falling further this year, things should continue to look better for buyers.”

Ways to shop for low mortgage rates

If you’re looking to buy a home, there are a number of ways to help you get the best 30-year mortgage rates. These include increasing your down payment, raising your credit score, shopping around to get quotes from multiple sources, and considering an adjustable-rate mortgage.

In addition, the Consumer Financial Protection Bureau's (CFPB) "Buying a House" webpage provides a tool to help in the homebuying process.

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If you spent your teenage years waiting anxiously for one of your siblings to get out of the shower, the idea of selling your spacious, multi-bathroom home and moving into a smaller house or condo may feel like a reversal of fortune.

Yet for many retirees, downsizing makes financial and practical sense. Younger baby boomers — those currently ranging in age from 57 to 66 — made up 17% of recent home buyers, while older boomers — ages 67 to 75 — accounted for 12%, according to a 2022 report from the National Association of Realtors Research Group. Boomers’ primary reasons for buying a home were to be closer to friends and family, as well as a desire to move into a smaller home, the report said. Both younger and older boomers were more likely than others to purchase a home in a small town, and younger boomers were the most likely to buy in a rural area.

Not all retirees move into a smaller home. A survey by Age Wave and Merrill Lynch found that about one-third of retirees opted to “upsize” to a larger home. But a smaller house or condo typically requires less maintenance and may be more accessible than a two-story suburban house. And at a time when homeowners age 62 and older have more than $12 trillion in home equity, down-sizing offers a way to free up some of that equity for other purposes, such as shoring up retirement accounts or saving for long-term care.

For retirees Fred and Shelby Bivins, selling their home in Green Valley, Ariz., will enable them to realize their dream of traveling in retirement. The Bivinses have put their 2,050-square-foot Arizona home on the market and plan to relocate to their 1,600-square-foot summer condo in Fish Creek, Wis., a small community about 50 miles from Green Bay. They plan to live in Wisconsin in the spring and summer and spend the winter months in a short-term rental in Arizona, where they have family.  

Fred, 65, says the decision to downsize was precipitated by a two-month stay in Portugal last year, one of several countries they hope to visit while they’re still healthy enough to travel. “We’ve had Australia and New Zealand on our list for many years, even when we were working,” says Shelby, 68. The Bivinses are also considering a return visit to Portugal. Eliminating the cost of maintaining their Arizona home will free up funds for those trips. 

With help from Chris Troseth, a certified financial planner based in Plano, Texas, the Bivinses plan to invest the proceeds from the sale of their home in a low-risk portfolio. Once they’re done traveling and are ready to settle down, they intend to use that money to buy a smaller home in Arizona. “Selling their primary home will generate significant funds that can be reinvested to support their lifestyle now and in the future,” Troseth says. “Downsizing for this couple will be a positive on all fronts.”

Challenges for downsizers 

For all of its appeal, downsizing in today’s market is more complicated than it was in the past. With 30-year fixed interest rates on mortgages recently approaching 8%, many younger homeowners who might otherwise upgrade to a larger home are unwilling to sell, particularly if it means giving up a mortgage with a fixed rate of 3% or less. More than 80% of consumers surveyed in September by housing finance giant Fannie Mae said they believe this is a bad time to buy a home and cited mortgage rates as the top reason for their pessimism. “This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon,” Fannie Mae said in a statement. As a result, buyers are competing for limited stock of smaller homes, says Hannah Jones, senior economic research analyst for Realtor.com. 

Here, though, many retirees have an advantage, Jones says. Rising rates have priced many younger buyers out of the market and made it more difficult for others to obtain approval for a loan. That’s not an issue for retirees who can use proceeds from the sale of their primary home to make an all-cash offer, which is often more attractive to sellers. 

Retirees also have the ability to cast a wider net than younger buyers, whose choice of homes is often dictated by their jobs or a desire to live in a well-rated school district. While the U.S. median home price has soared more than 40% since the beginning of the pandemic, prices have risen more slowly in parts of the Northeast and Midwest, Jones says. “We have seen the popularity of Midwest markets grow over the last few months because out of all of the regions, the Midwest tends to be the most affordable,” she says. “You can still find affordable homes in areas that offer a lot of amenities.” 

Meanwhile, selling your home may be somewhat more challenging than it was during the height of the pandemic, when potential buyers made offers on homes that weren’t even on the market. The Mortgage Bankers Association reported in October that mortgage purchase applications slowed to the lowest level since 1995, as the rapid rise in mortgage rates has pushed many potential buyers out of the market. Sales of previously owned single-family homes fell a seasonably adjusted 2% in September from August and were down 15.4% from a year earlier, according to the National Association of Realtors. “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” NAR chief economist Lawrence Yun said in a statement. 

However, because of tight inventories, there’s still demand for homes of all sizes, Jones says, so if your home is well maintained and move-in ready, you shouldn’t have difficulty selling it. “The market isn’t as red-hot as it was during the pandemic, but there’s still a lot to be gained by selling now,” she says.

Other costs and considerations 

If you live in an area where real estate values have soared, moving to a less expensive part of the country may seem like a logical way to lower your costs in retirement. While the median home price in the U.S. was $394,300 in September, there’s wide variation in individual markets, from $1.5 million in Santa Clara, Calif., to $237,000 in Davenport, Iowa. But before you up and move to a lower-cost locale, make sure you take inventory of your short- and long-term expenses, which could be higher than you expect. 

Selling your current home, even at a significant profit, means you will incur costs, including those to update, repair and stage it, as well as a real estate agent’s commission (typically 5% to 6% of the sale price). In addition, ongoing costs for your new home will include homeowners insurance, property taxes, state and local taxes, and homeowners association or condo fees.

Nicholas Bunio, a certified financial planner in Berwyn, Pa., says one of his retired clients moved to Florida and purchased a home that was $100,000 less expensive than her home in New Jersey. Florida is also one of nine states without income tax, which makes it attractive to retirees looking to relocate. Once Bunio’s client got there, however, she discovered that she needed to spend $50,000 to install hurricane-proof windows. Worse, the only home-owners insurance she could find was through Citizens Property Insurance, the state-sponsored insurer of last resort, and she’ll pay about $8,000 a year for coverage. Her property taxes were higher than she expected, too. When it comes to lowering your cost of living after you downsize, “it’s not as simple as buying a cheaper house,” Bunio says 

Before moving across the country, or even across the state, you should also research the availability of medical care. “Oftentimes, those considerations are secondary to things like proximity to family or leisure activities,” says John McGlothlin, a CFP in Austin, Texas. McGlothlin says one of his clients moved to a less expensive rural area that’s nowhere near a sizable medical facility. Although that’s not a problem now, he says, it could become a problem when they’re older. 

If you use original Medicare, you won’t lose coverage if you move to another state. But if you’re enrolled in Medicare Advantage, which is offered by private insurers as an alternative to original Medicare, you may have to switch plans to avoid losing coverage. To research the availability of doctors, hospitals and nursing homes in a particular zip code, go to www.medicare.gov/care-compare.

At a time when many seniors suffer from loneliness and isolation, a sense of community matters, too. Bunio recounts the experience of a client who considered moving from Philadelphia to Phoenix after her daughter accepted a job there. The cost of living in Phoenix is lower, but the client changed her mind after visiting her daughter for a few months. “She has no friends in Phoenix,” he says. “She’s going on 61 and doesn’t want to restart life and make brand-new connections all over again.”

Time is on your side 

Unlike younger home buyers, who may be under pressure to buy a place before starting a new job or enrolling their kids in school, downsizers usually have plenty of time to consider their options and research potential downsizing destinations. Once you’ve settled on a community, consider renting for a few months to get a feel for the area and a better idea of how much it will cost to live there. Bunio says some of his clients who are behind on saving for retirement or have high health care costs have sold their homes, invested the proceeds and become permanent renters. This strategy frees them from property taxes, homeowners insurance, homeowners association fees and other expenses associated with homeownership 

The boom in housing values has boosted rental costs, as the shortage of affordable housing increased demand for rental properties. But thanks to the construction of new rental properties in several markets, the market has softened in recent months, according to Zumper, an online marketplace for renters and landlords. A Zumper survey conducted in October found that the median rent for a one-bedroom apartment fell 0.4% from September, the most significant monthly decline this year. 

