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If your house has been going up, up,
up in value, might it be a good time to sell -- before
it starts going down, down, down?
In most cases,
no.
"Housing prices are going to do what
they're going to do," says Eric Tyson, author of
"Mind Over Money: Your Path to Wealth and Happiness."
"It doesn't
matter. It shouldn't make or break your ability to do
things, unless you were counting on that equity to do
something. It's really a paper thing."
Ric Edelman, a financial planner and author
of "The Truth About Money," agrees. "A
bubble is irrelevant unless you're selling," he
says. "If you can make the monthly payment, who
cares what the house is worth?"
He compares the situation to owning a
car, which almost always goes down in value. But you
don't buy it as an investment. Instead, you keep it
"because you can afford it, and it's serving,"
he says.
Unlike other investments, your house is
more than just a place to let your money grow. It's
also the place you call home. So unless a dip in value
would really hurt your bottom line, or you're planning
on moving soon anyway, it's usually smart to hang on
to the house and ride it out.
| If values dip (or you think they might), it can be
a good time to evaluate your situation. Some
of the questions to ask: |
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| 7 questions to ask yourself |
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1.
Are you happy where you are?
Do you like the house? The neighborhood? The neighbors?
The school system and local amenities? Is the house
big enough (or small enough) to be comfortable now and
in a few years? Does it have the features you need or
think you might need? If not, are you leaning toward
moving or renovating?
The problem with trying to time the real
estate market and sell before a bubble bursts is you're
trying to predict the future. You're gambling your present
home and happiness for a lot of unknowns. Will a price
dip actually happen? Will it be steep and sudden or
a gradual softening? Short-term or sustained?
Trying to play the market is like trying
to time a roulette wheel, says Nicolas Retsinas, director
of the Joint Center for Housing Studies at Harvard University.
And just about as practical.
Cashing out, "is something you associate
with speculators, not the person who buys a home to
live there," says Jack Guttentag, professor emeritus
of finance at the Wharton School and author of "The
Mortgage Encyclopedia."
While you always have the option
of selling because prices might be going down, not many
people do, says Dick Peach, vice president of the Federal
Reserve Bank of New York. And there are good reasons
for that, he says.
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