Current Real Estate Market -
The real estate market today is seeing a surge of buyers, but the surge is limited to the first-time home buyer’s market, with FHA and USDA financing as the loans of choice. The price range for this market is anything below the $417,000 price. With this surge of late, I am seeing many short sales and bank owned properties being purchased. Why the surge? Very low interest rates that are beginning to creep back up, the $8,000 dollar tax credit, lower home values, and overall affordability.
What is missing in today’s real estate market?
What’s missing in the market right now is the move-up buyer. Typical buyers in this class will be selling a “first-time home buyer” home and using the equity to move up to a larger home. But as I mentioned earlier, many of the homes that are selling now are either vacant (bank owned) or distressed sellers (short sales), meaning there’s no one to move to their next home. As I see it, this unique dilemma brings opportunity!
Why the opportunity?
Home values have dropped in the last two years to near 2005 price ranges in most areas. This means that homes have lost a total of 15% to 18% of their value in the last two years (this varies from neighborhood to neighborhood). For example, a home that was valued at $350,000 in 2007 has a market value of $287,000 (18%) and a home valued at $550,000 is now worth $440,000. The $350,000 home lost $63,000 while the $550,000 lost $99,000. This is the ideal situation for the “move up buyer”! Why? Because while the home you are selling may not be worth as much as it was last year, the home you are buying is an even bigger deal…in our example above, your net savings is $36,000! In addition, the homes in the $550,000+ price range are not moving, making sellers more motivated to make you a deal!
Conclusion -
This is a great time for first time home buyers to get into an affordable home, but even a greater opportunity for move up buyers to purchase their next home. Interest rates are very volatile right now with the expectation of inflation on the horizon, so if you or someone you know is contemplating a change in real estate (buy, sell, or refinance) have them give me a call to see if now is the right time for them!
