For the most part, timing the real estate market is a fallacy. This is especially true if you need to sell a home before then buying what might be your ‘forever’ home.
You see, as the market moves – rising and falling – it does so for both the home you need to sell first, as well as the home that you hope to buy. This has an equalizing effect.
Some people hope to sell at – or near – the top of the market, then rent for a time before they buy nearer to the bottom of the market.
This sounds good in theory. But in practicality it rarely works out favorably. Why? Because the money they may have ‘saved’ was spent on rent.
For the sake of making a point – consider rent of $2,500 per month, which unfortunately is cheap these days. That equates to $30,000 spent on rent annually – money that one will never get back.
How many years would one have to wait until the market turns downward, and at what point does a buyer pull the trigger to possibly make a purchase?
Some say that real estate cycles every 18 years. If one is lucky and it only takes 7 years, that lost $30,000 turns into $210,000.
Sadly, what typically happens when a homeowner converts to becoming a renter is that they remain a tenant for life.