I am experiencing quite the housing rebirth in my area right now. The financial meltdown all but collapsed the housing market three years ago and I was fortunate enough to buy at the bottom. While I bought at the bottom, I started out with a much higher interest rate. I’ve refinanced my home twice over the past year, and am now enjoying a lower mortgage payment as well. With this uptick in the market it has left me feeling confident in selling my home, but unease for buying another one. I feel that if I am to upgrade my living space I will need to buy my house fast.
Initially my worries were that I wouldn’t be able to sell my home quick enough in the market, and even if time weren’t of the essence I wouldn’t be able to sell it at my required price. Over the past year I have seen homes comparable to my own literally double in value. This is excellent news for me because it means that I can actually take away some equity in my home as well. Unfortunately, this is a double edged sword because it also means that I will be paying more money for my new home. I already know that my house is worth enough for me to walk away from now, and I know that I can afford to buy what I desire in my current price range…but for how long? Housing prices may continue to rise after I sell my home which means I will need to be speedy while searching out a new one. Also, interest rates have remained low for quite some time, helping make home selling/buying that much more achievable. But what if rates start to rise? Most likely I will have to downgrade my wants in a new home if that is the case.
Ultimately, I am trying to convey the importance of timing in the real estate market. Consider the many people that sold their starter homes toward the higher end of the market in 2006 and 2007. Then consider those that took all that equity and put it into a newer, larger, more expensive home a year or two later. Well they are probably underwater for years to come. Again, you need to consider the timing in any real estate transaction. The time to sell, upgrade, and buy is right now. If you wait too long on that then you will see a great investment turn bad.