The Seven Secrets of Buying Up in a Down Market

The Seven Secrets of Buying Up in a Down Market

If you are a current home owner and have always had the dream of moving up to a larger or more expensive home, now could be the best time to turn that dream into a reality.

Take a look at the information below and contact me if you have any questions.

#1. Instant Gain by Buying Up:

Let’s say your current home is worth $300,000, but because of a down market you must reduce your price by 10%. So, instead of receiving $300,000, you would get $270,000 and lose $30,000.

Your goal is to move up to a home that better fits your needs, maybe a $500,000 home which is located in the same distressed market. You could probably buy that house at that same 10% discount or $450,000. You just have saved $50,000!

Yes, you lost $30,000 on the sale of your current home, but saved $50,000 on the purchase of your new home, which puts you $20,000 ahead. And when the market starts improving, the larger high end homes will most likely see greater appreciation.

#2. Lower Interest Rates Means More Home for Your Money:

Interest rates are at all time historic lows and chances are the interest rate you have on your current mortgage is higher than current rates. There is even a program where you can literally use your retirement and savings to show more income to get help you qualify for a new loan.

Mortgage payment (principle & interest) on your current $300,000 home at 80% loan to value (LTV):

At 5.0% interest rate = $1,288

At 6.0% interest rate = $1,439

Mortgage payment (principle & interest) on your new $500,000 home at 80% LTV:

At 3.5% interest rate = $1,796

At 4.0% interest rate = $1,910

#3. You Can Finally Afford Your Dream Home:

You're in a home you own, which was great! Congratulations!!! But now perhaps maybe you’ve had children, or your children have grown, and your current home feels like it is bursting at the seams. Now YOU can afford that home you’ve always dreamt of.

#4. Changing School Districts:

Your children are growing and you want the best education your tax dollars can buy. Maybe your children are getting to be elementary school age or making the transition to middle school or high school. Now is the time to get your children in the schools of your choice!

#5. Changing Geographic Locations:

Maybe you live inland and want to be closer to the beach. Or perhaps you are fenced in on all sides and want a home with a view. So long as you are buying up, now is the money saving time to make the move you have always wanted to make.

#6. Lower Tax Base:

As you probably know, property taxes are based on assessed value. You may have sent in a re-assessment request to the county recorder to get your property taxes lowered. Assessed value is generally based on the selling price of the home. Why not buy the larger home you want, while prices are down, and keep the property tax base low?

#7. Housing Affordability Index is at an All Time High:

The Housing Affordability Index is at an all time historic high! The combination of incomes being higher, interest rates being at historic lows, and home prices being lower in this down market provides significant opportunities for you to move up to the home you’ve always wanted.

The bottom line is that eventually the market will turn around, it always does, and it should turn around in a big way here in the San Diego area.

What you really should be thinking about is where do you want to be while waiting for the market to turn around? Do you want to wait in your current home or the home of your dreams?

Call me today at 760-271-5153 for a no hassle, no obligation,
consultation to determine what options you may have.

If moving up is not in your best interest, I'll be the first one to tell you!

Allen Meredith, CDPE, e-Pro