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Moving Up in a Down Market
Coldwell Banker Residential Brokerage
October, 2008 - While owning real estate can be one of the best investments you will ever make, and also one of the last tax shelters left in America, more importantly, it's a place we call home. If you are looking to move up because of a lifestyle need or want, this is the right time to act
When the market was in an appreciating cycle, homeowners sold high and then bought high. However, in our current depreciating cycle, sellers sell lower than before, but will pay less as a buyer for their new home. Moving up in a down market makes sense.
Here's why that is true. Assume for this example that you have a home that is similar to those selling for $500,000 when inventories were low. Then assume that home prices have dropped by 15% to $425,000 as the inventory has significantly increased. Before the decline, you had your eye on some neighborhoods with homes selling for $800,000 that now are selling for 15% less at $680,000. When you sell your home based on the current market for $425,000, and then buy a home in that other neighborhood for $680,000, you have just received a positive increase of $45,000 ($120,000 less vs. $75,000 less).
As a commodity in the marketplace, homes are like ships in the harbor - they all go up and down with the tide. Interestingly enough, when the market prices are down because of high inventory... that is the best time to move up!
I am providing you graphs for each area so you can assess how the market is doing. When inventories are up compared the number of properties selling each month, there continues to be downward pressure on prices. Whenever you would like my thoughts or advice on our current market, I am ready to help.
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Tucson Real Estate Jim & Ann Henry, ABR, CIPS, GRI
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