Should we sell our house, move into an apartment and then rebuild when housing prices go down?

Dear Dave,

My wife and I are empty nesters, and our house is too big for just the two of us now. We talked about selling the house and moving into an apartment in a multi-use development with retail and restaurants that we go to several times a week. Then, in a year or so, buying a smaller house when housing prices go back down. How do you feel about this idea?

Ephraim

Dear Ephraim,

I like the idea of downsizing. My wife and I did the same kind of thing recently. But at this point, I’d say there’s about a 99% chance the housing market is not going down. It has gone down two times in the last 100 years—way back during the 1930s and again in 2008. And the market snapped back fairly fast after 2008.

I don’t think the price of housing is going to go down at all anytime soon. I do believe the housing market’s rate of increase will slow down, but that still kind of defeats your premise of renting until then. I wouldn’t be opposed to you two buying a different property in the same area and just moving in, but I’m not going to tell you to go rent something right now. That would put you in a hole with the rental amount, plus the fact that housing prices are probably going to continue to rise, even if not at the pace they’ve risen recently.

In other words, if you rent, you’re going to lose money two different ways—with the rental amount and home prices continuing to increase. Buying high and selling high isn’t such a big deal. But buying high, and later buying higher after renting? No, I’m not doing that.

–Dave