How Can You Time the Real Estate Market?
Timing the real estate market—how do you do it? Today I’ll explain.
We often think that we know when the market is going to peak, but it’s impossible to know where the top is until we’re on the other side of it. Despite this, we consistently allow ourselves to believe that we’re able to time the market. That’s a belief that we need to get rid of.
With that said, when truly is the best time to buy or sell a home? My honest answer is that the best time is when you need to move because your family is growing or shrinking, or when you’re being relocated for work—whenever it makes sense for your life.
Suppose you’re selling your current primary residence and buying your new one: Regardless of what the market does, it won’t ultimately impact your pocket that much. Of course, it hinges on your keeping that primary residence for an extended period of time, but no matter when you do it, you’ll end up living through a down cycle into an up cycle.
As a buyer, if you’re going to time anything, the No. 1 thing to pay attention to is interest rate trends. Even if you pay less for the home, a higher interest rate means you’ll end up paying more on a monthly basis than you would if you’d paid more for the home with a lower interest rate. If the interest rate environment you’re in today makes sense for you to buy and you believe that interest rates will be higher in the future, then buying sooner than later may be appropriate for you.
If you’re selling your home, doing so while the market is anywhere near its peak is ideal. Back in 2007, there were a lot of people who believed that their homes were worth, say, $1 million. They went to sell, only to find out that the market had shifted, and they ended up selling for $980,000. They were angry about the perceived loss of $20,000, but a few years later, people looked back and thought those sellers were geniuses. The farther away the market goes from its peak, the happier sellers will feel that they sold near the top. I challenge you to find anyone who sold their home in 2007 who isn’t thrilled that they did so.
If you’d like to go through this topic in more detail and relate it to your specific neighborhood and property type, or if there’s any other market-based data that we can provide for you, don’t hesitate to reach out to us. We want to give you confidence in your decision to act in this market, whether it’s to buy, sell, or to hold your property.