When’s The Best Time To Both Buy And Sell Real Estate?

When's The Best Time To Both Buy And Sell Real Estate? Photo 

     I was recently speaking with a couple of friends who are thinking of selling their condo and moving into something bigger.  “We’re hearing that prices are cooling off – should we wait awhile before making a move?”  Good question.  Unfortunately, there isn’t one catch-all answer. 

If these guys didn’t have a property to sell and were only buying into the current market I’d have one set of suggestions for them.

If they were only selling and weren’t buying (because they were moving away from Toronto or moving into a rental, etc) I’d have another set of suggestions.

However, they’re talking about selling and buying in the same market.  Since they’re doing both, the particular conditions of the market are (arguably) less of an issue.  In other words, if it’s a Buyer’s Market and prices have cooled, they’ll suffer as sellers but they’ll benefit as buyers.  And vice versa if it’s a Seller’s Market.

For example, let’s say you want to sell your 1-bedroom condo and move up to a 2-bedroom suite.  And let’s say that it’s shifted from a Seller’s Market to a Buyer’s Market and prices are on average 5% less than what they were 6 months ago.  If you’d have sold your 1-bedroom suite 6 months ago you might’ve gotten $300,000 for it.  But the market has shifted and now you’re like to get $285,000.  Clearly, selling has lost a bit of its appeal.

Don’t forget though, you’re also purchasing a larger (and presumably more expensive) 2-bedroom suite.  While this property might’ve cost you $400,000 if you bought 6 months ago, the market shift (5%) means that you’re likely to pay only $380,000 for it now.  So, the appeal that was lost on the selling side is more than made up for on the buying side.  In fact, you’re actually ahead of the game, to the tune of $5000 ($20,000 – $15,000).

Of course, this is just one possible scenario out of many.  What if you’re selling in an area that isn’t very “hot” but you’re buying into one that is?  You have to keep in mind that certain areas of the city can appreciate/depreciate more than others during any upswing/downturn.  This has to do with a number of factors (supply & demand within that particular area, recent gentrification, etc). 

And what if you’re selling within the downtown core but purchasing outside of the city.  Well, these are different markets and care needs to be taken in evaluating what’s happening in each respective area.

As I said, there isn’t one catch-all answer to this question.  Generally though, I would suggest that if you’re selling and buying in the same market you’re better to place less weight on current market conditions and more weight on other factors (“Have I outgrown my current home?”  “Am I ready for a change?”  “Are the circumstances right for me to make a move at this time?”  “Should I take advantage of attractive mortgage rates?”  “Etc…”

If you’re thinking of making a move and would like to know how I can help, feel free to contact me for more info.

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