In 75 of the 100 cities Zumper surveyed, the median rent for a one-bedroom apartment was flat or down from the previous month. (For more on the advantages of renting in retirement, see “8 Great Places to Retire—for Renters,” Aug.)

Aging in place

Even if you opt to age in place, you can tap your home equity by taking out a home equity line of credit, a home equity loan or a reverse mortgage. At a time when interest rates on home equity lines of credit and loans average around 9%, a reverse mortgage may be a more appealing option for retirees. With a reverse mortgage, you can convert your home equity into a lump sum, monthly payments or a line of credit. You don’t have to make principal or interest payments on the loan for as long as you remain in the home. 

To be eligible for a government-insured home equity conversion mortgage (HECM), you must be at least 62 years old and have at least 50% equity in your home, and the home must be your primary residence. The maximum payout for which you’ll qualify depends on your age (the older you are, the more you’ll be eligible to borrow), interest rates and the appraised value of your home. In 2024, the maximum you could borrow was $1,149,825.

There’s no restriction on how homeowners must spend funds from a reverse mortgage, so you can use the money for a variety of purposes, including making your home more accessible, generating additional retirement income or paying for long-term care. You can estimate the value of a reverse mortgage on your home at www.reversemortgage.org/about/reverse-mortgage-calculator.

Up-front costs for a reverse mortgage are high, including up to $6,000 in fees to the lender, 2% of the mortgage amount for mortgage insurance, and other fees. You can roll these costs into the loan, but that will reduce your proceeds. For that reason, if you’re considering a move within the next five years, it’s usually not a good idea to take out a reverse mortgage.

Another drawback: When interest rates rise, the amount of money available from a reverse mortgage declines. Unless you need the money now, it may make sense to postpone taking out a reverse mortgage until the Federal Reserve cuts short-term interest rates, which is unlikely to happen until late 2024 (unless the economy falls into recession before that). Even if interest rates decline, they aren’t expected to return to the rock-bottom levels seen over the past 15 years, according to a forecast by The Kiplinger Letter. And with inflation still a concern, big rate cuts such as those seen in response to recessions and financial crises over the past two decades are unlikely. 

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Looking for a home this year felt impossible, as someone trying to buy a first home. 

I set alerts for listings with two real estate agents at two different firms as well as, of course, on Zillow and StreetEasy. And, yes, I'll admit, on Cabin Homes (a city girl can dream...). I was looking widely for different types of homes in different locations, from city apartments to suburban ranches, and over and over again it was the same story: inventory is extremely low, and the price of homes was slow to react against risen interest rates. 

Now, a new analysis from the real estate company Redfin bears my experience out. Only 16% of homes listed for sale in 2023 were affordable, based on Redfin's calculations, but the situation should start to change in 2024. 

Redfin's analysis considers a listing affordable if the estimated monthly mortgage payment is lower than 30% of the local county's median household income. That 16% number is the lowest percentage in Redfin's 10 years of data. In 2022, 21% of listings were affordable, and before the pandemic boom, over 40% were affordable, by the company's analysis. 

The stark numbers are something to behold. In 2023, there were 352,500 affordable listings. In 2022, there were 596,135. It gets rougher: during the prior decade, there were over 1,000,000 affordable listings per year.

Primary reasons for this lack of affordability were mortgage rates and inventory and, naturally, the interplay of those factors. Higher mortgage rates meant that monthly mortgage payments started to get out of reach for more people. It also meant that people who already own homes didn't want to sell and lose their lower interest rate, putting fewer homes on the market. That left people like me scrambling with the realization that, for the time being, renting was cheaper than buying (please don't tell me about how good home equity is in the long-term, trust me, I'm aware).

There are some caveats to this data. First, the analysis assumed only a 5% down payment, which has obvious impacts on monthly mortgage payment estimates. Additionally, the analysis used the average 30-year-fixed mortgage rate, while it is possible to shop for a low mortgage rate.

What could happen to housing in 2024

There is good news on the horizon if you want a new home in 2024. But don't expect a quick change in fate. 

Mortgage rates are already falling since the Federal Reserve halted interest rate hikes this fall and winter, making monthly payments more affordable, but they're still higher than in even the recent past. 

Home prices, while not plummeting, are at least slowing down, something I've noticed in my own perusal of listings. It's not the frenzy it was in 2022, nor is it the completely out-of-reach situation of mid-2023. The Kiplinger Letter team predicts home prices won't fall, but will rise at a slower pace, while lower mortgage rates will bring more sales. The Letter team also expects that homes will get fewer offers than this year, and more offers will require home inspections and other contingencies.

So if, like me, you're still hoping to buy a home, 2024 could be our year. See you at the cabin!

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It’s definitely a seller's market, which usually means big profits for homeowners when the sale is complete. At the end of 2022, the average seller earned real profit on the sale of their property to the tune of $112,000, up 21% from 2021 and 78% from two years ago. 

And while that may sound like a large chunk of change, imagine averaging $2 million in profit from the sale of your residence. That’s what the average profit is on celebrity homes, with many celebrities fairing much better, according to real estate firm Agent Advice.

The company analyzed over 130 celebrity-involved property sales in the U.S. going back to January 2023. The study showcases which celebrities grossed the highest profits by comparing the original purchase price to the final sales price. 

2023’s Biggest Celebrity Real Estate Profits

Mark Wahlberg, $46.7 million profit

Boston-born actor Mark Wahlberg won the top spot among celebrities, securing an impressive $46.7 million for his expansive 30,500 square-foot mansion in Beverley Park, California which he sold for $55 million. (Even so, that’s a far cry from the $87.5 million Wahlberg was asking just last year). It is worth noting that the profit was based on what Wahlberg paid ($8.25 million) for the 6.2 acres of land only.

Sylvester Stallone sold his home in the same community as Wahlberg to Adele for $58 million in 2022, and the founder of California Pizza Kitchen is asking $48.5 million for his place down the street.

Brad Pitt, $31.3 million profit

Not far behind Wahlberg is Brad Pitt, earning an impressive $31.3 million profit on his Los Feliz compound, the former family home where he raised his six children with Angelina Jolie. Three decades ago, Pitt paid  1.7 million, which means he churned a substantial 1,840% profit.

Celine Dion, $20.8 million profit

Canadian singer Celine Dion sold her generous 31,000-square-foot Las Vegas mansion in May 2023 for a remarkable $30 million — triple what she initially paid in 2017. That's an impressive $20.8 million profit from the property's initial purchase.

Diane Sawyer, $18.6 million profit

Broadcast journalist Diane Sawyer sold her Massachusetts vineyard for $23.9 million. Sawyer bought the vineyard for $5.3 million in the mid-1990s, so she secured a profit of $18.6 million upon the sale. 

David Ortiz, $10.55 million profit

David Ortiz, the retired Boston Red Sox designated hitter, set a record for selling his Florida mansion this year. In 2016, he invested $1.5 million in the land and made a profit of $10.55 million on the final sale of his home.

"In a year marked by noteworthy and record-breaking real estate maneuvers, the impressive profits generated by these celebrities, from Mark Wahlberg to Russ Weiner, emphasize the resilience and allure of the luxury property market,” said Chris Heller, co-founder of Agent Advice.

Other big celebrity property sales

• Judd Apatow — $9 million
• James Corden — $7.355 million
• Oprah Winfrey — $7.230  million
• Quin Snyder — $6.825 million
• Russ Weiner — $6.4 million

Sources: Realtor, Robb Report, Redfin and Zillow, as of November 2023, per Agent Advice.

