Trading up houses: is cooler market better than hotter market?

[Anonymous]

Thinking of moving from $800K house in NWDC to $900K house in Bethesday/CCDC in a year or two. When is it better to trade up: when the market is relatively hot (like now) or when it's cooler? I see my situation as hedged, as I already own a home and the increase is not drastic: if prices go up a lot, the new house will be more expensive, but the current house will as well; if prices decline a lot, the old house will give me less equity, but the new house will also cost less. So I am inclined to think it's not very important in my case. I of course understand than a 5% (or 10% !) increase in the $900K is more than the same % increase in the $800K house. Working with the inverse of this, and given than any potential decline might affect the higher-end homes more than the more "modest" homes in the 800K range, I am inclined to think that it's better to trade up when things cool down -- but that ultimately I should do it when it works best for my family rather than trying to time the market.

[Anonymous]

I think it's kind of a wash. I sold and bought in a pretty hot market - late spring/early summer of 2011. For me the cost of that was storing my stuff for 6 weeks, living with my ex during that time and paying to move twice. (into storage and out of storage.) This was because my house sold really fast and when we did finally find a good-enough house to buy (and didn't get outbid), they wanted a closing that was 6 weeks after my buyers.

The other risk is that if Bethesda is hotter than DC at the time you sell/buy, your sale price will be lower relative to your purchase price. But that's hard to predict.

[Anonymous]

You're assuming there might be a cool down in the Bethesda/Chevy Chase market for SFHs under $900K, which is not what's generally being predicted. But you can never time the market perfectly, you're in a pretty good situation now, so I would just work with whatever is best for your family timing-wise.

[Anonymous]

Wouldn't you pay less in RE agent fees if the prices for both properties are cheaper?

[Anonymous]

When things cool down, there may well be little inventory, which could help you sell your house but make it harder to find the house you want.