Quote:
Originally Posted by KCUnited
I've been going through a similar scenario where I've had a large amount of $$$ sitting in my savings account since summer last year with the intention of it being a down payment on our next home. Super Bowl Sunday is when the housing inventory really heats up here, so we chose to let it sit ~6 months in savings. Our place is currently under contract and we just went under contract on our new home that is everything we want and more. That said, the difference in 25K below our budget was substantial in home/neighborhood quality compared to going 25K above our budget. So in hindsight, could I have made a litte more money spending 6 months in market, maybe, but the risk of losing and having to settle for a lower tier home would not have been worth it to me.
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The answer depends primarily on your time horizon (and your risk tolerance to a much lesser extent). If the down payment on the house is going to be made in the next year, preserve capital and keep the money in your savings account. If the down payment is 5 years forward, you have a lot more reason to put it in the market. If something in between, it's a grey area and perhaps diversify between both.
Risk tolerance matters too. For most people, if you have 100k you're saving as a down payment, a 10k loss is going to be far more difficult to stomach than the extent to which you're going to enjoy a 10k gain. But people are cut from different cloths.