My friends are predicting that the real estate market will continue to fall. My home has just been renovated. Should I sell it now before anything happens, rent for a while, and buy another house when the market bottoms out? – TIMING IS EVERYTHING
DEAR TIMING: Over the last two decades, the K-W real estate market has, with few exceptions, been among the strongest and most resilient in North America. Our ongoing level of performance has tempted some owners to think of their homes as investment tools, rather than a place to live. Corrections are expected, but if you cash out of the real estate market in hopes that it will crash, what happens if prices don’t go down?
Buyers and sellers have been trying to time the market for as long as analysts have been predicting the bubble will burst. In early 2016, a growing number of buyers started moving here from the GTA, which edged our prices upwards. A year later, some homeowners were selling, thinking that the bottom was about to fall out of the market.
That’s not what happened. Prices continued to rise until a year ago, when we hopped aboard the home value roller coaster and watched prices shoot up almost 25 percent before the market gave it all back. Home values levelled out in the third quarter of 2022, though sales volume had declined.
If you’re already in the housing market, it’s unlikely you’ll be hurt by staying there. If you step away now and come back later, you could be priced out of the market if values rise faster than expected.
Try running the numbers on your “sell, move, rent and purchase later” scenario. If you add up the costs of selling your house, moving, renting for one year (most landlords want a minimum one-year lease) and moving again, you’ll find that the market (in October 2022) will need to take a significant hit just for you to come out even. K-W real estate is performing well and seems to have stabilized, which makes it risky to bank on an imminent crash right now.
I often meet with people who have lived in their homes for 30 years or more. If they purchased in the early 1990s when the average sale price was around $140,000, their houses are typically worth around $750,000 today. They realized those gains just by living there, and there was very little risk involved.
PRO TIP: If you’re planning a move (upsizing, downsizing, retirement, etc.) this is as good a time as any to do so. If you’re buying and selling in the same market, you’ll be able to protect your equity. Trying to time the market by selling today, renting and buying later can put you in a dangerous position. #Advice #AskDavid #TheNegotiator
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.