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Sky high mortgage rates might be scaring off fewer potential homebuyers than usual in recent months, according to a new report from Bank of America.

The bank, whose products include home loans, surveyed 500 homeowners and 500 renters and found that fewer of them (62%) are willing to hold off purchasing a home until mortgage rates and prices fall than there were just six months ago (85%).

The survey also found generational differences among prospective buyers as far as specific home features that they are willing to sacrifice to raise the chances of finding a place. Baby boomers are more likely than younger generations to give up space, for example, and they are less likely to compromise on location.

The findings come as existing home sales are at their lowest level since 2010, and while availability is better in the new-home market, it may not last, as Kiplinger recently reported.

In a video accompanying the Bank of America study, Matt Vernon, head of consumer lending, said that if buying a home is your goal and within your budget, "the best time to buy is when you’re ready financially and you can find a home that fits your needs.”

As for what would motivate homeowners to sell, the survey found that 50% of current owners would be willing if their “dream home” became available. Some 54% said they would buy if they found a place in a more affordable area, regardless of whether rates moved higher.

According to the survey, other factors that would influence homeowners to sell include:

• A job opportunity or relocation (40%)
• Nicer neighborhood amenities (40%)
• The need for a larger home or more rooms (38%)
• A social community to be a part of (32%)
• A desire to be adventurous and move on (28%)
• A home with rental potential (21%)

Interest rates for about 80% of outstanding mortgages nationwide are below 5%, Bank of America said referring to a Zillow report. Given that, this group may be far less inclined to leave and purchase a new home, the bank said.

Another factor is that homebuyers are getting older and may be best able to swoop up the available inventory with all-cash offers, according to a November 13 Washington Post report. "A new picture is emerging of the buyers who still find a way to get a house," the article noted. "They're older, and because many of them sold a home before buying, they're also wealthier."

Meanwhile, there is contradicting advice about whether renting or buying is the right move at present, based on the landscape of the real estate market. In a December 1 New York Times piece, Mark Zandi, chief economics of Moody’s Analytics, said that this is not a good time for most people to buy a home. He pointed to high prices and mortgage rates and low inventory as reasons to choose renting right now.

“If you find the perfect place, then by all means buy it," Zandi told the NYT. "But most people are not going to find it."

Tips for finding a low mortgage rate

Although mortgage rates remain high, you can lower your rate, as Kiplinger previously reported. Actions to consider include increasing your down payment, raising your credit score and shopping around.

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Mortgage demand declined last week even as mortgage rates decreased, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

For the week ending March 22, total mortgage demand decreased 0.7% compared to the prior week, the survey showed. 

“Affordability is taking a hit this spring home-buying season as high mortgage rates erode people’s budgets,” the Kiplinger Letter’s housing editor Rodrigo Sermeño said. “As a result, many potential homebuyers are waiting on the sidelines for mortgage rates to drop.”

Joel Kan, MBA vice president and deputy chief economist, echoed those remarks in a statement.”Homebuyers continue to hold out for lower mortgage rates and for more listings to hit the market,” he said. 

Mortgage demand activity was “muted” last week despite the slightly lower mortgage rates, Kan said “The 30-year fixed rate edged lower to 6.93 percent, but that was not enough to stimulate borrower demand,” he said.

The MBA forecast calls for rates to move toward 6% by the end of the year, Kan said.

Sermeño said that tight inventories continue to exert upward pressure on home prices. 

“The supply of homes on the market, however, is showing signs of a recovery with the inventory of existing homes rising around 10% in February from a year ago,” Sermeño said. “Lower rates later this year and higher inventory of homes should help sales in the coming months.”

A March 25 report by the U.S. Census Bureau showed that the median new home sale price in February was $400,500, a decrease of 3.5% from January and a decrease of 7.6% from the same period a year ago.

“A slight uptick in mortgage rates held back the pace of new home sales in February,” Robert Dietz, National Association of Home Buildings (NAHB) chief economist, said in a statement.

“Our latest builder surveys show that roughly one-quarter of builders reported cutting home prices in March,” Dietz said. “The price cuts, in combination with building slightly smaller homes, can be seen in today’s data that show a 7.6% year-over-year decline for median new home prices.”

(Story continues below)

Mortgage application highlights

The Market Composite Index, which measures mortgage loan application volume, decreased 0.7% on a seasonally adjusted basis from the prior week, and decreased 0.4% on an unadjusted basis, MBA said.

The Purchase Index decreased 0.2% on a seasonally adjusted basis, compared to the prior week. On an unadjusted basis, the index increased 0.2% from the prior week and fell 16% from the same week a year ago.

The Refinance Index, which measures refinancing and prepayment activity, decreased 2% from the prior week and was 9% lower than the same week a year ago. The refinance share of mortgage activity decreased to 30.8% of total applications from 31.2% the previous week. 

The FHA share of total applications decreased to 12% from 12.1% the prior week. The VA share decreased to 12%, from 12.1% in the week prior, and the USDA share remained unchanged at 0.5% from the prior week.

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The mortgage delinquency rate on residential properties rose in the third quarter as the labor market softened, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey.

The delinquency rate includes loans that are at least one payment past due but not in the process of foreclosure.

For the quarter ended September 30, the delinquency rate for mortgages on one-to-four unit residential properties increased to 3.62% from 3.37% the prior quarter, the survey showed.

“The national mortgage delinquency rate increased in the third quarter from the record survey low reached in the second quarter of this year, with an uptick in delinquencies across all loan types — conventional, FHA and VA,” said Marina Walsh, MBA vice president of Industry Analysis.

The increase, Walsh said, was driven by a rise in earliest-stage delinquencies, or those that were 30- and 60-days past due. Later-stage delinquencies, or those that were at least 90 days past due, declined to the lowest level since the first quarter of 2020, she added.

Mortgage delinquencies track closely with the labor market, Walsh said. The unemployment rate increased to 3.9% in October, its highest level since January 2022, the survey showed.

“The increase in unemployment will likely mean further increases in mortgage delinquencies, particularly for FHA borrowers,” Walsh said.

Delinquency rates in focus

By loan type compared to last quarter, the delinquency rate for conventional loans increased 21 basis points to 2.5%, while the rate for FHA loans increased 55 basis points to 9.5%. The delinquency rate for VA loans increased 6 basis points to 3.76%. 

By delinquency stage compared to last quarter, the 30-day delinquency rate increased 28 basis points to 2.03%; the 60-day rate increased 7 basis points to 0.62%, and the 90-day rate decreased 9 basis points to 0.98%.

The non-seasonally adjusted seriously delinquent rate, which includes loans 90 days or more past due or in the process of foreclosure, decreased 9 basis points to 1.52% from the prior quarter, which is the lowest level since 1984, MBA said.

“The decline in later-stage delinquencies, along with a foreclosure starts rate of 0.14 percent — which is well-below the historical quarterly average of 0.40 percent — suggest that distressed homeowners may be utilizing available loss mitigation options that prevent a foreclosure start,” Walsh said. In addition, "accumulated home equity may also be enabling some homeowners to sell their homes well before foreclosure becomes a possibility.”

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For almost a year and a half, the housing market has slowed to a crawl as inventory remained low and record-high mortgage rates scared off potential buyers. However, a new report from Redfin shows a subtle rise in new listings, which makes the first increase since July of 2022. And in certain affordable housing markets, listings are flying off the shelf in as little as eight days. 

Are home listings picking up?

In the four weeks ending October 22nd, Redfin reported a 0.3% increase in new home listings compared to last year. While it might seem too small to celebrate, this is the first increase in listings in almost 18 months. The months of supply (a measure of housing inventory) also inched ahead by 0.2 points to 3.5 months of supply, which is the highest since February. While the figure is still a ways off from a balanced supply of 4 to 5 months, progress is progress. 

