WHY MOVING UP IN A DOWN MARKET MAKES SENSE

Many current homeowners have recently seen their housing needs change. Perhaps they have a child getting ready to start school in the fall, or maybe they simply need more space. Whatever the reason, if your goal is to move into a more expensive home, don't let the market scare you from moving forward.

With local real estate here in Cleveland on a slight downward trend, and with interest rates near historic lows, move-up buyers are facing a great opportunity. However, for a lot of move-up buyers, the thought of selling their current home during a declining market makes them uneasy and keeps them from moving forward with their goals. 

Hopefully, the follow graph will help illustrate why moving up can make a lot of sense.

Buying Up in a down market

 

In this example, the owners of Home "A" have experienced a 10% decline in the value of their home. On face value, this seems like a negative and can be very concerning. Had the owners of Home "A" sold at the peak of the market, like in 2003 or 2004, they would have also purchased Home "B" at the peak of the market. The difference would have been $200,000.

When the market declines, the price of all homes decline.  Thus, Home "B" experienced the same percentage decline as Home "A", yet went down a greater dollar amount.  The difference is now only $180,000. Although the sellers feel a "loss" in the sale of their Home "A", they actually realize a net gain of $20,000 in the overall transaction.

We realize this is a somewhat difficult concept for some people to grasp but we hope you really take some time to study the numbers. If you would like to buy a larger home, now really is a great time to do it.