Some economic experts are now predicting a double dip recession, and a 20% decrease in home values. They are predicting the housing market won’t start improving until 2012. If this decline actually happens, what is the best thing you can do with real estate you own? Should you try and sell properties now, or hang on to real estate investments until the economy recovers?
Every real estate investment is different and we can’t really predict what will happen in any given market. If you’re confident you want to have your real estate for a long time, then by all means keep them. Home prices may go down temporarily, but they will eventually rise again. Perhaps you should ask, will this house be suitable for me and my family in five years? and what kind of payoff do you want from the real estate investment?
If you are happy with your current primary residence, then you need to look at your house as your shelter, not an investment. If making your mortgage payment is easy, then just hold on to your properties.
If your investment property generates good cash flow, then you’ll be in good shape if you hold on to your property as a long term investment. As you continue to pay down the mortgage the closer you will get to actually owning the property. Rent demand is not likely to decrease, and there will always be a need for shelter.
If you currently have negative cash flow, then you’ll probably be better off selling it now. Sell it quickly by pricing it less than the competition before prices drop farther. Sell now before values are even lower, and profits are less. If it will be two years before property values start improving, then it will probably be more than four years before your property will get to its current value.
Remember, real estate is regional and every market is different. Redlands California homes might see a big drop in real estate values, while values of Crosby TX Real Estate might increase. Economist predictions are not very accurate, and nobody can rally forsee what will happen to real estate in the future.
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