Despite the subtle increases in home listings, buyers aren’t budging unless the deals are good. The near 30-year low in mortgage applications still indicates that buyers are waiting for conditions to improve more substantially before dipping a toe in the housing arena. With mortgage rates hovering around a 23-year high at 7.76% as of November 5th, and elevated home prices, it’s easy to see why potential buyers are still hesitant. However, buyers currently in the running for a new home might benefit from price drops. 

As home prices climb across the country, higher-priced homes are sitting on the market longer while buyers opt for more budget-conscious options. In response, sellers are adjusting prices in yet another record-setting juncture. As of October 22nd, 6.8% of listed homes dropped their prices. 

Which cities are bucking the trend and why?

Affordability remains a major concern for potential homebuyers in this high-rate environment. Markets with the fastest-selling homes typically have lower prices. In these five major housing markets, homes are going under contract in under two weeks on average. What’s making buyers snatch up these homes so quickly? They’re affordable and most fall under the national average home price of $412,081 except for Seattle, which surpasses the national average.

With people gravitating towards more affordable areas, competition for homes there is rising with it. Competition is also likely to bring price increases. Austin, TX is a prime example. The city gained popularity during the pandemic for its affordable housing and buyers purchased as quickly as possible while driving prices through the roof. Last Spring’s peak saw home prices of almost 30% more than the average home. Today, Austin is one of the slowest metro areas with a median of 59 days on the market, a Redfin study showed, and prices stretched ahead of the national average by over 9%.

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Over the past 18 months, the U.S. housing market has struggled to increase available listings while potential buyers battle sky-high mortgage rates, and elevated home prices. Although the national demand for homes has declined significantly in response to these conditions, some real estate markets are still managing to sell homes in just over one month. 

A recent study conducted by Agent Advice, a platform of services for real estate agents, analyzed U.S. housing markets to determine which markets are selling homes faster. On average it’s currently taking 43 days to sell a home nationwide. However, some markets fall above or below that statistic. 

What are the fastest-selling housing markets? 

According to the study, these U.S. housing markets saw the fastest turnaround times from listing to sale. The states with the fastest moving homes are Massachusetts and New Hampshire, which tied at 32 days to sell from the listing date. Next was Washington state with 33 days and Tennessee at 33.5 days.

What are the slowest-selling housing markets?

Several factors go into how long a home takes to sell such as the price, regional housing supply, and homebuyer demand. Homes in New York took nearly twice as long to sell as the fastest moving markets, coming in dead last at 61.5 days to sell. This might not be the case across all of New York, since upstate markets like Rochester and Buffalo saw homes go under contract in an average of 11 days and 9 days respectively in Redfin’s latest report.

Montana wasn’t far behind at 59.5 days. Next, West Virginia had the third slowest market at 56 days to sale.

Chris Heller, co-founder of Agent Advice, noted: “If you are looking to sell your home, there are many things to consider that might help you get a sale sooner, like opting to sell your home in the Spring or Summer months over Winter as well as taking your time to do thorough research regarding how many other homes in your area are on the market and at what prices."

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The National Association of Realtors’ (NAR) recent loss in a Missouri court for conspiring to artificially inflate commissions on home sales is expected to have far-reaching implications for the real estate industry and home sellers.

The case could, in fact, change how home sellers pay real estate agents, according to a Washington Post report.

In an October 31 verdict in the District Court for the Western District of Missouri, jurors found NAR and several real estate brokerages guilty of the anticompetitive conspiracy. The lack of competition resulted in home sellers having to pay higher fees to their brokers when they sold their homes than they would otherwise have had to if there was price competition.

The jury ordered NAR and the brokerages to pay about $1.8 billion in damages to about 500,000 home sellers in Missouri, according to the report.

In their suit, home sellers challenged an NAR rule requiring home sellers to make non-negotiable commission offers to brokers to list their homes on the multiple listing services (MLS) properties database owned by the local NAR association. The MLS service feeds into Zillow and other real estate sites, the Washington Post said in the report.

In the U.S., average total commission rates — split between buyer and seller brokers — are 5% to 6% of the sale price, according to the suit.

“Most buyer brokers will not show homes to their clients” if the seller offers a lower commission, or the broker will prioritize showing homes with higher commission offers, the plaintiffs charged in the suit.

'Drastic' change on the way?

Depending on whether the judge in the case issues an injunction to remedy anti-competitive rules and behavior, the verdict could “drastically” change the way commissions work, Ryan Tomasello, managing director at financial services firm Keefe, Bruyette & Woods, said in a research note on the case.

“In general, this means that listing agents and home sellers would no longer predetermine buyer agent commission rates, listing agents would be prohibited from sharing commissions with buyer agents, and buyer agent commission rates would not be published in the MLS,” Tomasello said.

“We believe changes to the residential brokerage industry's commission structure could cause the annual commission pool to decline by upwards of 30% over time,” Tomasello said. He added that a court-ordered injunction could “unbundle” commissions nationally by early 2024.

Appeals are coming

“This matter is not close to being final,” NAR President Tracy Kasper said in a statement. “We will appeal the liability finding because we stand by the fact that NAR rules serve the best interests of consumers, support market-driven pricing and advance business competition. We remain optimistic we will ultimately prevail," she said. "In the interim, we will ask the court to reduce the damages awarded by the jury. “

The appeals process could take years to resolve, the NAR said.

Besides the NAR, the others named in the case are the four largest national real estate broker franchisors:

• Realogy Holdings, which rebranded to Anywhere Real Estate last year
• HomeServices of America, an affiliate of Warren Buffett’s Berkshire Hathaway
• RE/MAX Holdings
• Keller Williams Realty

Before the trial, however, both Anywhere and RE/MAX agreed to settlements, which are still pending the judge’s approval. According to the Washington Post report, the RE/MAX settlement is $55 million and Anywhere’s is $84 million. 

“We are disappointed with the court’s ruling and intend to appeal,” a HomeServices spokesperson said in an emailed statement to Kiplinger. “Today’s decision means that buyers will face even more obstacles in an already challenging real estate market, and sellers will have a harder time realizing the value of their homes.”

“We are disappointed that before the jury decided this case, the court did not allow them to hear crucial evidence that cooperative compensation is permitted under Missouri law,” Keller Williams spokesperson Darryl Frost said in an emailed statement to Kiplinger. “This is not the end.”

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New single-family home sales fell in August as the average mortgage rate topped 7%, according to a new report by the National Association of Home Builders (NAHB).

Sales of newly built, single-family homes in August declined 8.7% to a 675,000 seasonally adjusted annual rate from an upwardly revised July reading, according to the report, which is based on data from the Housing and Urban Development Department and the Census Bureau. New home sales in August grew 5.8%, however, when compared to a year ago.

A dearth of existing homes for sale has pushed buyers to seek out new builds, as Kiplinger recently reported.

“Sales weakened in August with average mortgage rates above 7%,” said Robert Dietz, NAHB chief economist. “While some builders were able to offset that effect via mortgage rate buydowns, rates moved higher this month, suggesting the pace of new home sales will weaken further for September.”

New single-family home inventory was 436,000 in August, down 5.2% from a year ago. Of the total home inventory in August, which includes both new and resale homes, newly built homes represented an elevated share of 31% of those available for sale, and nearly 16% of total home sales during the month were new homes, NAHB said.

Supply-side concerns linger

“Builders continue to grapple with supply-side concerns in a market with poor levels of housing affordability," said Alicia Huey, NAHB chair and a custom home builder and developer from Birmingham, Alabama. “Higher interest rates price out demand, as seen in August, but also increase the cost of financing for builder and developer loans, adding another hurdle for building.”

The median sale price of a new home fell about 2% to $430,300 in August compared to a year ago, which is primarily attributable to builder incentives and a shift toward building slightly smaller homes, NAHB said.

