Friday, August 28, 2015

Should I Stay or Should I Go Now

Ah the 80s... Yes that title invokes the lyrics of a song by The Clash that had absolutely nothing to do with real estate.

"Should I stay or should I go now?
If I go, there will be trouble
And if I stay it will be double
So come on and let me know"

But those words do relate indirectly to the mindset of many homeowners as they ponder the equity they have gained or gained back as the case may be, since the crash of the market in 2009. If they stay, they continue to gain equity and get closer to paying off the house. but the "trouble" is that they may lose out on an opportunity to move up to a more spacious home with very low interest rates that honestly can't last forever.

There are even people nearing retirement that might be thinking about downsizing to the last house they'll ever own. "Should I stay or should I go..." dances in their mind. In the case of downsizing, the low interest rates could be the catalyst for the decision. If in fact it is the long term proposition then the low rates will be far more advantageous than waiting for additional equity to build up. The low rates are very real and right now. Gaining more equity is likely, but still not guaranteed. No one knows the future after all. What we know is what we have at the moment and that is very low interest rates and a rising home market. 

Sometimes my friends, a bird in the hand IS worth two in the bush.These super low interest rates have been hanging around for several years but there is no guarantee they will stick around. In fact many economists feel that it will just take a little nudge in the general economy to get the Feds to back off their aggressive loan guarantees and that could easily return the interest rates to a truly market range likely around 1-2% higher than they are now. 

This current market is healthy but not too robust. Many sellers are throwing homes on the market with a puffed up price and the market isn't biting. Buyers will snatch up well priced homes that are clean and sharp but they won't bid up a dump or nibble on the line of a puff piece. This is a good time to sell, bit also a good time to buy. Buyers that move into a new house today have a reasonable expectation of market appreciation but do not have to worry about bidding up on a house that is overpriced. During the 2005-2007 craze, that is exactly what was happening. People were bidding up overpriced homes and paying way too much for them. This market is much more subtle than that and buyers still can get a fair deal. The only exception is the very entry level portion of the market where inventory is so tight that buyers are feeling the squeeze. All the more reason for sellers in the entry level homes to list now while to price is upwardly pressed but the move up hose is not as tight.Sellers can squeeze a few thousand extra dollars out of the 3 bedroom ranch and move up to the four bedroom deluxe house with a low interest rate that will serve them for years to come.

Should I stay or should I go now...

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