There's lots of talk about "buyers' markets" and "sellers' markets" in residential housing. We've been in the latter for some time, but we're pretty emphatically moving into the former. A lot of people care a lot more about what kind of market they're in than they should, or at least, they care for the wrong reasons.
Consider. Most residential real estate transactions involve people who are moving within a market. Certainly you'll find people moving between markets, like from California to Texas, people entering the market for the first time, or people exiting completely, but by and large, most of the time, people are staying locally. That means that buyers are also sellers. A buyers' market helps you with the new house, but it hurts you selling your old one. A rising tide lifts all boats. Similarly, a sellers' market hurts you with the one one and helps with the old one. It would appear that it doesn't make much difference what sort of market it is.
That's not quite true, though. It's only irrelevant if you're moving between properties of about the same price. If your old house and your new house are both $200,000 and a bubble market is inflating the price of each by 10%, you neither win nor lose. However, if your new house costs substantially more than your old house, it's going to matter. Suppose the house you're selling would be $150,000 in a normal market, and the one you're buying is $250,000. That means you need to cover a $100,000 difference. If you're in a sellers' market, and each house's price is inflated by 10%, you're going to get $165,000 and pay $275,000; the difference you have to cover is now $110,000 1. On the other hand, if you're in a buyers' market with each house's value depressed by 10%, you'll get $135,000 and pay $225,000, for a difference of $90,000. Even if you paid more than $135,000 for the house you're selling, you're still better off in a buyers' market because you're trading up, and you want the difference between old and new to be as small as possible.
Naturally, the reverse is true. If you're moving into a less expensive house, that's when you want a sellers' market. In that case, the difference between the price of the old house and the price of the new house isn't a cost, but a profit. Even if a bubbly housing market means you're over-paying for the new house, whoever's buying your old house is overpaying even more 2 than you are.
Sellers' markets aren't always good for sellers, and buyers' markets aren't always good for buyers, because usually buyers in a market are sellers in that same market. It may seem that it all cancels out, but it doesn't. If you have any flexibility about when you move next, and you plan on a bigger or fancier house in a nicer area with better schools, wait for a slump. Don't get irrationally attached to making a "profit" 3 on your house; if you're making a loss because of market conditions, think about what a good deal you're getting on your new house.