"As a rule, most people don't buy
a house as a short-term proposition," says Peach.
Because this is more than an investment, it's a lifestyle
choice, "people don't take buying and selling lightly,"
he says. "Because of that, it's pretty impractical
to try and time the peaks and troughs in home prices."
When values dip, many
"believe that the period of negative equity will
be short," he says. "And the cost of moving
is high. So they continue to make the payments and hope
for the best -- which I think is the rational thing
You might also want to take the long-range
view. "Over the long term, home prices fairly steadily
tend to go up -- about 3 to 5 percent a year,"
says Retsinas. "It's not tech stock. But over the
long term it turned out to be a pretty good way to build
Bottom line: If your house feels like
home and you can afford it, why move?
Are you already planning a move?
One of the times it might make sense to try to get out
before prices go down is if you're already planning
"Suppose you're in a market that
has some of the characteristics of a bubble, and you
are otherwise thinking of relocating or making a lifestyle
change," says Tyson. Then it's "certainly
a good time -- when there are inflated prices in some
of those markets -- to think about cashing in your chips."
"The secret to cashing out equity
is to move from a high-cost market to a low-cost market,"
says Retsinas. But only if you were planning it anyway,
independent of equity issues.
Or, if cashing out your equity and downsizing
was always part of your long-range financial plan, an
impending bubble could be your signal to investigate
starting the process a little early.
And include the transaction costs when
you run the numbers. "Selling and buying back can
gobble a large percentage," which means they have
to be expecting a major market correction, says Tyson.
Selling "really makes more sense for people who
have other reasons to think about selling, like relocating
Do you have a manageable mortgage?
Can you afford your mortgage payments? If you're barely
making it now and might have trouble if rates went up,
you might simply want to refinance to a fixed rate.
You may also want to rethink
your mortgage if you've got an interest-only or
Your ability to ride out a bursting
bubble or a bad economy "has to do with the mortgage
product you're carrying," says Retsinas. "With
a fixed-rate mortgage, you have some insulation from
interest rate increases."