This article can be found in The Argonaut, where Lisa Phillips is a regular contributor.
Q: Is this a housing bubble? How can I know when it’s the right time to sell?
A: What a question. I am asked this question multiple times a day. If I could accurately predict the exact timing of the next market downturn, I promise I would share it with you. Here is what I do know:
When too many people are asking if the market is too good to be true, it’s probably approaching time for some form of correction.
The real estate market in the Los Angeles area has achieved all-time record high prices, surpassing the previous record highs right before the 2007 market crash.
The stock market has also been on a roll, the Dow hitting record highs, with people asking the same questions- is it too good to be true? Will the stock market crash? Market investors received a reality check this week when on a single day, the Dow dropped almost 1,600 points, the largest point decline in history within a single trading day. Concerns over inflation, which has been generally kept at bay despite conventional wisdom, and the comparatively higher and increasing yields of the bond market are likely contributors to the investor sell-off.
This is a time defined by uncertainty. Although the current political climate is pro-business and touted as contributor to a thriving economy, many individuals are not seeing this translate to money in their pockets. With wages rising at a slower rate than housing expenses, and changes in tax treatment impacting net income, many are unsure of their financial health and how it may change in both the near and distant future.
Is it time for you to sell? It depends on your very personal circumstances, and because of that, my evaluation for each client differs. As we witnessed with even the very severe market crash that began in 2007, real estate remains an excellent long term investment. If you are in a position to hold your property in the face of a downturn for a period of approximately ten years, there is certainly no reason to panic. If you intend to live in your home for that amount of time, enjoy it! Depending on your finances, this is why it may even be a smart decision for you to buy. On the other hand, if you are expecting to retire, relocate, or your home is your life savings and you may need to access it within a ten-year period, it is certainly worth considering whether it is in your best interest to cash in on this unbelievable Sellers’ market.
If you are staying in your home only out of excitement and optimism that it may be worth more next year, give it some thought, and consult with your financial planner- look at the worst case scenarios and plan for them. We know what today will bring, but can’t be sure of tomorrow. Can you afford to “let it ride”? I have watched many clients through several downturns of both real estate and stock market take heartbreaking losses, usually because they were not sufficiently diversified, and because they believed they would recognize a potential decline in value before anyone else, and sell at that perfect moment in time. I’ve rarely seen that gamble pay off.
As always, my advice is to consult with professionals and make thoughtful, educated decisions regarding your financial future. Whether you decide to keep your home or take the money and run, having a plan and confidence in that plan will get you through either scenario and keep you calm. Namaste, my friends.
Disclaimer: This article is intended to be primarily for entertainment purposes, and is not to be considered legal advice.
ABOUT LISA PHILLIPS, ESQ / CA Bureau of Real Estate Lic# 01189413
Lisa Phillips is an active Realtor in the Los Angeles area, with more than twenty years as a practicing real estate broker and attorney. Her unparalleled knowledge of real estate, from local markets and pricing to legal issues and deal-making, has made her a trusted and valuable asset to her clients. In addition to her real estate and business savvy, Lisa is passionate about helping others, and works tirelessly to achieve the best results for her clients. For more information, please visit www.LisaPhillipsRealEstate.com
