Timing the market is tricky....kind of like trying to time the stock market! If you choose to sell now, you more than likely will make up for any "price deficit" on the buy side. I like the idea of talking to your money advisor/financial planner. And maybe coordinate that conversation with a Realtor. Get an idea of what you can get [realistically] for your home..............and then what you can [realistically] buy for the money.

Best of luck!!

I would avoid downsizing if you don't have to...wait for the market to shift to a seller's market and do so then.

It depends on your lifestyle, if you like to downsize to smaller home how much money would you be saving over the next 3 -5 years on purchase of a new home. Speak with a financial planner.

I am a bit perplexed by the wording of your question... "My goal in the next 3 to 5 years is an empty nest." An empty nest means getting rid of the people in your house that drive you crazy... so you can miss them when they are gone. It doesn't mean moving. If you are waiting for kids to graduate or get married and get out, or something to that affect, I am curious what you would do with them if you sold and bought now? Will you actually put them out on the street? As a mother of 4, I can understand that philosophy... but, whether or not it makes sense depends on if they are 30 and living at home or 15. I am kidding a little with this... but my point is, since I don't really understand exactly the situation, I can't consider that information...

You say you can afford to stay in your home. Does that mean you have a mortgage? What does the mortgage cost you? If you move into something else, will it be smaller and therefore less expensive?

Usually when I hear "empty nest" I hear a sentiment like this:
I own a home. It's value is about $400K. I owe $150K on it. If I sell now, I want to buy something that is $200K, with cash, so I have no mortgage and can start really focusing on saving toward retirement. Should I do it now or wait?

I am going to pretend that's the question you asked, since I think it might be what you meant. In a very off the cuff answer, I say this... the upper ends of the market are always subject to the worst price drops and the longest recovery. In other words, if you are trading "down" to something less expensive, when the market is down is the worst time to do that. It is a great time, however, to trade UP.

To give you a meatier and more accurate answer, I would look at the market stats in your area, and value trends, I read predictions from economists... and I try my best to interpret that data for you, infusing my own local knowledge.

Next, look at your situation... First, do a calculation on what is more easily predictable to determine (assume for a moment real estate conditions freeze in time and there are no value fluxuations)....Count differences:
In expenses for changed commuting patterns to/from work.
In real estate taxes.
In insurance premiums (car and home, too, if crime rates or traffic patterns are different, this adds up).
In known maintenance costs.

Then, determine what your mortgage interest cost is minus the annual tax benefit (assuming you get a tax savings). Compare that to what you would do with the money... which is hopefully sock away the amount you would normally pay for your mortgage into a fund that provides a guarranteed return (assuming you are near retirement age). Compound that interest for the next 3-5 years.

What do you get? Should you stay or should you go now?

I truly don't know your area... but I think that the DC metro area (where I am) is stabilizing. We actually have bounced back from the low of the market, but will probably bounce around the bottom for awhile. I do NOT expect major price appreciations in the next 5 years. I'd bet we'll be relatively flat. DC has a better economy than most of the country. We are bringing in about 5000 new households (thanks to Obama's election) over the next 6 months. I don't think there is another area that can compete with that. There is still much fall out to come on a national level. Some say the bottom of the market is now, others say it will be in 2011. No matter who you listen to, no one is predicting substantial price increases in the next 5 years.

If you wanted to buy an investment property today and hold for no more than 5 years, I would tell you it was not a good idea, especially if you need that money for retirement. Put your money somewhere that you can get a guarranteed return - even if it is modest. If you could hang on for 7-10 years, then it makes sense, our market will have recovered by then.

Having said all of that, it is about you... your quality of life. There are no sure bets in this world... I even have a crystal ball, and all it tells me is not to time the market. Do what's right for YOU. It sounds like you are in a situation that most direly wish to be in - one where you can do what you want. So, do it!

Hi Dawne,

What it sounds like in your question is you are trying to determine market timing.

Because you are an owner looking to sell and then buy, no matter what the condition of the market, you are always going to be trading out your home because when values are down they are a negative to a seller but you pick it up on the buyers side.

Another factor you have to consider is, what would you qualify to purchase if you waited until the prices started upwards? What you might want to obtain might be unreachable because of lowered inventory (less selection) and increased value and increased interest rates.

For lifestyle, now is the best time to sell and buy. If you weren't buying then I would say wait to sell. But you do want to buy so now is the time.

Also, rates are low, 5% for a 30 year fixed loan. If your home you live in now is less that 250k then you are in the most active market for buyers. This means that your home would be more likely to sell now if it's priced right.

Does that make sense?

Should you need further assistance I would love to help you build your empty nest :-)

You can look for properties around the areas you are most interested in living here:
http://www.inspirerealtygroup.com

There is a foreclosure search you can use as well.

Have a Great Week!

Sincerely,

Stew Keene
Ph (480) 220-7491
Fax (866- 711 8573
StewKeene@yahoo.com
Keller Williams - Scottsdale, AZ
2008-2009 Master of Real Estate award recipient
ABR, GRI, ePro, CNE, MRE, AHWD