Scenario #1 – Should I sell?
Property prices are down right now, so it could be a good idea to sell if you want to upgrade your home.
Sandra and Dave own their own home. They want to upgrade their tired, 1970’s house to buy a nicer one. But they’re not sure if they want to sell now or in a year.
Many people say that it doesn’t matter whether you do it now or in a year. After all, you’ll be buying or selling in the same market.
But, I reckon that in Sandra and Dave’s case it probably is a good idea to sell now.
Generally, if you’re buying a better, more expensive house, do it when prices are down.
Why’s that?
If you are selling your $1 million house to buy a $1.5 million house, then the upgrade costs $500k, ignoring real estate agent fees to keep the numbers simple.
But, what happens if you wait and house prices go up 10%? Sure, you can now sell your property for $1.1 million. But, the $1.5 million house you want to buy now costs $1.65 million.
So it now costs you $550k to upgrade your house, rather than the $500k it costs today.
But the opposite is also true. So if you are a retiree and want to downsize, it’s a different story. Then, it’s best to upgrade when house prices are higher.