Can I Sell a Home After Owning It 2 Years? Here Are 8 Things to Consider

DISCLAIMER: As a friendly reminder, this blog post is meant to be used for educational purposes only, not for professional tax advice. If you need assistance navigating the tax implications of selling a house after owning it for two years, HomeLight always encourages you to reach out to your own advisor.

People are staying in their homes for shorter periods of time these days. The average length of home ownership has shrunk to just seven years, according to Brad Gore, a top agent who works with 74% more single-family homes than the average Branson, Missouri, agent.

Nevertheless, most people don’t plan on selling after only two years. It’s not an ideal situation … but it may be necessary.

Before you sell, there are some things to consider.

1. What’s your reason for selling?

The most common reason for selling a house after two years is job relocation, Gore says. Other reasons can include:

A health issue
A family emergency
A financial crisis
A change in circumstance, such as a divorce or death in the family
Buyer’s remorse – when the house just isn’t right for you

2. Do I have to follow the 5-Year Rule?

The 5-year rule states that the longer you keep your house, the more likely you are to make a profit when you sell it. Those who sell their property before owning it five years risk losing money on their investment.

Primary reasons for this include lack of equity accumulated in the home and insufficient appreciation – an increase in property value.

“The market is the largest driver of price,” Gore says. Price is one element in determining how much your home has appreciated. Appreciation derives from other factors as well, some of the most common of which include:

Location: Some parts of the country are more attractive to homeowners. Cities offer many amenities – although some buyers prefer a quieter, more rural setting. Nevertheless, proximity to employers, restaurants, shopping, and other attractions can enhance a community’s value … as well as that of your home. Being adjacent to parks and green spaces can add 8%-20% higher value. Low crime rates and good schools can add value. Some HOAs can, as well.
Supply and demand: Inventory still remains relatively low, and the prices increased about 5.8% in the last year. Changing interest rates and property buying priorities impact the appreciation of existing homes.
Comparable properties nearby: Real estate comps are recent nearby home sales that affect the sale price and value of your home. In a seller’s market, prices typically rise, which could effectively boost equity in your home and increase appreciation.
Size and usable space of your home: If you have built a home addition or finished an attic or basement, that adds more usable square footage that can increase your home’s value. Accessory Dwelling Units (ADUs), such as a detached mother-in-law house, have been known to add roughly 30% value.
Age and condition of your home: An appraisal is a tool to evaluate your home’s general condition. Age does not necessarily detract from your home’s worth, as long as quality materials and building practices were used and the home has been renovated or at least properly maintained. Gore advises homeowners to keep their homes in good condition. “Fix things. Don’t give buyers a reason to chip away at your asking price.”
Upgrades and updates: Even if your home is built to last, changing trends can necessitate a remodel. Kitchens and baths remain the most popular rooms to upgrade. They’re also the most expensive. Just be careful not to over-improve. If you know you’re going to be in the house only a short time, Gore recommends caution. “Do things to increase the value, but think long-term,” he says. Small improvements are best. For example, fresh paint can add 2%-5% to a home’s value.
Health of the economy: With inflation comes rising home prices. Conversely, prices typically drop during a recession.

The latest average appreciation rate in the U.S. is currently around 4.7%. That’s down from a rate of 15.7% a year ago.