In today’s market, selling home later can pay off

Q: With a growing family, we're interested in buying a larger home in our same neighborhood, but are wondering when the best time to buy might be. The research and constant news coverage seems to suggest that the time is getting close. If we do buy a new home in the coming months, we're considering renting our current home, which is a one-story with about 2,000 square feet of space. We think we'd have a better chance of selling our current home in a year or two, when consumer confidence and prices begin to rise again. Do you think this is a wise plan? -- Jayne C., Las Vegas

A: That sounds like a very wise plan. Let me explain a few things for you to take into consideration.

Let's first look at what created the market that we are in today, followed by the conditions that led the housing market to change, and then we can talk about why you should consider buying now.

Understand as well that the issue of supply and demand drives these scenarios. Since the Great Depression, home values have risen steadily. The correction that we are feeling in the market today is the result of many factors, including a large number of speculators entering the market during a period when prices rose at a double-digit pace sometimes increasing that fast in just a couple of months thus driving demand.

But, as prices continued to rise and the investors began pulling out in the past year or two, the demand for homes slowed. Many investors were unable to turn around and resell their properties, thereby adding to the supply.

Also, home builders, in trying to meet the soaring demand of a few years ago, were building at a record pace. Once the demand slowed, this created more inventory and led to oversupply. The default rate on sub-prime loans then reached the record levels we're seeing today. This, once again, adds to the supply of homes on the market.

So now, we are in a position where inventory is at or near an all-time high, and demand is low.

Now let's look at the factors that suggest you should buy now.

Over time, notwithstanding the short-term market corrections that occur in times like these, home values have continually gone up. That would lead you to believe that the longer you own, the greater the value of your home.

Going back to the supply and demand scenarios, it is likely that demand -- especially here in our growing community -- is beginning to increase. Interest rates remain at record lows, thus spurring on buyers. Job growth continues here in Southern Nevada, especially as many new multibillion-dollar hotel-casino and related projects begin opening in the next few years.

At the same time, new home construction has decreased significantly here, to the point where there are more new jobs being created than new homes being built.

All this indicates we're in a buyer's market, at least for now.

However, the No. 1 reason for buying a home is still frankly the pride of homeownership. We sometimes forget that your home isn't just an investment, but a place for you and your family to live, socialize and enjoy. It is where you may be living for the rest of your life, and possibly where your younger family members will be living well beyond your life.

As far as when to sell your existing home, well, that depends on your needs and your plans for the future. But before you do anything, talk to your accountant about when to sell, understanding the time frames for selling your personal residence versus selling an investment property, as they are two distinctly different scenarios and may have different tax ramifications.

Beyond that, history is on your side.

Devin Reiss is the president of the Greater Las Vegas Association of Realtors. To ask Reiss a question, e-mail him at ask@glvar.org. All questions to Reiss may be shortened and are subject to editing.