Tuesday, June 10, 2008

Housing Memo

Are you a young disgruntled homeowner? Did you buy a townhouse at the peak of the housing market and regret it? Do you want to sell your house and move somewhere rural? Don't do it!

Consider this:
  • The price of gas is rising. As this trend continues, people will aim for shorter work commutes. People will gather more tightly into cities. There will be less vehicle traffic and more public transportation. Downtowns will regain the vibrancy of the good old days.
  • City housing prices will rise in response to the crowding.
  • Rural housing prices will fall.
  • The time line for the changes in house prices will be only about 5 to 10 years. Within 10 years, the cost of transportation will peak, with gas at $6 to $8 per gallon. At that point, electric cars and alternative renewable fuel sources will become competitive, so the price of gas will become irrelevant.
Therefore, the best time to buy a country home should be in about 5 to 10 years, and the best time to sell a town home should be in about 5 to 10 years.

It has been observed that when you decide to buy a new house and sell your old one, it should not matter whether the housing market is high or low: The sale price of your old house will be high or low at precisely the same time that the purchase price or your new house is high or low.

However, this logic is useless if you are moving from one kind of housing market into another. If the price of city housing is about to rise relative to country housing, timing is everything. Waiting just a few years to sell the city home will leave the prospective buyer with a great deal more buying power in the rural market, especially if rural prices have fallen over the same period.

2 Comments:

Anonymous Disgruntled Homeowner said...

But what if the townhouse is in a suburb (near no major city) and my new job is 55 miles away?

3:37 PM  
Blogger current typist said...

Hey, good point, Your Freakwentness. Would you recommend buying townhouses at this point as investment properties? I know where you might find one...

3:38 PM  

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