Waiting For Home Prices to Rise Before Selling? Read This!

By
Real Estate Agent with Page Taft Real Living

Everybody is discouraged by the drop in home prices over the last 3-4 years, especially people who want to "move-up" to a larger home.

Our statistics show that the median selling prices of residential homes in our 24 town area (from Branford to Waterford Connecticut) have dropped 14.1% since 2006 (as of November 2009). 

So should you "move-up" now or wait for prices to re-bound to 2006 prices (the same percentage as the decline of 14.1%)? 

I've estimated the results of buying now or waiting as shown in the table below: 

MOVE UP NOW ?

Current Home

Move-UP Home

2006 Price

$         300,000

$             400,000

2009 Price (-14.1%)

$         257,700

$             343,600

Purchaser Savings

$           42,300

$               56,400

Net Gain for Buyer

 

$               14,100

Tax Credit

 

$                6,500

Total Net Gain

 

$               20,600

 

 

 

 

 

 

WAIT FOR HIGHER PRICES ?

Current Home

Move-UP

2006 Price

$         300,000

$             400,000

2009 Price (-14.1%)

$         257,700

$             343,600

Future Price (14.1% Gain)

$         294,036

$             392,048

Move Up Buyer Gains

$           36,336

 

Move up Buyer Pays

 

$               48,448

Net Cost for Move up Buyer

 

$               12,112

We're making several assumptions including:

1.  Current home and move-up home base prices in 2006 ($300,000 and $400,000)

2.  That the tax credit will only last until April of 2010 (not renewed).

3.  Prices will increase 14.1% in late 2010 or 2011 (at the same percent decline since 2006) 

Why is the gain so much larger by moving-up now?  Any increase in home prices will be a larger dollar amount using the median price percent change AND we're assuming the government tax credit will be phased out at the end of April 2010. 

So now is really a good time to "move-up" to that home you've always wanted! 

In addition, you "save" a net $14,100 by purchasing a more expensive home compared to what it would have cost in 2006 PLUS the government tax credit for a total of $20,600.

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Tags:
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Ambassador
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George Souto
Your Connecticut Mortgage Expert
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut

Ed, great job on this blog and the comparison that you made.  Hopefully Buyers will read this and take your advice.

December 27, 2009 08:23 PM
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Edward McCaffrey

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