Are We in a Real Estate Bubble?

Should I wait until the bubble bursts to buy my first home or my vacation home?

Should I sell my house now, rent for a few years, then buy when the bubble bursts?

These have been frequent questions I have had these days. Honestly, I really don’t know if there will be a real estate bubble.

Five years ago a young couple asked me if they should wait until the bubble bursts to buy their first home. If they had waited for that bubble, they would have been priced out of today’s market.

Real estate prices will fluctuate, but over the long term, real estate in general has always gone up. It may go up faster in certain geographic locations.

The same rule of thumb should be used for real estate that you use for stocks and bonds. If you need the equity from your home in the next five years and an equity line of credit or refinance is not an option, you probably should make the move now to sell.

If you are going to replace your present home, then sell and buy your homes when you are ready.

If you are paying rent now and you could qualify for a mortgage equal to your rent, then you should consider buying a house. Of course, remember to add to that mortgage amount the extra costs of owning a home such as landscaping, painting, etc.

By the way, before you do anything regarding real estate, be sure you know the tax consequences.

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