I've gotten this question several times before and actually just heard it on the radio today in a financial advice segment so I thought I would address it.
"Should I sell my house now while the market is good, rent for a while and buy when the market crashes?"
Of course, this is assuming that the market is going to crash but are we really in a housing bubble? Before the subprime mortgage bust in 2007 and 2008, homes were rapidly increasing in value and there were multiple bids, escalation clauses, and people were buying homes they really couldn't afford. I'll never forget helping a couple that worst going from a $500 a month rent to a $2500 a month mortgage. I strongly urged against it but their mortgage person said they could totally do it and they would've sold their firstborn child to get into this house. I highly doubt that they are still in that home today but we certainly don't want people buying homes they can't afford, however, the federal government has done a lot to prevent these predatory lending practices. Verifying employment, income, and debt is becoming stricter and mortgage lender certainly don't want you bailing on a mortgage a year or two after obtaining it. The last thing banks want is real estate on their books. They prefer you to stay in the home and that means doing everything possible to verify your income and make sure you can actually afford the home you want.
That being said, are we headed for another housing market crash? The housing market is very similar to the stock market. It has its ups and downs, crashes and rises, but it eventually continues to go upward. The housing market is very similar. Over the years we may have crashes but as long as you hang on to the investment it will automatically increase. If you're buying penny stocks, that is high risk and there is much more of a chance of losing your money or your house if you buy and sell rapidly. If you purchased a home in the 1990s, chances are it has probably tripled in value. If you sold now and waited to buy, you may or may not get a better deal. Sticking the money in a bank or in a high interest-earning account might give you a little bit more, but of course, there is no guarantee on the housing market. We can't really predict housing market crashes. We may see a dip here or there in the next couple of years, but chances are it will come back with a vengeance within 2 to 10 years.
So it's really a risk. The housing market may drop a little in the future but most analysts and economists don't see a drastic drop as we did 12 years ago. Chances are, homes will continue to increase so buying now, especially if you don't have to change your mortgage payment too much, might be ideal. It really comes down to when you need to buy or sell. If you need to buy a home, now is the best time. If you need to sell for whatever reason, now is the best time.
Call our office to find out what's available in your real estate market today throughout Colorado Springs or feel free to give us some information on your home and we can tell you what it's currently worth.
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