Move UP to the Home You Want (NOW!)
by Joy Moran, WA Licensed Broker, Sound Advantage Realty, Olympia WA
There are Advantages to Trading Up in a Down Market.
You’re living in a home you’ve outgrown, waiting for prices to increase before you sell it to buy the home you really want to live in. Did you know that replacing your home right now will SAVE you money in the long term? Its true. While you’re waiting around for the market to recover, the home you want will increase in value MORE than your current home.
Here’s an example.
Let’s say you bought your current 3 bedroom home in 2005 for $230,000. It was a seller’s market, so you paid $2,000 over asking. You still owe around $160,000 on your mortgage, and your house is currently worth $190K-$200K. OUCH! That really hurts, but you’re better off than folks who bought at the top of the bubble, in 2006-2007.
After preparing your home for sale, real estate commissions, WA state excise tax, title and escrow fees, and paying off your current mortgage you’d be lucky to clear $10,000. If you’re LUCKY! NOBODY is thrilled at the prospect of bringing cash to the closing table.
The 4 bedroom home you really like is $295,000. You have some savings, your credit scores are good, and you can afford the higher payment, but NOBODY WANTS TO LOSE MONEY ON THE SALE OF THEIR HOME, so you decide to wait until the market recovers and your home is worth around $250,000.
That decision is going to cost you at least $20,000.
Let’s look at an example.
Say home prices go up an average 3% per year. At that rate you will be waiting 8 years. By the time your current home is worth $250,000, the home you want will have gone up to around $370,000.
Now $195,000 $295,000 $100,000
In 2020 $250,000 $370,000 $120,000
Increase $55,000 $75,000 $20,000
It’ll cost you an extra $20,000 to wait. Not only that, you probably will not see today’s rock bottom interest rates eight years from now.
Why not take advantage of today’s low prices and low interest rates, and ENJOY the next eight years in a home you love living in!