“Builders are being more cautious about managing their inventory in this rising rate environment,” Dietz said. “A year ago, 10% of the new home inventory listed for sale consisted of homes that had not yet started construction, and that share has now risen to 17% of the total inventory.”

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 Residential mortgage lending activity declined sharply in 2022 as rates, closing costs and denials for insufficient income surged, a new report shows.

"The higher interest rate environment had profound effects on the mortgage market in 2022, with borrowers paying much more in monthly payments,” said Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB). “These trends are likely to continue given further increases in interest rates in 2023.”

The CFPB annual report on residential mortgage lending activity and trends shows a significant decline in mortgage applications and originations last year as interest rates, fees and other costs sharply increased.

That trend is also borne out in the latest Mortgage Bankers Association weekly mortgage applications survey, which showed that high interest rates has caused mortgage demand to shrink.

The CFPB report shows that more borrowers (50.2%) also paid discount points in 2022 than in any other year since 2018 when data collection began in this area. The median borrower paid $2,370 for discount points in 2022, up 32.1% from 2021, the report shows.

The report’s findings are based on data collected under the  Home Mortgage Disclosure Act, which requires financial institutions to collect and make public certain loan-level information on mortgage applications and originations. 

Borrowers that did get mortgages in 2022 saw average monthly mortgage payments soar 46% as the median interest rate for a 30-year, fixed rate mortgage at the end of the year was 6.5% and closing costs increased 21.8% from 2021 to an average of $5,954, CFPB said.

The number of refinances plunged 73.2% to 2.2 million, with the majority of these being cash-out refinances originated by independent lenders. Home equity lines of credit were the only form of refinancing to show an increase, rising 33.3% from 2021.

Disparities in outcomes for Black and Hispanic borrowers

The report also found disparities in outcomes with Black and Hispanic borrowers faring worse when it comes to approvals, loan sizes and fees, Chopra said. However, he added, some of these disparities shrank or disappeared for FHA loans.

“Black and Hispanic borrowers were denied loans at higher rates, received smaller loans, were charged higher interest rates and paid more in upfront fees than white and Asian borrowers,” Chopra said. 

For example, the median interest rate for Black and Hispanic borrowers in 2022 was above 5%, while the median rate was below 5% for white and Asian borrowers, according to the report.

Lenders denied loan applications due to insufficient income at a higher rate in 2022 than at any other point since 2018, the report shows.

In response to the report, Chopra said that the CFPB will “devote more attention to ensure that borrowers can sufficiently navigate alternatives to foreclosure when faced with financial distress.” 

That includes, for example, exploring amendments to mortgage servicing standards and looking for ways to simplify the refinancing process for borrowers, he said. 

The CFPB encourages people to visit its website or call (855) 411-CFPB (2372) to submit complaints about mortgage or refinance issues or other financial products or services. 

Visit the agency’s consumer education center on mortgages for more information on getting and maintaining a mortgage. 

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Monthly housing payments in September hit an all-time high, Redfin reported, reflecting the spike in mortgage rates to a more than two-decade high and continued upward push in housing prices.

Higher prices have correlated to lower sales, with pending home sales dropping 13% in the four weeks ending Sept. 17, Redfin reported. New home sales rose 3% in this same period. The total number of homes for sale is down 16% from the previous year as homeowners hold off on making sales. 

Interest rates have spiked as the Federal Reserve has acted to temper surging inflation, raising borrowing costs over the last 18 months. Although roughly benchmarked to the 10-year Treasury bond, rather than the fed funds rate, the 30-year mortgage rate tends to move in tandem with the fed funds rate. At last week's Fed policy meeting, the central bank held the fed funds rate steady at a range of 5.25% to 5.50%. Potential buyers may welcome the rate pause, but interest rates are expected to remain elevated over the next two years.  

As a result of the myriad of challenges currently facing the market, overall home sales and pending sales have declined since last year. 

High mortgage rates and payments

Daily average mortgage rates reached 7.78% as of September 27th, according to Bankrate. Amid the high rates, the median monthly mortgage payment for September hit $2,661, Redfin reported. That figure represented a 12% rise from the previous year and Redfin's highest median mortgage payment on record.

You can use our tool, in partnership with Bankrate, to compare rates from a variety of lenders.

Both home buyers and sellers retreat

Overall home sales and pending home sales declined year over year according to Redfin’s report. Many homeowners locked in lower rates before the beginning of the rate hikes in 2022, making them less likely to enter the home-buying or home-selling arena now. Doing so would mean giving up their lower rate and lower payment for a much higher one.

According to the Mortgage Bankers Association, potential homebuyers pulled back as well with a sharp drop of 26% in mortgage purchase applications over the last year.

Stagnant housing inventory

Since people are less likely to move anytime soon, housing inventory has remained stagnant at a 3.1-month supply, falling short of a standard 4- to 5-month supply. Data on new listings shows less fluctuation with the smallest year-over-year decline (-7%), but last year’s severe drop in this area may have skewed reporting. Home prices have increased alongside the slowing inventory, with Redfin reporting a median sales price of almost $375,000. 

Some sellers may see this as an opportunity to get top dollar for their home since home prices have soared. But potential buyers aren't responding. 

Bottom line

The housing market remains under duress. The challenging aspects of the market are deterring both buyers and sellers from engaging. Instead, many are patiently waiting for rates, prices, and payments to fall. However, the Fed may not consider reducing rates until 2024 or 2025 and 30-year mortgage rates, which tend to move in tandem with the Fed's actions, are expected to remain stubbornly high for the foreseeable future.

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Regular viewers of Judge Judy reruns, or Judith Sheindlin’s new show, Judy Justice, may know the two occupations she has little regard for: used car salespeople and real estate agents. In her opinion, she says, honesty and caring about the customer are not part of their job descriptions.

Before we toss the baby out with the bathwater, let me tell you about a number of real estate salespeople, who, when a serious problem was called to their attention, moved with more speed than a roadrunner and resolved a family’s very legitimate concerns.

Our story begins with an email marked urgent from “Thomas.”

Rental house up for sale

“I live with and take care of my elderly mom, ‘Anabel,’ in a lovely little house we’ve been renting for the past several years. It was recently listed for sale with a branch office of one of the nation’s largest real estate companies. The selling agent told us that someone would be out to take photos of the inside and outside of the house that would be posted online. On Aug. 31, 2023, at 3 p.m., I was at home with Mom when a photographer showed up and was about to take photos, and before he did, Mom asked him not to show our family photographs hanging on the living room wall or other things that would expose our personal lives to people across the country, especially anyone up to no good. Mom also offered to take our photographs down if he requested.

“He replied, ‘Not a problem. We can blur all those things out. We do this all the time.’ We said, ‘Then go right ahead.’ The gentleman was wearing a white T-shirt with the real estate office logo.”

On Sept. 2, Anabel checked the real estate company’s website to see how the photos of the house looked and was shocked to find that nothing was blurred — all their family photos, contents of the house and even the license plate of Thomas’ car was clearly visible. All these pictures were posted on real estate websites such as Zillow all over the Internet.

“Mr. Beaver, we have reasons to be concerned about the wrong people learning about our family through the photos as well as the things we own, such as expensive furniture, our new top-of-the-line television sound system and so on. This is an invasion of our privacy! Can you help us?”

Seller beware of photos during real estate sales

Photographs are known as the currency of real estate sales. Sellers — and their agents — typically want the home that’s for sale to have maximum exposure on as many websites as possible. In several states, listing agreements dedicate considerable attention to photographs. The seller can specify that photos must be blurred out to maintain privacy. This is something that needs to be discussed with the listing agent or broker. Experienced real estate salespeople recommend, where possible, obtaining the seller’s approval before posting interior photos that depict items of a personal nature.

Additionally, a landlord may want to obtain photographs of an occupied rental unit to use in a virtual tour of the property. But common sense — and the law — requires obtaining the tenant’s consent because of privacy considerations before taking and using such photographs.

