Wednesday, November 4, 2009

To Sell Now or Wait

Like many, you’ve probably been thinking about moving up to a larger home or downsizing, or perhaps even relocating. But, the market has meant declining house values, and you’re concerned that if you don’t get enough for your home, you’ll not be able to afford what you really want in your NEXT home.

Did I hit the nail on the head for you? You’re not alone. It’s always easiest to focus on the scary, negative thoughts – fear is a powerful emotion, in fact, THE most powerful emotion we have as humans. But, as humans, we have the ability to overcome illogical fear if we’re willing to. Let me point out some things you may not know, or may not have put together.

SUPPLY AND DEMAND: Because of a decrease in supply for much of this year, home values in some areas have started to rebound slightly, and are making the sales process (when you price “right”) easy for sellers. But, that won’t last forever… banks are holding a plethora of homes in inventory (either they’ve stalled the foreclosure process or they haven’t released foreclosed homes for sale, for a variety of reasons). We expect inventory to pick up after the first of the year – if that happens, it puts downward pressure on prices for YOUR home. And, if you’re trying to wait out the storm, you could be there a long while.

COMPARE THE SUBMARKETS: If your current home's value is less than $500K in Loudoun or $750K in Fairfax County, it's likely that supply is low, and demand for your home is high. 

However, at higher price points in the same area, that's not the case.  So, if you are "trading up" you may benefit from a seller's market when you sell and a buyer's market where you buy. 

If you're relocating, you'll soon realize that our Washington DC submarket is quite different from other areas of the country.  Many areas have massively depressed home prices allowing you to scoop up amazing deals.  While buyers markets are found in many areas, some of the best opportunities include Detroit, Michigan, most of Florida, the Las Vegas area and far more.

So, whether you're moving up or relocating, you have a very good chance of benefitting from seller market conditions when you sell, and buyer market conditions when you buy.  Can it really get better than that?

INTEREST RATES: Let’s face it, Americans buy with loans… therefore, the interest rate for loans impacts you as both a seller and a buyer. Right now, the fed’s rate is 0% and it can not go any lower. To artificially DEFLATE interest rates and spur more home buying activity, the fed has been buying mortgage backed securities. This has resulted in a “typical” 6% interest rate being reduced to an average hovering around 5%.

What does this mean in dollars? Well, for every 1% increase in interest rate, if you want to keep your payment identically the same, the price of the home must be 10% less. So, buyers that can pay $500K for your home today with a 5% interest rate, will only be able to pay $450K for it at a 6% interest rate. I bet you’d like to keep that $50K in your pocket, wouldn’t you?

And, this won’t last forever either. In fact, the fed has announced it will be phasing these purchases out and no longer plans to buy these mortgage backed securities after the first quarter of next year. That means if you are thinking of putting your house on the market in the spring, that could be a very poor decision.

EXPANDED TAX CREDIT: You’ve heard of the “First time home buyer tax credit” of up to $8,000? Well, that is coming to an end November 30th. BUT, it's being extended!  And, it gets better… the new version of this program is not just for first time home buyers any more! If you are a first time home buyer you can still get up to $8000.  Or, if you’ve owned a home for 5 of the last 8 years, this NEW credit’s for you, too! Plus, the income limits are being increased…. Allowing people with higher incomes ($125K for one person, $225K for a married couple) to take advantage of the maximum credit. If this passes, it will expire APRIL 30th.

This affects you as a buyer and as a seller. You may be eligible as a buyer; but even if not, your buyer may be eligible, and certainly many buyers in the market will be eligible, spurring activity and urgency to buy before April 30th of next year.

** As an aside, please know that the National REALTOR Association worked hard to make this happen.  Your national, state and local REALTOR associations are always looking out for you, property owner rights, and small business owners, as well as for our economy overall.  This bill is only one example of the fruits of our labor.

Still not convinced? Call me for a personal consultation. I will be glad to help you sort through this, and other economic news, as well as to discuss your family’s specific situation and help you strategize to make the most of what’s available to you.

Ofc: 703-669-3142
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