Moving Up: Was it Worth
brought to you by THE KCM BLOG
New reports are revealing that
the number of months’ inventory of existing homes available for sale is
increasing. Some of these sellers are moving up, some are downsizing and others
are making a lateral move.
There is no way for us to
predict the future but we can look at what happened over the last year. Let’s
look at buyers that considered moving up last year but decided to wait instead.
Assume, last year, they had a
home worth $300,000 and were looking at a home for $450,000 (putting 10% down
they would get a mortgage of $405,000). By waiting, their house appreciated by
approximately 10% over the last year (national average based on the Case
Shiller Pricing Index). Their home would now be worth $330,000. But, the
$450,000 home would now be worth $495,000 (requiring a mortgage of $420,000
assuming the original $45,000 down plus the additional $30,000 from the sale of
Here is a table showing what
the difference in monthly cost (principal and interest) would be if a purchaser
3 dollars and 27 cents. Was it worth waiting a year to move up to the home of your
dreams? Only you can answer that question.
If your family plans
on moving up in the next twelve months, it may make sense to move now rather
than later. Prices are definitely still appreciating and, unlike the last year,
interest rates are also projected to increase.