Market Conditions in 19446>Question Details

Ralph, Both Buyer and Seller in Lansdale, PA

in speaking with family for advice pertaining to selling our house and upgrading into a house $100,000 more

Asked by Ralph, Lansdale, PA Wed Jan 16, 2008

than ours an obvious question has risen to the surface. If houses are currently moving at a slower pace than during the real estate cycle of a couple of years ago than wouldn't now be a good time to upgrade? For instance it appears houses in the 500k range are not moving at as great a pace as houses in the 300k to 350k range. My assumption is you will now or in the next yr or so get more for your dollar in that so-called luxury house category. Also if all house prices were down say 10% than should the same analogy apply in that 10% of 500k is obviously much greater than 10% of 300k. Does that make sense??? This is assuming my wife and I can secure an outstanding rate of course which we have in the past when searching for our first home a couple yrs back..

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Ralph,

I hear what you're saying, but if there's one thing that's true, it's that Real Estate is local - even down to certain neighborhoods in certain towns there are pockets where homes may be still increasing in value or, at the very least, selling quickly. Alternatively, we hear mostly national media portraying the "gloomy" housing market. Big picture though, you're right....assuming you can get a decent price for your current home, you're probably going to find some savings on the purchasing end (although I wouldn't assume a blanket percentage), especially if you find a motivated seller.

Homes in the best condition, in the best location, priced well, will always sell quicker. We still see houses being sold with multiple offers, some over asking price. Certainly not to the extent that we did a few years ago, but I would caution any buyer who is looking today to understand that there are other buyers out there, homes are being priced crisper and sellers are understanding better what needs to be done in order to make their home compete.

Your biggest challenge will be selling your current home. Once you do that , interest rates are low, you'll have plenty of homes to choose from, you'll be able to write a clean offer, and you may get a great deal along the way.

Good Luck,

Pete
2 votes Thank Flag Link Wed Jan 16, 2008
Ralph:

Thank you for allowing me the opportunity to respond to your question.

I agree with the basic tenants of your rationale Ralph, but there are many other dynamics at work that most people overlook these days. All real estate is local. The difference between one neighborhood and another can be as finite as several blocks. The media’s reporting of the “housing market” is baffling. Can you imaging if there where a National Weather Report (hey folks, its snowing in Des Moines, so you fine people in Montgomery County, PA – get out your snow shovels)? Please don’t get me wrong. This doesn’t mean we should take the sub-prime and credit situation lightly. But let’s put things in perspective and be rational about it.

The other dynamic is change. Buyer’s or Seller’s market, albeit not overnight do change. And while one real estate market can be experiencing a Buyer’s market, another can be experiencing a Seller’s market at the same time. This is why it is suggested that you put an experienced local Realtor in front of your real estate transactions. As a student of the local market, let him/her run “absorption rates” and market data for you. One of our jobs as Realtors is to “educate” the real estate consumer so they can make informed decisions.

Lastly, and I feel that many people these days have been caught up in the media frenzy and have forgotten that the real reason for buying a home ...A home pays an annual dividend: A roof over your head and the personal enjoyment that the real estate provides.

I wish you and your family all the very best!

John B. :-)
1 vote Thank Flag Link Thu Jan 17, 2008
Are you family in the real estate field?

Homes that are the most up to date will sell first--- that does not mean they will sell for more. No one knows when things will turn around as far as prices go, but "the next year or so" could be 5-10 years down the line. If it were me (and this is exactly what I did), I would upgrade so that I would enjoy my home during the time I live in it, knowing that when I sell, I will price my house right, and have the best one in that range.

You are on the right track in one aspect: you don't say what you want to do after you sell your home, but assuming you want to move up to a more expensive home, you're going to save money on that end! :)
1 vote Thank Flag Link Wed Jan 16, 2008
This economy has been a wake up call for many, and I think what is important is that you make a decision based on solid financial figures. The days of speculating are over. If you have the resources to feel comfortable with a larger mortgage, or have the extra $100K sitting in the bank to throw into the kitty, why not? But I think most people are thinking that living frugally has a lot of benefits for good sleep at night.
0 votes Thank Flag Link Sun Jan 8, 2012
There's nothing wrong with moving up, and if you can afford to do so, great. And there are plenty of good values out there. However....

I think your logic may be flawed. Now, it really all depends on the market, and how homes in particular price ranges are (or aren't) holding up. And really, more to the point, it depends on the price points between what some call a "bread and butter" home and an upscale home.

