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Avoid Making Rushed Decisions in Housing Rebound

NEW YORK ( BankingMyWay) -- This time they mean it: the housing market really does seem to have turned around.

So, on the theory that every silver lining has a dark cloud, it's worth asking: What's the easiest way to blow this good news and make the wrong move in buying or selling a home?

Would buyers be fools to rush with the belief that the bargains are going fast? Would sellers be too greedy if they held off in hopes of making more?

If you're thinking of buying or selling because you're forced to move for a new job or other compelling reason, you may not have much choice in timing. But if you just want to trade up or downsize, you have the luxury of picking the moment.

The latest report from CoreLogic -- adding to increasing data sources calling a national housing bottom -- shows that home prices rose by the largest percentage in more than seven years in June. Home prices were 2.5% higher than a year earlier and 6% higher than in the previous quarter, reversing a decline that took hold during the winter.

"Home prices are responding positively to reductions in both visible and shadow inventory over the past year," said Mark Fleming, chief economist for CoreLogic, in a statement.

Shadow inventory refers to homes that could be put up for sale, causing an increase in supply that holds prices down.

"This trend is a bright spot because the decline in shadow inventory translates to fewer distressed sales, which helps sustain price appreciation," Fleming explained.

CoreLogic's president and CEO, Anand Nallathambi, said that 2012 is increasingly looking like the year that the residential housing market may have turned the corner: "While first-half gains have given way to second-half declines over the past three years, we see encouraging signs that modest price gains are supportable across the country in the second-half of 2012."

Still, no one is predicting the kind of double-digit annual gains seen in the housing bubble that burst in 2008. So if you've been thinking of buying, a few months' delay won't ruin you.

Nor will a seller lose much by selling now rather than holding off a few months.

National figures also mask great variation in local markets. In Arizona, rebounding after devastating price declines, prices have jumped 13.8% in the past 12 months, while jumping by more than 10% in Idaho and South Dakota. Meanwhile prices have fallen by 4.8% in Alabama, and by 4% in Connecticut.

If you're in a fast-rising market, it really might pay to buy sooner rather than later, while a seller might do better by waiting. In a falling market, buyers should wait and sellers should hurry -- or dig in for the long haul.

For people wearing both hats -- selling one home to buy another -- market fluctuations may not be a big factor in timing your move. In a hot market, the seller might realize more by holding off, but would then give back the gain by paying more for the next home.

There are the select few lucky enough to be in the perfect situation. They are able to hold off selling until prices rise, while buying now to get a bargain. To do that, you must have a lot of money, or be willing to rent out one of the properties until the old home is sold.

So who's most likely to get hurt by making the wrong move?

There are lots of ways to lose money in real estate, but one of the easiest is to talk yourself into believing you'll make a killing. In the recent housing crisis, the biggest losers were those who borrowed every cent they could to bet that home prices could only go up.

In fact, never lose sight of the most critical -- and arguably most simple lesson -- learned as a result of the housing bubble. For all but the most skilled speculators and seasoned real estate investors, a home should be seen as an expense, not an investment.

More on housing:

In a twist, housing is the bright spot for US economy

All housing bottoms aren't created equal

An overlooked way for older Americans to purchase a home

By Jeff Brown

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