Sally Farrell
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What if You're Not a First Time Home Buyer?
Posted on May 19, 2009
You've heard a lot of bad news, you've heard a lot of "It's A Great Time to Buy" from lenders and real estate agents and that lady on TV from the National Association of Realtors. But is it? What if you're not an anointed "FIRST TIME HOME BUYER" who is blessed with the $8,000 tax credit? What if your a regular schmo, with a house to sell before you can buy a new one, and what if your house is now worth less than it was last year?. You missed the boat and now you might have to sell the boat to keep your boat afloat, right?
Let's just see about that. What if you live in a real estate market like the one I live in? Depending on who you ask and the exact data that is crunched, the median home prices here in Whatcom County have declined over the past year. And depending on where you live in this county of diverse landscapes, climates and cultures, that decline could range from a mere 3% to over 30%. But for ease of math, lets say it's 10%. If you sell your home this year you'll probably get 10% less than you could have gotten for it last year. Oh, that's not good, you feel ripped off could just kick yourself for not doing this sooner. Why didn't you sell last year or the year before when the market was hot?
The fact is, if you've owned your home for several years, the value of your home is really sort of imaginary until a buyer plops down some money for it. And besides, life doesn't work that way. People need to sell their homes for many reasons that have nothing to do with "the market," like growing families or growing stacks of stuff or to move closer to their jobs. Or maybe want something nicer, because you've worked hard and you deserve it!
So, you put your home that was worth $300,000 last year, up for sale. Chances are that now it's going to fetch $270,000. You feel you've lost that imaginary $30,000, and that hurts. I feel for you. But lets say you want to buy a bigger, nicer house in your ideal location. That house that would have been valued at $400,000 last year, most likely dropped $40,000. Now I'm happy for you!
The fact is, if you've owned your home for several years, the value of your home is really sort of imaginary until a buyer plops down some money for it. And besides, life doesn't work that way. People need to sell their homes for many reasons that have nothing to do with "the market," like growing families or growing stacks of stuff or to move closer to their jobs. Or maybe want something nicer, because you've worked hard and you deserve it!
So, you put your home that was worth $300,000 last year, up for sale. Chances are that now it's going to fetch $270,000. You feel you've lost that imaginary $30,000, and that hurts. I feel for you. But lets say you want to buy a bigger, nicer house in your ideal location. That house that would have been valued at $400,000 last year, most likely dropped $40,000. Now I'm happy for you!
Do you see where I'm going with this? You "lost" $30,000 on your sale But you pay $40,000 less for the new house, giving you a net gain of $10,000. Plus if you did all of this last year, you would have likely locked in at 5.5% and felt like a real winner. But this Spring/Summer, it may be possible to lock in under 5%. Don't make me do the math, trust me - under 5% is good.
So this is not earth shaking news, but I think it's worth repeating worth thinking about and worth sharing. So you're not a first time home buyer? This market still has some very nice perks to offer.
Have a great Memorial Day Weekend. Call me if you have any questions!
So this is not earth shaking news, but I think it's worth repeating worth thinking about and worth sharing. So you're not a first time home buyer? This market still has some very nice perks to offer.
Have a great Memorial Day Weekend. Call me if you have any questions!
Comments Posted on "What if You're Not a First Time Home Buyer?"
1.
Salty Dog McNamaraPosted May 21, 2009 4:20 PM
Sally, Once again, you've encapsulated your thoughts in bold-face print, the only real way to express your voice in type. The math is correct, the excalmation points used sparingly, and yet precoscious, with just a hint of lavend...wait, that's my wine label.
Great blog, I'll keep reading, until the bailiff comes to get me for my "date"
2.
AbbyPosted May 21, 2009 3:12 PM
I am sending this to my husband! Great information... informative and easy to understand. I like it!
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