Agents across America will warn their clients to think carefully about trying to “time the market”: a practice in which buyers wait for the prices to drop in the hope of purchasing a bargain.
Many will sell their homes and then rent, believing they can re-enter the market when sentiment is more in favor of the buyer.
Your best approach relies on selling and buying when conditions suit your personal circumstances.
Owners who try to “time the market” often find prices move in the opposite direction to the one they had anticipated. That can cost them thousands of dollars because values continue to increase or even make their next dream home unaffordable.
These are some risks in trying to predict market sentiment:
No crystal ball
Not even real estate agents have a perfect crystal ball. Market sentiment spins on real-time information. Other factors, such as interest rates, employment figures, inflation and consumer confidence all have an influence.
Lost chances
If you wait for a price drop, you open the door for other buyers to purchase your dream home. And believe me, there are plenty of buyers out there willing to pay market prices for well-presented apartments and houses.
Emotional stress
Selling and buying a new home comes with plenty to think about. You don’t need to add to the emotional stress by “trying to time the market”. You risk making a poor decision when emotions, assumptions and guesswork cloud your judgment.
Finance fluctuations
It is essential to have a pre-approved loan when searching for your next property. However, credit conditions change daily, and the mortgage promise you received from a lender today may not be accessible in six months, which can hurt your plans.
Missing out
By sitting on the sidelines of the property market for an extended period, you risk missing out on the investment opportunity a property purchase would give you in a market that is still delivering positive value trends.