This article from a recent news feed that I get resonated with me. If you've been dreaming of a bigger house, now is the time to act.
Home owners who are reluctant to sell because prices have fallen, should do the math, and realize that the market downturn could work in their favor, say practitioners in hard-hit, but still pricey Boston.
Their reasoning may work in many other parts of the country as well.
"People are finding houses at prices they thought they'd never see again," says David W. O'Neil of Century 21 Spindler & O'Neil Associates in suburban Boston.
O’Neil points out to potential sellers that if the house a buyer covets used to be $500,000 but its price has fallen 20 percent to $400,000, it is a deal, even if the buyer’s own home also has lost 20 percent of its value.
In general, the toughest sell is people who bought about four years ago at the height of the market, says Zur Attias of The Attias Group at Barrett & Co. in Concord, Mass. But even for these home owners, selling now may make sense as long as they can at least break even.
He argues that almost everyone forgoes something, and probably several things, that he or she wanted when buying a house. For instance, the home may be in the right school district, but on a busy street. Or it may in a great neighborhood, but it's a Cape, not a Colonial. These are things Attias calls "unchangeables."
He says it’s a good time to sell if a seller can get rid of the most negative unchangeable in his current home, and replace them with better unchangeable in a new home. Once the market really turns around, the growth will be bigger in the better house, he predicts.
Certainly I've been advising local, Detroit-area buyers that now is as good a time as any to sell and buy something different, if you are staying in the state. The loss that you might take on the sell side will be made up (and in many case plus some) on the buy side in the current market, especially if you are looking to do a move-up. In fact, if you are thinking of selling your starter home in order toe mover up to a bigger and better house, you may be quite well. Starter homes have been selling well and have taken less of a hit on price than the larger homes in the prime move-up market.
Another factor that has changed recently involves the increase in the FHA loan limits, which now puts more of the potential move-up market within the FHA loan limit zone – up into the $290’s locally. FHA loans are less expensive and less difficult to qualify for than conventional loans. So, if you are moving up, you can get a bigger FHA loan to allow you to get into a bigger house.
And if, like many older Baby Boomers, you are looking to downsize, you can take advantage of the recent law that would make it easier for you to go ahead and buy your retirement home, while you have your current home on the market. The new law allows you to homestead both houses while you try to sell the old one. You save money on taxes and the old house doesn’t become less attractive by being burdened with higher, non-homesteaded taxes. I reported on that law in my last blog post and now I can report that the townships DO have the necessary forms, so home sellers can beat the May first deadline to homestead both their old and new homes. If your Township office doesn't have the form, I've put a link to a PDF copy of it on my Milford Team Web site.