When to stop buying in a down turning market.

[Brian Langstrom]

We all know the cost of buying properties is at an all time high. Historic prices. But many have continued to buy with hopes of continued growth. I am seeing a flattening on demand for Condos and Townhomes. Big discounts to the inflated prices are popping up. Single Family is holding steady for now. But interest rates will soon start bringing reality back.

Has anyone started looking to sell before the drop? A neighbor who owns 7 duplexes and 4 singles has put all of his portfolio on the market. He stands to make $100K per property with less than 2 years ownership. His thought is to sell now, hold the equity and profit for 10 months and then reinvest in something much grander and in nicer neighborhoods. I am tempted myself. If you can turn a 75% or more return in less than a year, sell it and then be prepared to re-invest when the market falls. Likely in 12 months. 

Thoughts?

[Andrew Garcia]

Hi @Brian Langstrom, it really all comes down to the bet of whether house prices will decrease or not.

If you sell, you will have to pay closing costs, realtor fees, and capital gains with your strategy. You could lose 10-15% of your buying power this way. In addition, even if there is a correction, inflation is at 8.6% so the correction will be minimal.

I would recommend you stay the course.

As the saying goes "time in the market beats timing the market". There is another popular saying that goes "be fearful when others are greedy and greedy when others are fearful".

Maybe using quotes to make million-dollar decisions is not the best idea.

In short, I do not know whether housing prices will go up or down and by how much. 

Do your research and make the best determination that you can with the information that you have.

I, like you, wish I had a crystal ball. Let me know if I can be of any assistance.