Your rationale, if I can rephrase your question, seems to be that because prices are softer in the higher price ranges, you may be able to get more for your money. Then, when the market strengthens, perhaps properties in the higher price ranges will become more popular again.

Granted, houses in higher price ranges "are not moving at as great a pace as houses" in a lower price range. But we've got a "chicken and the egg" question. You're looking at it and thinking: "Good value, better than a few years ago." I'm looking at it and thinking: "Less demand. Less interest. Not as good a value, as perceived by buyers."

If you want to buy a house which consumers believe isn't as good a value (as measured by demand), go ahead. At some point, the market will strengthen, but it may strengthen unevenly. Just as the downturn hit some segments of housing harder than others, the strengthening will affect some segments more than others. And maybe that'll be the "luxury house" category. But....I don't know. There's one school of thought that says that the luxury market is less susceptible to market fluctuations. The people who own those homes are insulated from some of the factors that affect people in the bread and butter homes. If you own a $300,000 home and drive a 5 year old Toyota, you may be more concerned about high gas prices than someone driving a new model Cadillac. I know that in my area (Northern Virginia) the moderate-priced homes were harder hit than some of the more expensive ones. (Vienna and Oakton are doing better than North Springfield and Annandale, for those who know the area.)

If you want to buy a larger, nicer home, that's great. And if you can afford to, and it fits with your lifestyle, you probably should. I'm not trying to talk you out of it at all. There certainly are good values out there. But don't over-rationalize or oversimplify ("if all house prices were down say 10%...") Understand your real motivations. Check the numbers. Then make your decision (which it sounds like you already have).

Good luck.
0 votes Thank Flag Link Fri Aug 15, 2008
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
Hi Ralph. It sounds like you have a good picture of what is happening. Yes, homes in the 400's and + are taking a little longer on the market these days. Thus, price decreases are frequent. So, it is a wonderful time to buy. There are great deals out there! Please call me and I would be happy to assist you. I am rated #1 in the Active Rain Real Estate Network for All of Pennsylvania. I would be happy to talk with you. Don Bradbury http://www.bradburyteam.com 215-536-6777 x 329
Web Reference: http://www.bradburyteam.com
0 votes Thank Flag Link Fri Aug 15, 2008
Other factors play a large role in your question. Larger homes may be moving a little slower, but the large factor there would be the job market. Maybe in Idaho, it would be rule of thumb, in montgomery county, we are surrounded by fortune 500 companies. I would call our local market well balanced. The bigger question is do you NEED to upgrade? You are correct in my opinion regarding your "10% rule" if you are losing a little here, you are taking more from there. It is a give and take. Now with a larger home, you also have to consider taxes, higher utilities and any other charges that would come with a larger and more expensive home. I would focus more on what you can get, to sum it up, try not and worry about pennies. The current market may be in your favor to get what you REALLY want instead of what you could get your hands on like it was 3 and 4 years ago.
0 votes Thank Flag Link Thu Aug 14, 2008
A few stats, homes that listed for 309,000 sold for 300,000; 335,000 sold for 323,000. Where as home listed for 529,000 sold for 488,000; listed for 469,000 sold for 455,000. The statistics were compiled by TrendMls and account for all our listings that were in the MLS. So, when upgrading to a larger home, you will be making out in the long run, especially with the interests rates. I tell all my prospects," if you are upgrading you will make out." I show them the statistics that I just showed you, so they can see for themselves. I hope this helps. Any Questions? Give me a call. 610-864-1487
0 votes Thank Flag Link Thu May 22, 2008
I had a home listed at $620k that sold for $529. I have also had homes listed at 279k that sold for 255k. The higher priced homes are definitely getting hit for the highest reductions. So my advice - buy now - but be willing to lose a little money on your current home. You will still come out way ahead in your purchase. Using the example above you would have lost 24k on your sale, but gained about 90k on your purchase. Coming out ahead 66k in the end. Sounds like a great deal to me. Let me know if that helps.
0 votes Thank Flag Link Tue Feb 26, 2008
Basic investment,buy low sell high..Well you could wait,,but of course who knows where the rates will be in the future.Therefor all the savings in the price difference could be swallowed up by higher interest rates.None of us have a crystal ball but I think a full time realtor with experiace with the last market turn down can help more with advice than the family members.Unless they are real estate professionals.Its been my experiance that if you want a change bad enough.You will do whatever it takes.This is why you must be careful,after all this is how the sub-prime guys found their prey.If you are not under contract with a realtor contact john@jbrealtyservice .com
Web Reference: http://jbrealtyservice.com
0 votes Thank Flag Link Wed Feb 20, 2008
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