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Monday, April 2, 2012

How Do You Know If Your Home Is Still a Good Investment?

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Most of the news we see in real estate today is either about how good a time it is to be buying a new property or about how home values are super low and the impending shadow inventory that is soon to be expected on the market. Little attention, however, is paid to the position of existing homeowners with no immediate plans to sell their homes.

A question that is on the minds these days of many current owners of property is whether their home is still a good investment.  We know that Warren Buffet mentioned buying as many single-family homes as he could, but that is an investment class and refers to buyers of new properties.

It turns out that the financial viability on a property that you own today is largely dependent on your plans and time frame.

Planning to Move In the Next Two Years?

Most property owners today would rather wait until housing values rise again however there are often unforeseen circumstances that dictate otherwise.  In some cases job relocation forces the need to sell a home premature to the owners’ original plans. Other times it could be a matter of the homeowners needing to liquidate their asset because they need cash. The tough economic times faced by many today, in fact, forces a lot of homeowners to sell earlier than they would have liked.

If you are in a home that you plan to list on the market sometime in the next twelve to twenty four months, then the sooner you do it the better off you will be.  Housing values and home prices have been declining and though the decline has slowed down, it does not seem to have hit bottom yet.  Another factor to consider is that once the banks begin unloading their foreclosure inventory, there will be far more competition than you have today to contend with.

How Long Can You Hold Off To Sell?

In a nutshell, the longer you wait to sell – the better you will be in terms of return on your investment.  For homeowners that are looking to wait as long as possible but would prefer to sell sooner the best minimum time frame would be to sell in three to five years or longer, if possible.

Ideally, waiting until the market stabilizes, fewer homes (both traditional listings and distressed properties) are on the market and a shift toward a sellers’ market will all be strong factors in your investment success.
Once again, if you are concerned with your existing home being a good investment or not – keep in mind that in terms of selling, if you can hold off until at least 3 to 5 years that would be ideal.  If you must sell in the next 12 to 24 months, then the sooner you sell, the better.  Maybe seizing the opportunities that exist right now with affordability and low interest rates, perhaps buying up is a good option for you right now.  If you are unsure as to your options or would like to explore something new, contact us today – but hurry, because timing is everything!