Is it a good time to sell and buy a home?
When I listen to the media and everyone around me talking about real estate and what’s going on in the market today I guess I can understand why some might become dismayed and even convinced that it might not be a good time to buy a home. I am here to tell you that there’s nothing that could be farther from the truth. Right now is an excellent time to purchase a home whether that’s a home you plan to live in or whether it’s an investment property. So why is it, you might ask, that everything I hear today on the news is about the horrible real estate market. While it is true that prices across the country have declined substantially in the last three years. That doesn’t mean that it’s a bad time to invest in a home. The truth of the matter is that there has never been a better time for you to purchase property! Let’s examine why I believe this to be true.
First of all let’s take a look at interest rates. Within the last couple of weeks interest rates have hit all time lows, somewhere in the range of 5%, depending on your credit and other variables, for a 30 year fixed mortgage. The good news for a buyer is the fact that you can actually purchase substantially more house for your money in this historically amazing interest rate environment!
The second factor that we should look at is the unusually high listing inventory. In Frederick County Maryland, as an example, the listing inventory during a normal and balanced market, (where home prices remain flat and steady), has historically been between 1,100 and 1,200 homes available for sale through the MLS. Today’s listing inventory in Frederick County is over 2,200 homes available for sale on the MLS. That is just about double the average listing inventory of a balanced market! What does this really mean for you if you are thinking of buying a home? Very simply put, you will have all whole ton of houses to choose from! What a deal! Most sellers these days are willing to negotiate not only on the contract sales price but oftentimes they are willing to negotiate with closing cost help as well. What a deal!
You might be thinking, “That’s all just fine if you’re a first time buyer but I have a house to sell, prices have come down and I’m not gonna get as much money if I sell today, especially compared to three years ago!” Well if the only part of the Sell/Buy equation you look at is what you’re going to net from the sale then you’re right you could have sold for more money three years ago! The reality though is that we have to look at the whole picture of a sale and a purchase! Let’s face it we all need a place to live and unless your moving in with friends or family you’ll probably be purchasing another home! So let’s take a look at some of the basic math and general facts when it comes to selling and buying your next home.
Who are the losers?
If you’re planning on downsizing then unfortunately you would have been better off selling your house three years ago! On the bright side though if you’re thinking of downsizing you probably have been in your home for quite some time now, if you’re like the average person thinking of downsizing, and you have probably also built up quite a bit of equity in your house. Although you could have made a bit more had you sold in the last couple of years, you’re still going to walk away with a quite a bit of money so cheer up. There are a lot of houses to choose from and interest rates couldn’t be better.
Who are the Winners?
For practically everyone else who’s thinking of buying, and even if you have to sell before you buy, now is a great time to make a move. Most sellers I consult with these days are so concerned that they’ve lost money in this depreciating market. Generally what I will do is sit down with them with a pen and paper and show them that from a mathematical perspective that today is a fantastic time to sell your home and buy a new home! Yes we are talking about the money in your pocket, mathematical perspective!
Let’s look at an average example for the Frederick County Maryland area and consider the average move up buyer. The National Association of Realtors states that the average move up buyer will actually purchase a home that is worth 50% more than the house they are currently in. So let’s say that three years ago, when you were thinking of selling, your home was worth $300,000.00. If you’re like the average move up buyer you would be purchasing your next home for $450,000.00 which is a 50% increase. Let’s also say that homes in this price range have depreciated by 20% over the last three years. That means your home has depreciated by 60,000 in today’s market. Sounds bad right? Well let’s look at the next factor before we come to any rash conclusions! The home that you would have purchased three years ago for 450,000 has depreciated by $90,000.00. Remember both homes have depreciated by 20%. The bottom line is you actually are $30,000.00 ahead of the game by purchasing today and selling today! A $90,000 price depreciation on the house you were going to purchase and a $60,000 price depreciation on your house means you are $30,000 ahead!!! The Math doesn’t lie! Don’t forget there’s a much better listing inventory today and that means there are a lot more houses to choose from. It really bothers me that the media and news outlets focus so much on the depreciation that’s happening with home prices BUT they don’t tell you the whole story! They don’t mention that it’s actually a better time to sell and buy a house today than it has been for decades!
Unfortunately, it is a bad time to sell if you’re thinking of downsizing or if you just purchased your home within the last two or three years at the peak of the market. Recently I have had many calls from potential sellers who want to move only to find out that they would need to come up with $40,000 to $100,000.00 out of their own pockets at the settlement table in order to sell their house. In the past I would not have been able to give any assistance to my clients in this situation because, unfortunately, I cannot control market values. Recently though, I found an excellent tool, called the MMA program, to help my clients who find themselves in a negative equity position. This tool has enabled some of them to use what they currently have, and has taught them to bank like a bank, and take control of their financial situation. It is all based entirely on math, timing and leverage and many times they find themselves on track to have $20,000 to $50,000 of additional equity in their homes in just a year or two, which may put them in a position to sell their home much faster! Instead of being at the mercy of the housing market, I now offer this as an option to help people to get what they want sooner! This tool is like a financial GPS. Not only will it help with mortgage debt it will also help with consumer debt. I have found that most folks can have all of their debt completely paid off in as little as 1/3 to ½ of the time with no change to their household budget or lifestyle. I know this sounds too good to be true! That’s what I said until I made a choice that changed my financial future forever. I asked the simple question, “Will the MMA work for me?” You can click this link to read more about the debt I had and my money and debt position? You’ll see it really was not so good!
Whether or not you are in a negative equity position this tool, from United First Financial, can help you to pay off your mortgage and debts in record time and help you to keep more of your money where it belongs. In your pocket, not the banks!
Look at all of the facts before you come to a conclusion, you may realize that, just like whether or not it is a good time to buy and sell a house, the real truth is in seeing the whole picture and the fact that math doesn’t lie!
Have a great New Year and live abundantly!
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