You might wonder, What are the risks involved if photos of the inside of my home show up online? Plenty! Photos can reveal:

• Details about a tenant that they might like to be kept private
• If the tenant is lower income or appears to have a lot of money
• Easy-to-access windows that could be used by someone with criminal intent

Violating the scope of permission is an invasion of privacy

Where a tenant has given permission for photographs to be taken, but specifically required that certain items are blurred out — and that does not happen — then in most states, a suit for invasion of privacy could be filed.

But that takes time, and if the concern is getting those photos taken down now, I do not recommend going the “legal” route. Instead, get someone on the phone who has the ability to order those photos taken offline. Usually, I’ve found the media relations people at most companies are very helpful.

Not this time! I left a voice mail and sent an email to the corporate headquarters of the real estate company and never got a response.

The real estate agents involved acted at once

My reader did not know which office was handling the listing, and so I reached out to a broker in his area and explained the problem. Within an hour, he provided me with all the relevant names and phone numbers to call.

Not only were those people helpful, but they were appreciative of my call, as the failure of their own photographer could have resulted in a sizable lawsuit — something even the tenants did not want.

And all of this took place in less than 24 hours of me receiving my reader’s email. I’m sending Judge Judy a copy of this story.

Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Does it matter what time of year you go house hunting? You can find houses during all seasons. Determining the best time to jump into homeownership means understanding the pros and cons of buying a house at different times — and deciding when it’s best for you. 

When is the best time of year to buy a house? 

Seasonality tends to affect factors such as inventory, the number of homes for sale, and purchase price. Market conditions, such as job growth, mortgage rates and tax incentives, also influence the best time to search for a new house. But, the best time to purchase a home isn’t always when inventory is highest or when prices are the lowest. These are important factors to consider, but broader market conditions and your personal needs will be paramount in finding the right home. 

Winter

Winter is traditionally the slowest season for home sales and, as a result, it’s the cheapest time to buy a home. There's usually less competition between buyers and sellers may be more willing to negotiate to make a sale since buyer interest is lower than it is in the spring. The best time for a bargain is "the winter months, especially from the week of Thanksgiving to mid-January" Lawrence Yun, chief economist for the National Association of Realtors (NAR), told Kiplinger.

"The best time for price negotiations is during the winter months provided the right home appears on the market," Yun said.  While prices are cheaper during the winter, inventory is far more limited. There are fewer open houses in the winter months and you may be house hunting in less than ideal conditions. 

Evaluating a home’s roof and exterior grounds in a cold climate can also be challenging especially if it’s covered with snow or ice. It’s hard to assess the amount of natural light you’ll enjoy when the days are short. At the same time, inspecting a property during the winter lets potential buyers determine the effectiveness of heating systems and the structure’s integrity. 

Completing a sale may be easier than the peak home-buying months. The closing process tends to be speedier as lenders process fewer applications during this season and inspectors have less backlog.

Spring

Spring is when the weather and home buying start to heat up. In the spring, there is pent-up demand on both sides. Sellers and buyers often sit it out during the winter months. Most people start looking for homes as the weather gets warmer.  "Inventory is higher in spring and early summer, but that is when there are also more buyers in the marketplace. The days on market shortens and multiple offers become more prevalent" said NAR Chief Economist Yun.

Spring may not have the best weather, but it historically has the quickest home sales. One of the reasons sales inventory tends to increase when temperatures rise is because houses show better. Houses look much better in the spring sunlight and when landscaping is in bloom. People that want top dollar know spring is the season to sell and generally price their homes high during the spring.

The desire to get settled before the new school year begins is another reason why home buyers wait until spring to go house hunting and why they want to complete the sale before the fall. Mr. Yun noted that "Parents try their best to avoid school — year disruptions for their kids." While spring is generally one of the best times for inventory, competition is also fiercer, which can result in bidding wars and less room to negotiate with sellers.

Spring is typically a rainy season, which can magnify any defects of a property. Water infiltration can lead to rot, mold and mildew.  Seeing a property at this time of year can reveal costly damage that may be harder to detect in the warmer, drier conditions of summer. 

Since springtime is such a busy season in real estate, it’s not uncommon for mortgage brokers, real estate agents and inspectors to have busy schedules and thereby create longer wait times for buyers. 

Summer

 The early days of summer are considered peak real estate season in the U.S. Many of the same reasons buyers shop in the spring apply to home buying in summer as well — warm weather, school breaks, and having more hours of sunlight to go to open houses. If you are determined to get into a house before the summer is over, expect to come in with a strong offer. And you might consider being flexible on terms, not just price. 

There are parts of the country where real estate is slow in the summer because it’s simply too hot to shop comfortably. Florida is a great example. The temperature and humidity in the Sunshine State are at its worst in July and August, so searching for homes can be less than pleasant.

Buying in the summer has its pros and cons, but timing matters a lot. If you can hold off until the end of the summer, deals abound. In most areas the market slows down as it gets closer to August. Late August traditionally gives you a great opportunity to find deals. The sellers may need to get their kids settled and enrolled by the next term or may not want the listing to go stale. 

Don’t overlook the houses that have languished on the market during the spring and summer selling seasons. There are any number of reasons why a home might not have sold. A home that has been on the market for an extended period may end up being a great find.

Fall

While buyers shopping in the early fall may be trying to move before the weather gets bad, many sellers want to avoid moving during the holiday season. This may give you more room to negotiate when you do make an offer on a house.  Fall is one of the best seasons to negotiate a more desirable price because sellers often take their home off the market prior to winter.  

Buying a home in the fall can be ideal for home buyers trying to stretch their budget. When summer ends, sellers get more motivated. Prices usually get lower and there are opportunities to get a deal. As is the case with winter, there’s also less inventory during the fall. "Sales and listings drop in September," Yun noted. 

There are also fewer buyers during the fall. People — especially parents — who have looked during the spring and summer typically want to be settled into a home before school starts. Once fall arrives, they tend to put home shopping on hold until the next spring. If you wait until around October, you may be able to get the most bang for your buck. Desperation can start to set in for sellers around that time. This is particularly true of sellers who want to sell their home by the end of the year.

October can be the best month in the fall to buy a home as prices tend to be less competitive, but inventory remains at a good level. Where severe weather is of concern, buying during this month still gives time to settle in before the brunt of winter arrives.

Average daily home sales and median days on the market by month

Stiff competition for homes will continue through the fall, according to the National Association of Realtors (NAR).  “In areas with persistent housing shortages, principally in the Northeast region, the recent falling interest rates could reignite more buyer interest—but without necessarily increasing supply,” says NAR Chief Economist Lawrence Yun. “Therefore, multiple offers could intensify.” 60% of home sellers nationwide sold their home in less than a month, a sign of strong buyer demand, according to the latest REALTORS Confidence Index. 

Buyers are making concessions and cash offers to secure a home: 18% of buyers waived the inspection contingency and 20% waived the appraisal contingency in August, according to NAR’s Confidence Index. All-cash sales were down slightly, to 26% of buyers, from 27% one month ago and 27% one year ago.

Let's take a look at average sales of existing and new home listings by month with help from NAR's data.

Bottom line

The season, month and even week or day that you buy can impact many different parts of the home-buying process, including how many options you have while shopping and how much you end up paying at closing. If you want your pick of homes and don’t mind paying for it, the best time to buy a house ends up being in the late summer or early fall. There tends to be less competition than at the peak during the spring and summer, but still a fair number of houses on the market. 

In the winter, there are fewer homes on the market, but buyers often have more negotiating power, since there are fewer of them out house hunting. As mortgage rates continue to climb, you might find some unexpected savings by buying off-season or maybe not. As Mr. Yun, chief economist of NAR, observed: “This year is unusual in terms of having historically low inventory. Therefore, many people got outbid by other buyers. Those who got outbid will still be in the market to look for fresh listings.”

