The Impact of Buying at the Top of the Market

There's concern of buying a home at the top of the market before things come tumbling down...as you might see during a housing bubble or recession. I only know what is happening at this moment. Any of us can make a prediction on what is to come, but we don't actually know. If I was highly certain of an impending crash, I would tell all buyers to wait. I do not believe that is the case. I believe it is inevitable price appreciation slows down, and when that happens it will come back to a normal rate. Not a crash. The demand still outpaces supply. This article is meant to share some insight on the "what if" scenario of a drop in current values. 
The Charlottesville market is no different than what every one else is experiencing across the nation. Values continue to rise at levels not seen before. During this time a lot of people wonder if now is the right time to buy a home. Selling is phenomenal, but what if you're also buying? 
I never suggest buying with the intent of only owning the home for less than 2-3 years. The real trouble with the downturn of a market is when your life situation is forcing you to sell and the current value is less than what you paid. Being forced to sell at a price below what you purchased requires cash at the closing table. Without that cash you have problems. Your future plans and ability to remain in the home have a big impact on the level of risk when buying now, or during any market.
Everyone buys for different reasons, but here are 2 motivations and how those come into play during our current market.

  1. Buying vs renting
    If you continue renting, you continue throwing money away. A year ago many renters decided to wait for the market to improve their chances. Because the market only gained strength, they ended up losing out on tens of thousands of dollars from appreciation, delta between loan pay-down and rent payments, and tax breaks of ownership. Without knowing where the market is headed, hedging your bets could turn out poorly for you.
  2. Selling and buying
    Selling and buying always brings about the same result whether it's a buyers market or sellers market. Sell high, buy high. Or, sell low, buy low. If the market shifts down, you get to buy in a lower market, but you also need to sell in that same market. 

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