Is now a good time to buy?

It goes without saying that homes are selling for top dollar in a market where there are a lot more buyers than homes. The problem for mover-uppers is buying the next home. If you think about it, this is a common dilemma no matter when someone moves from one house to the next. Either the sale or purchase is going to have an advantage. So, what are some advantages of moving up in today’s market?

1. You likely have a lot of money to work with

Equity from your current home is buying power that can help you afford the new home. The combination of a large down payment and these historically low interest rates can potentially decrease the monthly mortgage obligation. Your Intercap loan officer can take a look at your current mortgage, equity, and other debt to structure a mortgage that minimizes your monthly expenses while potentially increasing your home investment and overall net worth.

We recently helped a family move from a $475,000 home to a $650,000 home with a monthly increase of only $180. Their equity was used as a large down payment, which also improved their interest rate and loan terms.

2. There may be more homes available in the higher price ranges, with fewer buyers

According to Zillow, the typical house sold in America last year was a 3-bedroom, 2 bath, 1,876 square foot home with a median sales price of $225,000. In 2020, homes spent an average of just 25 days on the market, compared to 30 days in 2019.* These numbers may seem out of touch in many major and growing markets in California, Colorado, Arizona, Utah, and several others. However, homes getting the most attention seem to be starter to lower-range home values. Tyler Shenk from Utah Key Real Estate commented, “I’m seeing more expensive homes lowering their prices and taking longer to sell.” Considering a move up from a lower-cost home to a higher-priced home is giving some of these mover-uppers a bit of an advantage on both sides of the deal.

For example, the mover-upper mentioned earlier sold their starter home for $475,000, well above their expectation and asking price. They received 27 offers. This gave them a great deal of equity to put towards their new home. The home they bought for $650,000 was purchased at asking price and included a few concessions towards closing costs and repairs. There were fewer buyers and more homes for them to look at in this price range.

3. Your overall net gain usually increases with a move up

One of the major benefits of owning a home is the equity and net worth it provides over time. Since many buyers leverage a mortgage and their living expenses to cover the cost of ownership, a home that’s affordable in their budget usually makes for a great investment. And as history has shown, even the deepest recessions haven’t kept housing prices down for very long, if at all.

For example, let’s say you own a house worth $475,000 with an appreciation projection of 5% a year for the next five years (the 48-year average is 4.2%).** That means in five years, your $475,000 home would increase $118,750 for a total value of $593,750. At the same time, a home worth $650,000 in the same area would gain $162,500 for a total value of $812,500.

Obviously, every market and financial situation is unique and should be considered carefully. Your Intercap loan officer and real estate agent have the tools and experience to review your options and help you make a well-informed decision about a potential move up in any market. All three of you should meet to discuss your Home Transition possibilities.

Contact your real estate agent and Intercap loan officer to make a plan to move up, move over, or whatever you would like to do.

*July 2021 – https://www.zillow.com/sellers-guide/average-time-to-sell-a-house/
** June 2021 – https://www.in2013dollars.com/Housing/price-inflation/1970-to-2018?amount=100000

VA Loan Grants

/