The Petalumahomes.com Realty WebLog

We’ve all heard the news: “Foreclosures on the rise,” “prices falling”, “interest rates stagnant” … We all know that 1st time buyers are in a much more comfortable position than in 2005.  In East Petaluma, for example, they can basically expect to pay $75,000 to $150,000 less for the same house as they would have in 2005. (with exceptions, of course - but just take a look at this listing)  But here’s a different headline - Move-up buyers are better off moving now than waiting for the market to recover.

 Coldwell Banker Inc., ever diligent in their outreach marketing, has created a new advertising campaign entitled “Reality Check” - a campaign to counter the mass media’s often times unfair bashing of the real estate market. 

Here’s the latest release: move-up-buyers.pdf

Give this article a read if you’re in a position where you need to sell first before you buy, it’s an interesting take on your scenario.  In a nutshell, when the market does recover you’ll certainly get more for your current home but your replacement property (the home you have your eye on now) will have appreciated as well - this article argues that it will cost you more to move if you wait. 

But don’t take my word for it, here you go:

“Reality Check:
Move-Up Buyers: Buy Now.
Are you and your family bursting at the seams of your three
bedroom entry-level home? Are you looking to take advantage
of the 40%+ in equity you’ve gained over the last five to seven
years? But with all of the headlines you’ve read regarding the
state of the housing market, are you concerned that now may
not be a good time to sell your home?

Throughout our market, move-up buyers – those who are looking
to sell their home and “move-up” to a larger, more expensive
home – like yourself, are pondering these questions and many
are ultimately finding success in selling their homes now rather
than waiting by the sidelines for the market to pick up.
Here’s why:

Why Now May Be a Good Time to Move-Up

According to the National Association of Realtors, “the typical
home seller owned their home for six years” before deciding to
sell. So for many people looking to move-up in today’s market,
those individuals purchased their home in 2001.

Here in Sonoma County, the median price of a single-family
home in 2001 was $339,473. Today, just six years later, the
median price for that same single-family home is $597,826 or
a 76% increase. You may be one of those individuals looking
to use the equity you have gained on your home and now may
be the time to do so.

Equity Positioning

If, as in the example above, you had purchased your home in
2001, you may now have $258,000 in equity – on top of your
initial purchase – to put towards the purchase of your move-up
property.

Considering Both Sides of the Transaction, It Might Not Make
Sense to Wait

If you are considering a move to a more expensive home but
have decided to wait until the market picks up, you may want
to reconsider. Certainly, the fear of not getting top dollar for
your current home is understandable but, as a buyer, you must
consider both sides of the transaction. Consider this:

Selling Your Home

Hypothetically speaking, let’s say that at the height of the market
your current home was selling for $650,000 but due to the slow
down it depreciated 3% over the last two years. The average
home in your neighborhood is now selling for $630,500.

You decide to wait to move up until you can get “top dollar” for
your current home.

Let’s say you wait until 2010 to move up and that between 2007
and 2010, the market appreciates 7.75% per year, as it has (on
average) annually, according to the California Association of
Realtors, over the last 37 years.

Ultimately, you may be able to sell your current home for
$788,744 in 2010.

Buying Your Next Home

Now let’s look at the buying side. The home you want to purchase
was selling for $900,000 in 2005. Two years later, it too,
endured a 3% depreciation and is now selling for $873,000.
You are able to purchase the home for that price but ultimately
chose to wait until 2010 to purchase the home, holding out to
get “top dollar” for your current home.

Based on historical performance numbers compiled by the
California Association of Realtors, the home in 2010 may also
have enjoyed an average 7.75% appreciation (according to the
California Association of Realtors) each year and will then cost
you $1,092,107.

Now May Be the Time

Many people who are buying and selling right now are move-up
buyers – like yourself – who are using equity positioning to obtain
better, more expensive housing. As a seller, you may enjoy the
benefit of years of high appreciation rates and, on the other side
of the transaction, as a buyer you enjoy near historically low
interest rates and a large selection of homes to choose from.
The result: on both sides of the coin, you win!

This Reality Check brought to you by Coldwell Banker Residential
Brokerage, the leading provider of real estate services in Northern
California.”