WHEN I PURCHASED a house in Portland, Oregon, in 2018 for $375,000, my plan was to stay in it for four years. By 2022, if everything went according to schedule, I’d be set to retire from my fulltime job. Then I’d sell the house, and my husband and I would move to Arizona, where we’d purchased a second home in 2019.
Conventional wisdom suggests that homeowners should plan on remaining put for at least five to seven years to come out ahead on a home purchase. But as I can attest, there’s been nothing conventional about the real estate market over the past 18 months.
For the first two years I owned the house, it appreciated at just over 2% annually. By August 2020, Zillow estimated my home was worth $400,000. I began to think that, even after paying a real estate agent’s commission and other costs, I might recoup my $80,000 down payment when I sold.
Then, at the start of 2021, home prices in our neighborhood began shooting up. Houses weren’t necessarily being listed at higher prices, but buyers were frequently bidding more than the asking price. It wasn’t unusual to look online and discover a home had sold for $15,000 or $20,000 above what it had been listed for.
Small, modest homes that might be considered ideal for first-time buyers were selling faster than I’d ever seen. A place might go on the market on a Thursday and have a “sale pending” sign outside by Sunday.
The trend continued, and even strengthened, through the summer of 2021. By then, news reports said that low mortgage rates—coupled with an ample supply of young, first-time buyers—were causing the housing market to explode. Record low inventory of available homes only added to the frenzy.
Result: Home prices have been soaring across the U.S. The S&P CoreLogic Case-Shiller U.S. National Home Price Index jumped 18.8% in 2021, with the Portland market up 17.9%.
When my mom’s house sold in August 2021, it went for $63,000 over her $500,000 asking price. Her place, similar in size and location to mine, made me think that my asking price should be far higher than the $400,000 I’d been contemplating.
My original plan was to sell the home once we’d already moved to Arizona. That would mean putting the house on the market in June 2022. But as 2021 drew to a close, I began to wonder if getting the house sold sooner would make more sense.
Why? The news feed on my phone was filled with articles warning of impending mortgage rate hikes. Other stories mentioned a potential wave of foreclosed homes coming onto the market. And while many experts believed that the rapid rise in property prices wasn’t a bubble, nobody could be sure when prices would finally level out or even begin to drop.
In January, I hired the same real estate agents who had brokered my mom’s deal. They suggested I get the house on the market in February. A map of current listings in my neighborhood showed there wasn’t a single starter home on the market. There were, however, plenty of prequalified buyers looking to purchase before mortgage rates rose above 4%.
My agents suggested setting an asking price of $475,000. I agreed to get the house ready to sell. In the three weeks between the time the house was photographed and when it went on the market, I continued to follow the local real estate scene closely. I told my husband it felt like we were living in a once-in-a-lifetime seller’s market.
Location no longer seemed to matter. Homes on busy thoroughfares were selling for tens of thousands of dollars over the asking price. The size and condition of homes seemed irrelevant to buyers. Small, single-bathroom homes that needed thousands of dollars in repairs and renovations would be snapped up quickly, and for more money than I’d paid for my home in 2018.
The day my house went on the market, my phone blew up as potential buyers scheduled times to view the house. My agent suggested setting Sunday evening as a deadline for offers. Given the overwhelming interest in the home, they were anticipating I’d have several offers to sort through.
On Friday evening, barely 24 hours after listing the home, my agent called to tell me there’d already been an offer. The buyer’s agent used the word “aggressive” to describe it. Aggressive might have been a bit of an understatement.
I was presented with an all-cash offer of $125,000 over the asking price. All contingencies and inspections would be waived. Closing would take place in two weeks, and my husband and I could stay in the home until mid-April without paying rent.
When I moved into my home in 2018, I had no idea what the real estate market would be like in 2022. On my best days, I hoped I’d recoup my $80,000 down payment. On my worst days, I imagined the market collapsing, as it had in 2006-12. For now, I’m savoring the fact that I somehow managed to time the housing market—and that I’m walking away with a handsome profit.
Yes, I readily admit it, I got lucky. Would I buy a house today in hopes of turning a profit after four years? Not a chance. Conventional wisdom might say you need a five- to seven-year time horizon to come out ahead on a house purchase. But based on the market frothiness that I’ve seen, I suspect these days it’s a lot closer to seven years—and maybe longer.
Kristine Hayes is a departmental manager at a small, liberal arts college. She enjoys competitive pistol shooting and hanging out with her husband and their dogs. Check out Kristine’s earlier articles.