I get this question a lot from friends, family and clients and the answer is the same everytime--it depends on your long term outlook, goals and willingness to take risks. I remember here in Austin in 1995 that we had several friends that would build a new home every 5 or 6 years. Each time they moved, they were able to take a larger and larger piece of equity with them to use towards the purchase of a bigger and nicer home. During those days, the growth in equity of homes here was astonishing. In fact, this was happening all over the country, people were begining to realize that they could use the rapidly growing equity in their homes for all sorts of things.
Now here we are about 13 years down the road in 2008 and the country is in the middle of a housing slump as inventories are at all time highs. Here in Austin, we have fared somewhat better and our inventories have increased but by much lower than the National average and our job growth rate is 3 times the rest of the country. So is now a good time to buy or sell a home here in Austin? If you have good credit and some equity to put towards your purchase, it really seems to be a good time to sell and purchase. On the selling end, you may not get the crazy high dollar returns the folks were getting here in Austin just last year in most of 2006 and the begining of 2007, however on the flip side, after you sell, your buying dollars will go a little further as you will have more to choose from and at a reasonable price. Some folks have no choice in the timing of when they buy or sell. Many are at a time in their lives when they financially need downsize or perhaps they are getting relocated or even worse going through a divorce or have a death in the family.
In my opinion the fact still remains that buying and selling a home should be viewed as a long term investment that may have small or large dollar yeilds and tax breaks-- depending on the time you keep and work to improve your investment. It is not a given that any home you purchase will return tremendous profit dollars to you in the future. If you are lucky as most homeowners are, you will realize the main benefits of homeownership are not financial--but emotional. The value of having a safe and consistent place for your family to live, work and play is the biggest return on investment in my book.