The best way to recoup home fees? Stay put

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

Buy and hold. The traditional advice for stock investing now applies to home buying. With a long-term horizon, you can ride out cycles where prices are depressed.

Just as stock investors console themselves in knowing that today’s troubled market doesn’t really matter if they don’t sell now, homebuyers who put down roots won’t worry about selling at a loss should real estate prices slide further.

“There’s tremendous uncertainty about the future.”

But since you actually live in a home, life can get in the way of even the best-laid hold strategy. A job offer in another city, a marriage, a divorce, a new baby — all are life turns that can force a housing change.

Nevertheless, life goes on, and you may be contemplating a move. Indeed, the government is dangling an $8,000 tax credit to entice first-time buyers. Here, experts weigh in on how buyers should consider getting time on their side.

‘Rules’ vary about length of stay

Although he now works as a fee-only financial planner, Richard Kahler spent 30 years as a real estate agent. During most of that time, “the standard rule of thumb was that you’d have to stay in a home at least two years to recoup the costs (of buying and selling),” he says.

Kahler’s hometown of Rapid City, S.D., had not seen dramatic upswings in prices, but modest, steady appreciation. Prices are now flat, says Kahler, who adds, “Today, I would be telling someone (to stay in their home for) three to five years, depending on the market.”

Although the National Association of Realtors reports that historically, home prices rise 1.3 percent above the rate of inflation, there have been more dramatic down and up cycles.

A study published in 2001 from Harvard’s Joint Center for Housing Studies found that homeowners who are most likely to profit from a sale are those who buy at the trough of a cycle and hold at least one year through the next price upswing.

Right now, given the inventory of homes for sale and the spate of foreclosures around Sacramento, Calif., Kevin Young of Young Wealth Management in Davis, Calif., advises his clients to plan to stay for five to eight years. “I don’t know if we are at the bottom, and there’s tremendous uncertainty about the future,” he says.

Foreclosures and price drops are a much greater problem in places like California, Florida and other select areas rather than in the nation as a whole, according to University of Virginia urban planning professor William Lucy.

Look at actual sale prices in the neighborhood you’re interested in, says Lucy, adding that such information is typically available from the county record or assessor. The future is never sure, but examining price movements can help buyers define their timeline, Lucy says.

You must live with what’s affordable now

Young buyers, especially, might find that the home they can buy now won’t fit their needs later.

According to 2007 U.S. Census abstract data, at age 18 a person could expect to move another 9.1 times in his or her remaining lifetime, compared with 2.7 expected moves for 45-year-olds.

Another old real estate rule, or oft-repeated maxim, is “buy the biggest and best you can.” The idea is that if young buyers purchase a home that can accommodate them years later, they’ll save by not having to move again. While this advice dovetails with a theory experts endorse — holding a home and steadily paying off the mortgage is the surest route to housing wealth — financial planners generally frown on “stretching” to afford a more expensive home.

Barry Korb of Lighthouse Financial Planning in Potomac, Md., says he counseled one couple who wanted to spend about 55 percent of their income on housing. “I asked them how they’d handle their car loans and credit card debt,” he says.

Lenders are now focusing more on those questions, says Bedda D’Angelo, president of Fiduciary Solutions in Durham, N.C. Even if borrowers want to borrow big, the new and more conservative lending standards probably wouldn’t allow it, she says.

What’s the rush?

To stimulate homebuying, the federal government is offering a tax credit worth up to $8,000 to first-time buyers who fall below certain incomes and who buy during 2009.

Young says this credit might spur some buyers to act before year-end. Still, if buyers don’t think they’ll be able to stay in an area long enough to avoid the risk of selling at a loss, it can be more prudent to rent.

Indeed, there’s a newfound, more deliberate approach to homebuying and home owning. “The world has changed,” says Nicolas Retsinas, director of the Harvard Joint Center for Housing Studies.

During the boom years earlier this decade, Retsinas says, there was a distorted emphasis on profit, and homes were “purely for buying and then selling.” Now there is a “refocus on the consumption value of homes,” he says, meaning that homes are to “consume” — or live in and enjoy — for as long as possible.