Q: We are planning to move from our home in Northern Virginia to a house in Morgantown, W. Va. where we hear the local market is a rip roaring seller’s market right now -- certainly not the kind of situation a sensible, not-desperate retiree should buck.

But, we wish to be closer to our son, who lives in Canonsburg, Penn., just south of Pittsburgh. My wife and I are 75 -- hence the desire -- and can still get around OK, but closer to family would be nicer.

What should one do about looking at homes in that kind of market? Should one seek a ‘temporary-type’ place that’s easy to resell and wait until the market changes? What kind of place? How can one gauge which way the market is going?

Charles S.

A: Your questions and concerns have raised several good points about the home-buying process. It’s not all about money and the bottom line. The decision you have to make is also a lot about lifestyle.

You’re at a point in your life where being close to family and the grandkids is more important than living close to commuting corridors. You also need to consider some very tough questions about what you want in living quarters during your retiring years. I don’t mean to be insensitive, however, wondering if you’re house is going to appreciate or depreciate in value at this point in your life may not be the top priority.

Northern Virginia has experienced phenomenal appreciation over the last 10 years and if you have been there that long, unless you’ve already refinanced and taken out your equity, you are sitting on a little gold mine. It may be time to cash out and do something else with the money besides keeping it in an asset that cannot be easily liquidated.

If you need access to that money, for medical expenses, for instance, possibly you may consider placing it into another type asset where you can dip into it without going into debt to do so. As a retiree you could scale down and put the proceeds from this sale into a money-generating rental property. This way someone else is paying the mortgage and taxes expense through rental payments, plus you would want to purchase a property that provides a positive cash-flow for you. Meanwhile, the property would most likely appreciate as well, so your equity is growing by appreciation and by mortgage reduction.

Now’s the time to look at growth funds or rental real estate so that your equity starts sending you a monthly check, rather than keeps on growing in a piece of real estate where it can’t be accessed.

The good part of your consideration is that you're in a seller's market in Northern Virginia – one of the few markets in the country in that situation -- so if you're selling, you'll get top dollar as you leave. I wouldn't look for temporary housing if your ultimate goal is to get moved and settled in (the lifestyle consideration). If you're purchasing to live in and enjoy the house, then you just have to get in the game and do it. If you're buying to invest, then, yes, you could wait till a buyer’s market appears.

As far as determining what the real estate market’s going to do: look for employment numbers and overall economy. Real estate follows those two, rather than leading them. What are the prognosticators saying about Morganstown? Is it growing economically over the next few years? Then get in the market now. Keep in mind, however, that a market can turn quickly -- just like it did in your current community in 1991 (buyers) and 1998 (sellers).

On the real estate side, look at the trends of listings vs. sales. A growing number of listings (year to year comparison) shows that the market is slowing down and prices may begin to soften. You also want to look at the absorption rate – how many houses are listed and how many are selling each month. (Example: If there are 1,000 listings and 300 sales, the market would have a 30 percent absorption rate for that month.) A seller’s market exists when these numbers are in the 20 percent and above range. When it falls below that ratio, the buyers are in control.

Published: May 16, 2003

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Mr. Carr is an award-winning real estate broker in Northern Virginia and authored "Real Estate Investing Made Simple: a commonsense approach to building wealth." He also contributed to Donald Trump’s book, "The Best Real Estate Advice I Ever Received," and is an active trainer and coach of top producers in the Washington DC market. As a sought-after expert on real estate, Mr. Carr has been featured on CNN, various broadcast outlets and was the former real estate editor for The Washington Times. He accepts questions at his blog www.RealEstateOlogy.org.