The Stimulus Package & Buying Up in a Down Market

So here you are, living in a home that no longer meets your needs and you want to know if it makes any sense to make a move “in this market.” If you have a home or condominium that is now too small for you and your family you should keep reading. Let’s set up the following scenario. Two years ago, when you did not want to sell, you might have gotten $250,000 for your home. Now, two years later, your house is not getting any bigger, and your home is worth $225,000. If you do sell, you are planning to stay in the area, or moving to an area that has had housing prices that have fallen far more dramatically than here in VT. In either case , you will be buying a bigger, more expensive home. Two years ago that home would have cost you $375,000 but now you see that homes of that size are now selling for $325,000. As an added bonus, the interest rate has dropped from 6% to 5% or less. Under these circumstances, assuming your employment situation has not changed, you have a better opportunity than ever to buy up for less total purchase price and at a lower interest rate.
The difference in your monthly mortgage payment will be far less than it would have been 2 years ago. In addition, that larger house that you just bought at a bargain price is now going to appreciate in value at a higher rate and out perform the appreciation of the home your currently in during the next up swing in the market. Although there is more inventory available in the 0-$250,000 price range, the rate of sales year to date actually results in a shorter market time for the house you will be selling than price range you will be buying into. With longer market times at the higher price ranges, you will have time to sell your home in order to buy the next one and the sellers may be more flexible on price. And this is where the stimulus package starts to work for you. As the deadline of December 1, 2009 approaches, more and more first time home buyers will recognize the opportunity and make their first home purchase driving the market for your home and others like it. As a result, we should actually see the market time for the first time home shorten as demand increases which will further improve your chances of you achieving your goal. In short, if you are looking to step up into a larger home, now may be the time to make the move.