In case you hadn’t noticed, the real estate market in North Texas (and in the rest of the country quite frankly) is on fire! Inventory continues to be extremely low, while at the same time interest rates are holding steady at historically low rates as well. What does this mean? It means we are in a Seller’s Market! Sellers can demand higher prices for their homes, and Buyers are able to purchase because the rates are low enough to allow it. Here’s why it makes sense to buy down in an “UP” market; and some of the factors currently behind it.
LOW inventory: right now we have about a month’s worth of inventory on the market. In a “balanced” market, there is about six months available. This drives prices up (supply and demand).
The Pandemic has caused people to re-think their living situations. Since we are staying home more, families want more room for work and recreation. If they can’t manage this in their current home, they are looking to buy UP. As a result, large homes are in demand!
Historically low interest rates, and special “first time buyer” programs are allowing many who couldn’t afford to buy a larger home, the ability to do so now.
If you’re currently living in a larger home, but you don’t have the need for an in home office or virtual learning space(s), media room, or an outdoor living area with pool…let’s say you’re an “empty nester” and are retired…you can sell your home quickly to someone who will pay top dollar for it! Here is some simple math to help you understand (I’m using 10% to make it easy):
Your current large home (i.e., 4,000 sq. ft +, 4-5 bedroom with 3+ baths, media room, multiple offices, large kitchen, 2 dining spaces as well as outdoor living with a pool) is now worth 10% more today.
$600,000.00 (previous value) x 10% (increase in value for today’s UP market)=$60,000.00
You purchase a smaller home (3 bed, 2+ bath, single story with less square footage and no pool) which is now worth 10% more as well.
$350,000.00 (previous value) x 10% (increase for today’s UP market)=$35,000.00
$60,000.00-minus $35,000.00=$25,000.00 in your pocket right off the bat!
Couple that with the fact that you will be probably be lowering your monthly mortgage amount by using the equity (as a down payment) from your previous home, while taking advantage of the LOW interest rates today, and you’re saving money! Not to mention, your utilities, taxes and home maintenance (yard and pool service really adds up!) will be much lower, which is also a huge benefit.
So, if you find yourself pondering whether you should downsize in an UP market, I hope I’ve made this a little clearer as to why it may be a wise thing to do! Contact us at Castle Hills Real Estate to help you find the right size home for your needs today!
Submitting an offer on a home without ever setting foot inside is not new… and now with the COVID-19 Pandemic, it has become more common place for buyers who simply don't want to take any risks. But is this a smart thing to do?