The real estate market is not a single entity. It consists of millions of people making individual decisions based on their personal needs and opinions. Current real estate trends vary widely from state to state, city to city and even suburb to suburb, making the market virtually impossible to predict with accuracy.
Many sellers base their decision to sell on their own opinion of the real estate market. This opinion is often formed after seeing information that appears to apply broadly and equally across all markets.
However, this information is flawed in a number of ways, initially regarding time frames. Much of the quoted property data is up to three months out of date, and based on broad sales figures that are produced quarterly, or sometimes annually. The real estate market has a history of moving very quickly at times, both up and down.
The other big flaw is that the reporting is based on broad – not local – factors. Very rarely do we see accurate, up-to-date local research reported.
For example, in the Melbourne suburb of Mount Waverley, a property in the correct school catchment for Mount Waverley Secondary College can sell for up to $150,000 more than a similar property a couple of doors down – just because the latter falls outside the catchment area. If the market can vary so dramatically within a street, you can see how hard it is to predict the real estate market as a whole.
Many potential sellers face the dilemma of timing. They want to sell, but also want to know the best time to sell.
The chance to make a few thousand extra dollars will often keep people in a property they should sell. They wait in the hope that their property will rise to a value at which the financial gain makes the move worthwhile.
But it’s difficult, if not impossible, to pick the top of the market. You only know the market has peaked when it starts to fall. A rising market can quickly become a falling market. The danger comes in trying to predict the market.
Neither a rising nor a falling market is a bad thing. Based on individual needs, the right time to sell may be in either market.
Instead of trying to predict the market, ask this question: ‘How will my life improve as a result of this sale?’ Use that, not the market, when choosing the time to sell.
By Andrew Trim, Managing Director of Johnson Real Estate and author of ‘Real Estate Dangers and How to Avoid Them’