You Deserve an Upgrade
If you consume any of the “Breaking News” onslaught, you get that we find ourselves in a moment (**November 2022) of economic uncertainty. Of course, we worry about how this effects residential real estate in the short-term, especially if a need — or desire — beckons us to move.
Short of quoting all kinds of stats and speculating what they could mean, what we will say is that prices for single-family homes have not significantly dropped. This is observed when examining an aggregate of one-year trend lines — in the primary neighborhoods that we work in. Nevertheless, it is feasible that this trend may change, given the fear and aforementioned uncertainty in the zeitgeist. While that might lend reason for pause, this might actually not be the best time to do so, especially for folks thinking about an upgrade.
As an example, let’s say you would like to sell your current home for $2 million to buy a larger, $4 million home:
1. One discount deserves another: Simplistically speaking, if the market is down, selling a $2 million home for a 10% discount creates a ‘loss’ of 200k. Buying a $4 million home at a 10% discount could deliver a $400,000 savings on that purchase, netting you a $200k gain. Think balance-sheet, not merely transaction.
2. Bigger fish, smaller pond: As higher mortgage rates force many buyers to buy lower priced homes, the discount on your sale may be less than you think. The the purchase for a larger, more expensive home may have fewer competitors due to that buyer pool shrinks a bit.
3. Count on the cyclical: Yes, the mortgage rate will be higher (but most people are not paying the headline rates). It’s highly likely that when — not if — the Fed has to stimulate the economy back into growth mode, the first thing they (usually) resort to is lowering rates. REFINANCE!
4. Ca$h: Not all buyers are 100% reliant on mortgages to finance a purchase. Some have more — or access to — cash. These buyers will always create a floor for home price fluctuation.In closing, we re-emphasize that a decision to buy and sell should be all about YOU! Will your life be better by making a change? If a kid — or twins — are on the way, you’ll need more space. Likewise, if you are working more from home, or a parent plans to live with you, your living space needs become more essential, not simply voluntary.
As always, we’re available to chat about anything related to real estate. No pressure, we promise. If you simply want some feedback on what your thinking about. Contact us at 323.203.5439 or via email.
