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July 19, 2005


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I read in couple of finance websites that in some markets it makes more sense to rent rather than buy at this moment. Don't you think selling your house (which is probably overpriced right now) and renting till market cools down a little could actually be a good idea for those markets?

Sandeep --

There are circumstances under which almost any financial move makes sense. However, timing the housing market is like timing the stock market -- it's nearly impossible to do. So someone who sells today and wants to wait until the market cools down a bit may be waiting for a loooooong time.


Besides the timing issue, there is major cost involved in doing this. It's not a simple stock commission. You have to pay for two moves plus commissions and taxes. Not to mention the fact that when you buy back in you will probably incur additional expense to get the new house how you want it. I doubt most people factor these costs in.

People forget that your primary residence is a home first and an investment second.


It would be interesting to see some statistics that show how much real estate has lost value in the short term and long term. From my understanding, it's only been in some parts of the overall market, and they've always started heading north again.

I personally wouldn't bet on the market coming down that far, or that fast. No doubt that some markets might be overheated, but if you are going to live in an area for a long time (or at least you think you are), waiting might not work out for you.

If you are a pretty "mobile" person and tend not to settle in one area, renting probably is the right move. I guess it's just a personal decision.


If anything, the "better" way to cash out is to sell when you're in Cali and move to Pennsylvania. :)


The first lesson in Real Estate Appraisal 101 is that real estate is the first thing to suffer in a major economic downturn and the last thing to recover.

Bear in mind that we haven't had a MAJOR economic downturn in a long time.

Following a budget with surplus is the rule of survival, exploring new opportunities is the road to the rich.

Although I don't agree with the tactic discussed here, but trying to earn more is at least as important, if not more, to wealth building.

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