The Federal Reserve cut the fed funds rate, a key overnight bank lending rate that influences other rates, by a half-percentage point at its September meeting of the Federal Open Market Committee (FOMC). Mortgage rates were already falling from a high of 7.39% in May ahead of the rate cut. This rate cut should help to bring rates down further and may coax some homeowners to put their home on the market. If mortgages rates fall and inventory remains low, there could be a spike in prices due to competition. 

So, if you can find financing that you can afford, it could be beneficial to lock in a rate. There’s always the opportunity to refinance down the road as rates fall further; meanwhile, you're still building equity while you wait.

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If you’re planning to put your house on the market, you might be focused on price. But this isn’t the only factor to consider before you stick a “for sale” sign in front of your home.

From agent commissions to closing costs and potential home improvements, the expenses can add up quickly. Understanding these upfront costs can help you maximize your profit and avoid last-minute surprises. Whether you’re upgrading to a bigger space, downsizing or relocating, knowing what to expect can make the selling process smoother and more financially rewarding.

Let's get into the costs of selling a house, including some of the hidden ones.

Agent fees

Typically, home sellers are responsible for paying commissions for both the listing agent and the buyer’s agent. On average, real estate commissions run at 5% to 6% of a home’s sale price, with the money split between the seller’s and buyer’s agents.

On a $400,000 home, a 5% to 6% commission would equate to $20,000 - $24,000. (The median existing home sales price in the U.S. in July 2025 was $435,300, according to the National Association of Realtors.)

However, commission rate standards can vary depending on where you live. For instance, the average real estate commission in Georgia is 5.62%, compared to an average commission of 4.47% in Massachusetts, according to a recent Clever survey of real estate agents.

Granted, real estate commissions aren’t set in stone. Around four out of 10 real estate agents said they're willing to negotiate their commission rates, a FastExperts survey found.

Pre-sale home repairs

Many homes need fixing up before they go on the market for sellers to get top dollar. And today’s buyers have high expectations: 77% of house hunters recently surveyed by Curbio said they wouldn't consider a home that isn't move-in-ready.

While pre-sale home repair expenses can vary depending on the age of the property and its condition, sellers who make repairs before listing spend an average of $14,163, according to recent Realtor.com data.

Staging

Although it’s not a requirement, staging your home — where you declutter and decorate — can help your property sell quicker and for more money.

Consider that 20% of buyer’s agents say staging increases the value offered by 1% to 5% compared to similar homes on the market that aren’t staged, according to the National Association of Realtors’ Profile of Home Staging.

On average, staging costs between $800 and $2,800, HomeGuide reports. Although expenses can vary depending on the number of rooms and the length of the selling period.

Closing costs

Closing costs can vary too. Sellers typically pay closing fees of 1% to 3% of their home’s sale price to cover attorney’s fees, transfer taxes, title insurance fees, recording fees and outstanding property taxes.

That equates to $4,000 to $12,000 for a $400,000 house.

Moving expenses

The average professional local move (under 100 miles) costs $7,600, according to Move.org. A professional long-distance move, on the other hand, averages $9,140.

Pro tip: Treat moving estimates as a range, not a guarantee. Even well-documented quotes can change once movers account for time, weight or last-minute complications.

Also, don’t forget tipping. A good tip is $5 to $10 per worker per hour, according to Consumer Affairs.

Planning to move yourself? According to Angi.com (formerly Angie’s List), these are the typical costs for moving supplies:

• Moving boxes: $1 to $10 per box, depending on size
• Packing tape: $2 to $4 per roll
• Furniture pads: $8 each
• Packing paper: $10 per 10-pound box
• Bubble wrap: $20 per box
• Foam packing peanuts: $5 per bag

Rental trucks typically cost $130 for a small local move to over $3,000 for a long-distance move, according to Move.org.

That doesn’t include gas, insurance and towing equipment, such as a trailer or tow dolly.

Other costs for home sellers

Depending on your circumstances, you may also incur these expenses at closing:

• Mortgage payoff: If you still have a balance on your mortgage, you’ll need to pay it off at settlement. This is typically done using a portion of the proceeds from your home sale. Ideally, you'd have enough equity to pay off your loan balance and to cover closing costs.
• Capital gains taxes: Single home sellers selling their primary residence can usually exclude up to $250,000 of capital gains, while married couples filing jointly can usually exclude up to $500,000. If you exceed those exemptions and have owned your home for longer than a year, you can expect long-term capital gains tax rates of anywhere from zero to 20% depending on your taxable income.
• Seller concessions: If you agreed to cover some of the buyer’s closing costs, you’ll pay them in the form of seller concessions at settlement. Another type of concession is a mortgage rate buydown, where you pay money to reduce the buyer’s interest rate.

The bottom line

Selling a home comes with its fair share of costs, from agent commissions to closing fees, but careful planning can help you keep money in your pocket.

So whether you’re reinvesting in a new property or simply looking to walk away with the best possible return, get to know the costs ahead of time to navigate the process with confidence.

Use the tool below, in partnership with Bankrate, to compare offers from different mortgage lenders.

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If you're planning to sell your home this summer, there's a lot to consider. From cleaning and repairs to hosting open houses and preparing for your move. But before any of that, you'll need to focus on one of the most important steps: setting the right price.

To set the right price on a home, you should combine an objective evaluation of your property with a realistic assessment of market conditions. In good markets and bad, you are more likely to benefit by determining the fair market value (FMV) and sticking close to it than if you set an unrealistic price and wait for a negative buyer response to reevaluate.

As the housing market inches closer to "normal," setting the right price will be even more important.

Don't overprice

The temptation to overprice can be strong. But buyers today are savvy. Chances are, anyone who looks at your house has spent time both online and offline checking out properties.

Most buyers and real estate agents will know right away if a property is overpriced. This is the main reason homes sit on the market for months, with the price usually coming down to where it should have been from day one.

At an inflated price, your house will be competing against homes that are in a better location and have more bedrooms, bathrooms and square footage. Buyers that would have otherwise bought your home won’t even see it because they are shopping at a lower price point.

By the time a seller wises up, many of their best prospects will have gone elsewhere and bought other houses. This decreases demand by reducing the number of available buyers for the now correctly priced property.

Try RedFin’s home value estimator How much is my house worth? To get an outsider’s opinion of your home’s value and see how it compares to what you think it’s worth.

Study the comparables

Whether you are using an agent or not, you should learn the listing and selling prices of similar properties. Find out how long each took to sell.

Unless you live in a subdivision where a home builder used similar finishes, layouts and materials in all of the homes, no two housing comps in your neighborhood will be exactly alike — and even when homes are very similar, no comp is perfect.

So how do you identify the best comps? Try to stay as unbiased as possible and set aside your emotional connection to your home and focus on the facts.

A comparable home. To be comparable or comp, the house that sold has to be close to yours in age, style, size, condition and location.

When looking at closed sales, try to find at least three comparables no more than six months old or three months old if market values have been rising or falling more rapidly than usual.

When lookin for real estate comps, aim to find homes that meet the following criteria:

• Location. Limit your search to a quarter- to half-mile from your home
• Look back period. Only include homes that have sold within the past three-to-six months — or less if your market is changing quickly
• Size. Try to stay within about 300 square feet of your home’s size
• Bedrooms/bathrooms. Include homes with the same number of bedrooms and bathrooms as your house
• Condition of home. Factor in things like recent renovations, updated interiors, outdated features or necessary repairs
• Age of home. Homes built around the same time as yours will be the most accurate comps, because major systems like roofs, HVAC and plumbing should be in similar condition
• Price per square foot. Real estate agents use price per square foot to identify comparables. Divide the sale price of a home by its square footage, then compare that number to your own desired price per square foot

What is the MLS? MLSs are private databases that are created, maintained and paid for by real estate professionals to help their clients buy and sell property. It’s important to be aware that the MLS isn’t available to the general public.

