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Real Estate Market vs Stock Market

Real Estate is a tangible, physical property while stocks are often shorter-term liquid investments. Why am I mentioning this? I get asked daily “When is the best time to buy or sell (real estate).” Many people have confided in me about their anxiety in trying to “time” the market. This is where real estate timing starts to sound like the stock market. Investing in real estate and the stock market are two vastly different investments. The stock market refers to investing money in a company’s stock and selling it quickly and straightforwardly, which is also referred to as a market sell-off. Real estate on the other hand is a tangible asset with a physical component. The big and obvious difference is that real estate (for example a primary residence) is meant to be lived in. It serves a need to not only provide shelter but also contribute to a desired lifestyle for you and your family. The stock market is more about “timing’ and predicting the best time to buy low and sell high.

Your home fulfills a necessity. A home and the location of your home are meant to meet or exceed your quality-of-life expectations. The size, location, neighborhood, schools, amenities, and the type of home directly affect your day-to-day life experiences for many people, the need to move to a better property is often put on hold for fear of trying to select the best time to buy or sell/buy. Specifically, I have had people tell me that they have been cramped in small living spaces with four children. They were fearful of deciding to move without knowing for sure if the timing was right. They thought if they waited for interest rates to go back to 2, 3, or even 4% then they would “time” the market just right. The sacrifices they were making waiting for the return of historically low interest rates were unfortunate. Here is why. The COVID-driven financial climate brought down those rates to keep the economy going. Overbidding and paying much higher prices for properties was the norm at that time. It was cheaper to borrow money, but buyers were competing for properties by paying extravagant amounts beyond the asking price. Overbidding and paying so much for a property may be more expensive than purchasing a property with a higher interest rate. Fast forward, when rates rose, the overbidding calmed down.

If you need to find a better property or even a first-time homebuyer who may be tired of paying their landlord’s mortgage, take the advice of not depriving yourself of looking into your options. Elevated interest rate mortgages can be refinanced later or perhaps you can have a “buy down” interest rate opportunity. For some, waiting can price you out of the real estate market later.

Bottom line, when you are ready to move or need to move, do not treat your decision-making process like a financial puzzle, trying to time the perfect market. Without a Crystal Ball, you deserve the opportunity to get expert advice and review all your options. This is also true for those who currently have a low-interest mortgage. Reviewing expert-level strategies could make a significant difference in your life and meeting your evolving needs.

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Whether it’s buying your dream home or selling your current one, Suzanne Rocha and the CAL Home team are here to help.