Fortune Favors The Seller? Yes, But…
As you probably already know, real estate is red hot right now. Even though the prime spring selling time is still weeks away, the National Association of Realtors says list prices nationwide are up 10 percent on average from a year ago.
At the same time, the inventory of properties for sale is at a record low. Add the fact that interest rates are relatively low but poised to move higher, and a lot of people who read the tea leaves are saying that now is an ideal time to sell.
…But what if I want to buy?
Homeownership is a critical building block of household wealth. Owning a home is a key reason why the median net worth of a homeowner is almost $200,000 while the median net worth of a renting household is just over $5,000. (source: Realtor.com’s The Misleading Math Behind the Rent vs. Buy Calculation)
Why is that? Researchers at Harvard put it this way:
While studies simulating the financial returns to owning and renting find that renting is often more likely to be beneficial, in practice renters rarely accumulate any wealth. In no small part this seems traceable to the difficulties households face in trying to save absent either a clear goal or an automatic savings mechanism.”
If you’re looking into your own future and can foresee a time when you’d like to buy, now is a great time to start getting your ducks in a row so you’re ready when the wind shifts. Experts are predicting more of a buyer’s market around this time next year. But what if you want or need to buy this year? It’s still a great idea. Why?
Renting vs. Buying
With prices and rates higher now, less than half of the counties in the country see math that favors buying.
But unlike a rent check, a percentage of every monthly mortgage payment goes toward the owner’s home equity, making it a forced savings plan.
For most of us, buying a home or condo is one of the best ways to gain financially. For the average person, their wealth is concentrated in their home and maybe a few non-depreciating assets.
Trading Up or Down
Perhaps your family has outgrown your current home, you’re looking for a summer home, or you want something smaller and easier to take care of. You may have to buy higher than you did last year, but you’ll also be selling higher. Or you can rent out one of your properties as a vacation or yearly rental. You have options.
If you’re wondering what your home is worth now, or if you’re trying to decide a good time to make a move, give me a call! I can help you figure out what works best for you.