Why Would You Want To Sell Your Home In This Market?
This is the million dollar question for people who have not been informed about what is happening in this real estate market. Many people do not understand why so many listings are on the market that are not in a distressed situation. "If you were not forced to sell your home now, why would anybody want to sell at a loss?"
It is simple really.....
Many sellers want to take advantage of the market even if this means taking a large loss on their home. Many want to get out of their 6% mortgages and into a nicer house with a mortgage around 4.25%.
Follow this...
Lets say they bought their house for $250,000 in 2007. Lets also assume that their home is now worth only $185,000. The owners are still paying a 6% interest on their mortgage of or around the $250,000 price. These sellers are not financially stressed and have always dreamed of living in a nicer subdivision closer to the city but could never afford the house of their dreams.
Now the market crashes and house prices plummet...
The seller sees houses in their desired subdivision that are listed for $350,000. These same houses were selling for $450,000 in 2007. The sellers has also kept their jobs through this downturn and their salary has increased a bit over the last three years. They can afford the $350,000 even after taking a $65,000 loss on their current house.
Why wouldn't the seller make the move is the better question! (Interest rates will not stay this low forever and house prices will eventually climb back up)
So now the seller has the house they want in the subdivision of their choice. They have a new mortgage with an interest rate in the 4% range and have bought a house $100,000 less than what it was selling for a few years ago.
Most sellers are having to sell their houses for less than what they purchased them for a few years ago but they understand that they can make their loss back when they buy a more expensive home.
Note, if you are downsizing and not financially stressed, now is not the best time for you to make a move. The percentage gain you get from purchasing a less expensive house will probably not be as much as you have to lose now on your current property.
This is definitely a good market for move-up buyers. Thanks for the post.
Great post and so very true...basically it comes down to ....do you want to gain equity in your current home or a home that better suits your needs?
Dan and Amy - Thanks for the comment
Deborah - You are correct. There are still people out there that have jobs and money in the bank even if they do not have equity in their current property. These are the people taking advantage of the "deals"
well said Brandon - why wouldn't they make the move is the better question... As the saying goes - one man's ceiling is another man's floor. This market has been very interesting for a lot of people. Is it good or bad, just depends on where you are...