NEW YORK (CNN/Money) - With home prices across the nation up nearly 50 percent in the last five years, you may be wondering if its time to sell your house and take your gains.
Timing the real estate market, however, is tougher than it looks. If your plan is to hang onto your house for the long haul, you'll inevitably weather the ups and downs of the market and end up ahead.
But if you're more interested in today's gain or if you simply want some tools for evaluating prices, check out today's Five Tips.
1. Spy on the neighbors.
Before you take the money and run, you need to assess whether your home has hit its peak value.
Ingo Winzer, president of Local Market Monitor, which tracks economic conditions in 100 markets across the country, says, "A general rule of thumb that I use: if housing prices have been moving up at a double digit rate for 3 years or more, you are reaching the peak of the market."
Find out what your neighbors sold their homes for over a span of time. If prices have been moving up at a double-digit rate for at least 3 years, it's a signal your market may be topping out.
2. Check the inventory.
Winzer also advises you look at the amount of "inventory" in your area. Ask a local realtor association how many homes are on the market and for a statistic called "days on market," which simply means the number of days it takes the average home to sell in current market conditions.
Get the current number as well as the area's overall average. If days on market are more than double the average, you could be headed for a slowdown that could ultimately impact prices.
3. Measure job growth.
Real estate markets are strongest when people are moving in for new jobs. If your local job market is growing at an annual rate of 2 percent or more, chances are housing prices will continue to rise for the next few years. But remember, the job outlook is more of a factor in smaller markets that are heavily dependent on one large employer.
4. Check out the paycheck.
Look at the relationship between home prices and income. If home prices are increasing at a faster rate than income, home values may start to stagnate. Keep in mind, though, that real estate markets move slowly and prices usually stagnate rather than fall. In that case, don't be in a rush to sell.
5. Take a good look.
You should also consider the kind of home you own. Whether you own a two-bedroom apartment, a five-bedroom home, or a one-bedroom condo has a lot to do with your home's ability to sell in a certain market.
Your market may be more targeted to small families, so you could have trouble selling a six-bedroom house. Winzer says condominiums are in a much more volatile market because many speculators get involved in the condo market.
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