Today’s housing market presents considerable opportunities for home owners looking to be “move up” buyers and enhance their lifestyles. Prices are stabilizing in our area, interest rates are near historic lows and the high inventory provides many choices.
Even amid such incentives, many move-up home buyers remain on the fence about making the lifestyle change they desire due to concerns over selling their current property. Many sellers want to wait to sell until prices rise rather than making a price reduction to market value on their current home. If these sellers are trade up buyers that decision will cost them money.
While the value of your current home may have seen some decline, the “move up” home has also seen a price reduction. Consider the example of the seller who wants $300,000 for a home with a market value of $270,000. That seller wants to trade up to a home that was also 10% overpriced at $450,000, but is now reduced to market value of $405,000. By reducing to market value now, the seller fo the $270,000 home would be ahead $25,000 compared to waiting for the market to rise back up another 10%. Further, when the market improves and price appreciation returns, the more expensive home will see a higher dollar increase.
So, is now the time for you to be a “move up” buyer? Coldwell Banker Evergreen Olympic Realty offers the following thoughts to consider.
Have you built substantial equity in your current home? Home equity can be defined as the value of a home, minus the amount of outstanding debt. Although equity does not generally develop in the first few years of home ownership, five or more years of home payments may create significant unrealized gains.
Has your income or financial situation improved? Homeowners should consider their overall financial situation including current and future expenses in order to make an educated decision on the price range for a new home. For example, an increase in salary may allow for an increased mortgage.
Has your lifestyle changed? Lifestyle changes are the most common reasons people choose to move. Starting or adding to a family may require an extra bedroom or additional square footage, as well as a desire to live closer to work, family or a particular school district can all be inspiration for a move to a larger home or new location.
Is your current residence one that could potentially be rented out? For homeowners who are ready to make a move but are concerned about purchasing a new home before the current property is sold, renting out the current residence may be a viable option.
Are interest rates attractive? A low interest rate means lower mortgage payments on homes of the same price. Recent rates have been very competitive. Your real estate broker can recommend a local lender to discuss current rates and qualifying for a mortgage.