Instead, if you want to access the MLS in your area, you’ll need to have a real estate license. Access to the MLS is one of the main benefits for sellers who use an agent. Not being able to list a home on the MLS can be a significant disadvantage for a for-sale-by-owner (FSBO) seller.

Only use sold homes. Ignore homes that are currently for sale or pending. Why? Sellers can overprice the home and then end up settling for much lower. Or, sellers can price below market value in hopes of drumming up multiple offers with a bidding war. Until a home sale closes, you’ll never get an accurate read on its value in your local market — it’s only worth what someone ends up paying for it

Adjust for seasonality. Wondering when the best time of year to buy a house is? That depends on your local real estate market, but in general, homes sell more quickly in spring and early summer, and they take longer to sell in the winter. Sellers often try to motivate buyers in slower seasons with a lower sale price, so keep seasonality in mind as you price your home.

Get an appraisal

If you haven’t done so already, give serious consideration to hiring a local appraiser. The appraiser will be able to give you a professional estimate of your home’s value. The appraisal gives you useful information about the property.

It describes what makes it valuable and may show how it compares to other properties in the neighborhood. This helps to ensure that the price you are asking is not way out in left field and unrealistic.

It’s best that you have an accurate picture of what your home could sell for by finding a qualified appraiser in your area before you list a home. A useful site is the Appraisal Institute, where you can search for qualified appraisers in your area. The median price for a typical single-family home appraisal is $500, according to the National Association of Realtors.

Why pricing your home right matters

Pricing your home can be tricky. You have to be careful to not let emotions get in the way of being honest about the fair market value of your home. Your memories are priceless, but they don't add value to a home.

Deliberately over- or under- pricing a home is risky. This strategy could make you look either unrealistic or desperate. Underpricing can backfire and result in losing thousands of dollars if your strategy is not timed right, or buyers don’t respond with competing bids.

If you're overpriced, the house might sit on the market and the listing could go stale. If a buyer is willing to overpay, overpriced houses typically appraise for less, and you'll be forced to either lower the price anyway, or put your house back up for sale after the buyer goes to find another home.

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Real estate website Zillow plans to soon link its new-construction listings to rival Redfin to expand its own reach and broaden the range of new-construction homes for sale on Redfin.

In a joint statement, the companies said that Zillow is the most-visited real estate website and has the largest selection of new-construction communities of all U.S. real estate websites. The partnership will allow home builders to expand their marketing to Redfin’s customer base of 50 million monthly visitors.

Home builders that are partnered with Zillow will begin to see their listings and communities syndicated to Redfin in the fourth quarter, the companies said.

Under the deal, Redfin will source non-multiple listing services (MLS), new-construction listings exclusively from Zillow. Redfin says it will still offer new-construction listings through an MLS on its site, however.

Quarterly sales slump in key sectors

The partnership comes as new construction, particularly for single-family homes, is becoming increasingly popular with buyers as inventory of existing homes has declined sharply. It was also announced just days before both companies reported second-quarter results with slumping sales in key sectors.

As Kiplinger recently reported, single-family construction has improved this year, which is “a sign that builders are scaling up development in response to both more favorable conditions and a steady stream of buyers giving up on the existing home market, where inventories are slim.”

Inventory of existing homes on the market is down to a record low, according to the article, “and it’s unlikely to improve in coming months, as more homeowners choose to stay put rather than list their homes.”

That is borne out in a statement by Adam Wiener, Redfin president of real estate operations, in announcing the Zillow partnership.

“With buyer demand outpacing the supply of existing homes for sale, Redfin's home-buying customers are increasingly turning to new construction,” Wiener said. The deal is a win-win-win for customers, agents and the builders who advertise with Zillow, who will be able to reach homebuyers on Redfin, he added.

On Aug. 3, Redfin reported a second-quarter net loss of $27.4 million, compared to a net loss of $78.1 million in the second quarter of 2022. Total revenue slid  21%, to $275.6 million. The company’s real estate services division’s gross profit fell 24%, to $56.2 million over the same period last year.

Commenting on the results, Redfin CEO Glenn Kelman said that, in a declining market, Redfin saw a year-over-year, second-quarter improvement in net income.

“We lost market share due to one-time setbacks from agent layoffs and the closure of RedfinNow, but we expect to return to quarter-over-quarter gains in the second half, as Redfin.com has been competing better for traffic,” Kelman said.

On Aug. 2, Zillow posted second-quarter sales of $506 million, up from $504 million in the same prior year period. The company posted a net loss of $35 million in second-quarter 2023, from net income of $8 million in the prior-year quarter.

Zillow’s residential revenue declined 3% in the quarter to $380 million, and mortgages revenue dropped 17% to $24 million.

Rentals revenue grew 28% year over year to $91 million due to continued strong traffic and growth in multifamily properties, Zillow said.

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You don't need to embark on a lengthy renovation to sell your home. Smaller investments can bolster your windfall just as effectively. With most Americans scouting properties first from a laptop or smartphone, "pictures are key," says Jay Bell, co-founder of Virtually Staging Properties in Doraville, Ga. Even before the pandemic, 70% of house hunters toured the inside of a home online, according to a 2019 report from the National Association of Realtors.

To lure buyers and maximize your home's sales price, real estate experts have these seven tips, including a new way to stage a space in the digital age.

Your home may be special to you, but for potential buyers, it's just another property. To sell it, get over your emotional attachment and think of your home as a product. "For many retirees, this is probably the biggest hurdle to overcome, especially for those who've been living in their home for a decade or more," says Lori Matzke, owner of Home Staging Expert in Arlington, Minn. Just because you love your home's brightly painted accent wall or bold, patterned wallpaper doesn't mean others will find it attractive. Look at the space as a buyer would -- with a critical eye -- to spot what needs changing.

Homebuyers like to picture themselves living in the home with their furnishings in the room. So put away family photos, knickknacks and collectibles, and remove pictures from the walls and mantels.

Downsizing your belongings helps your house command a higher selling price. "The less stuff in a room, the bigger it looks," says Mary Kay Buysse, executive director of the National Association of Senior and Specialty Move Managers in Hinsdale, Ill. If weeding out a lifetime of possessions seems overwhelming, hire a professional organizer, who will even call the movers and donate your giveaways. Organizers charge between $50 and $125 an hour, or between $3,000 and $5,000 to help clean out an entire house.

Although rooms should be free of clutter, you don't want them completely empty either. If you need to move out of the house while it's on the market or just want more neutral, attractive furniture to show off the rooms, a staging company can help. Traditional staging usually involves furnishing only a few key rooms, such as the living room, dining room, master bedroom, master bathroom and a half bath. This can cost anywhere from a few hundred dollars to upwards of $6,000 if you end up renting the furniture for an extended period.

As a cheaper alternative to traditional staging, firms can digitally add pieces of furniture to pictures of the rooms in your house. These photographs can then be used on websites that show home listings. Virtual staging costs about $500 total and lets you furnish spaces you wouldn't ordinarily do with traditional staging, like placing a pool table in a recreation room. The downside is the rooms you are virtually staging must be completely empty.

Anything you can do to lighten and freshen up your home is likely to pay off. Paint the outside accents of your home, including the mailbox, to bolster curb appeal. Use a product like Orange GLO to make cabinets and wood floors shine. Change light bulbs in lamps and overhead lighting for ones with a higher wattage. Replace heavy window coverings with something that lets in more light such as sheers. "Light-filled rooms energize potential buyers," Matzke says.

If more significant renovations are needed, limit them to simpler projects, such as upgrading kitchen appliances or bathroom cabinets, rather than knocking down walls to reconfigure the room's footprint. Any improvements you make should be in line with the average home prices in your area. "You don't want the nicest house on the block," Buysse says. "If your house is in a moderate price range, pick moderately priced cabinets and appliances. Otherwise, you aren't going to make the money back."