Tami and Steve's I-94 Minnesota Real Estate Blog: Moving Up in a Down Market

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Wednesday, January 13, 2010

Moving Up in a Down Market

Now may be the time for the prudent home buyer to make the big move. I have four good reasons why 2010 is the time to make the move up to more square footage, a new lifestyle dwelling, an easy access floor plan, or a greener home. My top four reasons:

First, consider the net loss from the sale of a current home compared to the net gain from the purchase of a new home. Sellers in today's market might experience a 10% loss compared to selling a year or two ago, but they would benefit from the market decline when they purchased their new homes. Typically, a seller's new home will be twice the value of his or her previous home. It may look like this: Seller A's home was valued at $150,000 one year ago and sells at $135,000. Seller A experienced a 10% loss or $15,000 in her mind's eye. Seller A returns to the real estate market as Buyer A and purchases a home at $270,000. This home was valued at $300,000 in the previous year. The net gain to this buyer, now turned seller, is $10,000. This is my top reason to move up in a down market. Prices of higher priced homes have generally declined more than prices of lower priced homes.

Second, the buyer tax credit adds another $6,500 incentive to make the move up in a down market. Sellers who have lived in their current residences for at least five years are generally eligible for the new move up tax credit. If a home owner considers the price his current home would bring and the adjusted savings he will receive on his new property, plus the federal tax credit, the move up scenario sweetens.

Third, the current interest rates. With home mortgage interest rates well below the forty year average, most loan applicants are receiving a thirty year, fixed rate below six percent. Add up the net gain in purchasing up in a down market, the move up buyer tax credit, and the current low rates, and the consumer interested in purchasing a new home has a prudent decision to make.

Fourth, we may be experiencing the final months of the buyer's market. With inventory on the downturn and the number of sales on the rise, the number of homes available per buyer may soon be in a balanced position where neither buyer nor seller has an advantage. After careful consideration of the long-term financial gains for moving up in a down market, it is also important to consider the lifestyle enhancement reasons that influence the move up.

We have experienced a lengthy thirty-six to forty months of housing recession and it has produced an enormous amount of pent-up buying demand in individuals and families who want or need to move. The reasons for the pent-up desire to move vary from wanting more space to a desire for a greener or more energy efficient dwelling to wanting to be closer to employment or family. Whatever the reason, now is clearly the best time.

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Tami DeLand and Steve Hansen
Saint Cloud and Central Minnesota REALTORS
Coldwell Banker Burnet
(320) 258-6675
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St. Cloud Real Estate, Condos, Homes for Sale
Central Minnesota Real Estate
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# posted by Tami DeLand and Steve Hansen @ 4:42 PM

Comments:
It is great to see the move up buyers starting to come out as well, being this is the next crucial stage to a market recovery.
# posted by Blogger Craig Campeau : 6:12 PM CST
 
There is only three months left of the tax credit. Time is ticking away. Don't wait to buy! You may end up paying more money for a home because you may end up competing against other buyers that made the last minute decision to purchase a home.
# posted by Anonymous Carissa : 8:54 AM CST
 
Just closed last week with a move up buyer who now feels like he can sell his home for less because of the great buy he got on his patio home and the $6500 on top.
Great incentive.
# posted by Anonymous Monique : 8:40 AM CST
 
Great points. Timing is everything and this opportunity for existing homeowners may never be available again.
# posted by Blogger Ron : 5:30 PM CST
 
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Saint Cloud, MN Real Estate | Tami DeLand and Steve Hansen
About Tami DeLand and Steve Hansen's Saint Cloud and Central Minnesota, MN Real Estate Website: The www.I-94homes.com web site provides Saint Cloud, Waite Park, Sartell, Sauk Rapids, St. Joseph, Clearwater, Clear Lake, Avon, Albany, St. Augusta, Rockville, Coldspring, Righmond, Becker, Rice, Royalton, Little Falls, Monticello, St. Michael, Albertville, Rogers, Otsego, Maple Grove, Buffalo, Annanndale, Rockford, Corcoran, and Central Minnesota, Minnesota real estate information and resources to guide homeowners, homebuyers and real estate investors through the process of selling and buying a house, condo or other realty property in the Saint Cloud and Central Minnesota area. Tami DeLand and Steve Hansen (sometimes misspelled as Tammy DiLand, Tammi Deeland, Steven Hanson or Stephen Hanson) have services to help you get the best value for your Saint Cloud and Central Minnesota home and this website offers home buyers and home sellers a superior comparative market analysis (CMA), a way to view real estate and MLS IDX listings including virtual tours, prepare your home for sale, and more. Investors looking for real estate investment properties to invest in need look no farther. Anyone selling a home, buying a home or seeking housing can learn more about our realty services, and will appreciate working with   Saint Cloud and Central Minnesota REALTORs who know  the area so well. Through trusted partners, we also provide real estate and financial services to consumers looking for houses for sale or selling their home in Saint Cloud and Central Minnesota, MN, such as mortgages, credit history, new homes, foreclosures and other services. If you've already tried to go the for sale by owner (FSBO) route and find you are needing a partner who you can trust in the sale of your most precious asset, Tami DeLand and Steve Hansen can take care of your special needs. It really doesn't matter if you spell it REALTOR, Realator or Realter, realty, realety or reality, real estate or realestate, Tami and Steve speak  your language.
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