By Michelle Flaherty
Does anyone else miss working with people who want to buy AND sell?
In a market marked by bank sales, short sales, and first-time home buyers, it’s easy to lose sight of what lies beyond this year’s surplus of single-sided clients.
The year 2009 was without a doubt the year of the first-time home buyer. Already, an estimated 400,000 fence-sitters have been drawn into the market by low rates, the $8,000 tax credit, and lots of affordable options. We’re still in the throes of this massive movement; but I’ve been wondering lately: When the able first-timers of 2009 have settled into their nests, what will be the next big thing?
My prediction is that 2010 will be the year of the move-up seller. I truly think that those first-time home buyers of 2005-2007, who may not have any market-based home equity, will still make moves in 2010. Why? Two and a half big reasons:
1. Moving up in a down market is a net gain. Say prices are down 10 percent in your area since you bought your first home for $200,000. Your $20,000 hit is dwarfed by the $40,000 discount on the home formerly listed at $400,000 that you can now pick up for $360,000. Your net gain: $20,000 in additional equity when values reach the level of when you first bought, plus double the equity as prices rise higher.
2. Life changes. There are some great non-financial reasons to move up in a down market, and they’re often seen riding in strollers and sporting pink and powder blue booties. Families and their housing needs grow in tandem, regardless of the latest market stats.
2.5. IF the first-time home buyer tax credit is expanded to all home buyers, the cash incentive will bring the buyers of a few years ago back into the market by offsetting the sting of their home’s adjusted or stagnant value. An added benefit: more high-quality, non-distressed homes being sold – exactly what we need for values to solidly turn around.
Michelle Flaherty is an associate broker with Prudential Northeast Properties, serving Greater Portland, Maine. Visit her Web site at www.michelleflaherty.com.
Comments 2
Great blog. I’m with you on this one!
Michelle,
Great post. I think there is better ways to spend our tax dollars as the current incentive would have probably done better if the funds were used to cover closing costs and/or down payments. I do agree that 2010 will be the year of the move up buyer as long as the rates stay down. If the financial market loosens a little, I think it will also be a great year for the investment buyer. Wish I could look into a glass ball to see the trends for the next few months, but as of late things have really picked up an encouraging sign. Good information. Have a great week in the business.