How the housing market works, and what causes it to go so high or to crash

Question

Basically I understand that there are not many houses for sale right now, so supply and demand would dictate high prices. However, wouldn’t the high prices attract more people to sell? Is everyone just holding their houses hoping prices go even higher?

In: 4

Answer 1

Selling your house is all fine and dandy if you’re wanting/willing to move and can find a place you’ll be able to afford after selling your home that won’t end up costing you more money than you’re already paying.

Like, i could probably sell my home for more than i paid for it. That would be good, I’d make a profit. Ok, i paid off my mortgage and have a bit of cash in my bank account, but now what? I’m homeless, so now i have to find someplace to live. What are the chances i can find a house, preferably comparable to the house i just sold, that is going to cost me less per month than my old mortgage payment? It also needs to be in an area i want to live in, i certainly don’t want to move farther away from where i work.

On top of finding a new place to live, that’s going to cost me the same or preferably less than i was already paying, i have to go through the hassle of moving. I’m going to have to take some time off of work so that i can pack my house up and then rent a moving truck and move everything to the new house and unpack everything. And that’s just a hassle i don’t want to do.

Now, if i could sell my current home for enough to pay off my current mortgage and after paying it off i make enough of a profit off the sale to outright buy a new house, that would be something to consider doing. I could take all of that profit and invest it, more likely than not making more money in interest than i would be paying for a new mortgage, and come out ahead in the end. But there’s just no guarantee that that would happen. I’m not likely to find a house like i have, where i want to live, that’s going to cost me less than I’m already paying.

Making a small profit is good, but only if doing so isn’t going to cost you more money then you made in the longterm.