WHY A DOWN MARKET IS A GREAT TIME FOR MOVE UP BUYERS
I’m sure everyone is aware that the value of our homes has eroded over these past two years. If you are planning to sell in the near future, you can expect to get from a buyer a price that may be 5-10% lower than in January, 2006. So, if I was planning to move up to a larger, more expensive home, why would this be a great time? Let’s look at the reasons.
The first reason is about choice. The inventory has stabilized in the past four months (a great sign that the down cycle has ended and prices will stabilize) and you have 5 times the choices you had 2 years ago. And, you can take your time looking and making a decision. The second, and most important reason is price. Even though prices have dropped across the board, the move up buyer has a distinct price advantage. Let’s look at a scenario to see why that is true.
An owner of a 3 bedroom townhouse in Bowling Brook Farms plans to buy a 4 bedroom single family home in Kings Contrivance this winter. The average selling price of a 3 bedroom townhouse in Bowling Brook Farms the past 6 months is $340,115 with an average seller subsidy paid to the buyer of $6200, netting the seller $334,000. The last 6 months of 2005, the 3 bedroom townhouses in Bowling Brook Farms sold for $352,134 with no subsidy. So the townhouse in Bowling Brook Farms has decreased in value about $18,000.
The 4 bedroom single family house in Kings Contrivance that they want to buy currently has an average sale price of $465,343 and they can likely get an average of $4000 seller help with closing. The average price of the 4 bedroom single family house in Kings Contrivance in the last 6 months of 2005 was $522,473 with no subsidies given. As a result they will be paying over $60,000 less for their new house while only losing $18,000 on their present home. That is a gain of $42,000 from 2 years ago.
And yes, you could do comparisons of communities all across Howard County and get similar results. If you are a move up buyer and want me to do a price analysis on both your community and one that you have targeted to move, please contact me and I’ll get you the results. It’s a GREAT TIME to be a move up buyer!!
Submitted by Len Moyer