Should you Sell your Home before the Housing Bubble Pops

When is the Best Time to Sell your House

By Mark J. Donovan

Prior to 2006, housing prices rose dramatically. Then starting in late 2006 the housing market began to collapse. The collapse was pretty much universal throughout the United States, but some metropolitan areas such as Phoenix and Las Vegas were hit especially hard. In these particular areas housing prices fell greater than 50%. In many cases people simply walked away from their homes and let the banks take over. In their angst, many homeowners walking away from their homes damaged them out of frustration and anger. They were angry with the banks and the government for putting them into these situations. However, they should have looked in the mirror.

Yes, the government was pushing banks to loan money to everyone to buy a home, irregardless if a person could afford it. But in the end, it really is the person who has to make the decision on whether or not owning a home is financially doable for them. In most of the foreclosure cases, which were in the tens of millions around the United States between 2007 and 2013, the people who were being foreclosed on should never have received home mortgage loans in the first place. Yes, the federal government in its attempt to offer everyone the American dream of owning a home, irregardless of their financial situation was reckless. And yes, the banks were somewhat complicit in this goal as well, albeit they were in many cases being forced by the federal government to do so. However, in the end each adult person has to act responsibly when deciding on making such a large financial commitment such as buying a home.

Unfortunately throughout this entire housing market catastrophe many homeowners who had acted responsibly and bought homes they could afford, and paid their mortgages faithfully every month, but who needed or decided to sell their home during the housing collapse, got caught up in the debacle. Due to the glut of homes on the market for sale, housing prices fell dramatically. And as a result, many responsible homeowners found themselves underwater in their homes. Pricing your house to sell.

As a result, these poor folks either had to hold off selling their homes, or bring money to the closings when selling their home to pay off their underwater mortgages.

So with the housing market collapse well behind us and home prices now beginning to rise, what have we learned from this experience? Well hopefully we’ve learned a great deal.

First, the federal government should not be arm twisting banks to loan out money to people who can’t afford to own a home.

Second, banks should not be so willing to be complicit with federal government policies in order to make a fast buck that they know is fraught with financial danger down the road.

Third, people should think more carefully about the commitment they are making when purchasing a home. A home mortgage lasts typically between 15 and 30 years. It’s a long commitment. They seriously need to ask themselves before buying a home if they feel comfortable with their current job situation, as well as their future job prospects, to buy a home.

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They also need to think about the size and cost of the home their contemplating purchasing. The bigger and more fancier the home, the higher the price.

Fourth, when a housing market bubble is obvious to just about everyone, then future homeowners may want to hesitate on purchasing a home. For example, there were reports nearly every day for about two years leading up to the housing market crash of 2006 that home prices were rising at unprecedented levels. Yet, people continued to buy homes.

Fifth, for folks contemplating selling their home they too should be paying attention to the housing market before putting their home on the market. Trying to time the selling of your home at a peak pricing point is fraught with danger, which many good credit people learned from 2006 through 2012.

If you own a home and are contemplating selling, seriously look at the market conditions before making the decision to sell. If the market is rising, it’s a great time to sell. If the market seems to be peaking then make sure to list your home at a price point that can attract a buyer instantly.

And if the market has already begun to collapse, consider listing your home at a discount to attract a buyer quickly. If you don’t, you may end up not selling your home or giving it away at an even much lower price.

To conclude, every person should look carefully at their own financial and personal situation before buying a house. Only after deep reflection about their own ability to make the monthly mortgage payments should they move forward with the purchase of a home.

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