Steven Keefe, Broker/Owner
Coldwell Banker Sky Ridge Realty 
www.mountainmoves.com
steve@mountainupdate.com
909.336.2131
Who would have 'Thunk" it, but people are actually making money selling in a down market and buying a larger home....I am not an investment guy, I am a real estate broker who has watched time and time again his customers make a ton of money and created significant wealth utilizing real estate as one of the vehicles.
The opportunity to create wealth using real estate is there for everyone, not just first time buyers. What we see often is that family's that already own a home are looking at the fact that they can not get the same price for their house today that they could have a few years ago. Because values are down, family's sometimes believe that they can't or shouldn't move up to the home of their dreams. Actually the opposite is true. Right now is the best chance a family has to buy up into the home that makes sense to them right now.
Homebuyers must realize that whatever percentage of value they lost was also probably lost on their dream home. Look at this table below to better understand the dynamics. The prices may be different, but consider the concept, because it rings true in our current market.
| Here is how somebody realized a $46,000 gain... | ||
| Current Home | Move-Up Home | |
| 2006 Current Price | $200,000 | $400,000 |
| Current Price (-20%) | $160,000 | $320,000 |
| Savings for Purchaser | $40,000 | $80,000 |
| Net Gain for Move-Up Buyer | $40,000 | |
| Tax Credit (If Eligible) | $6,500 | |
| Total Gain | $46,500 | |
| Plus Savings on current interest Rate | ||
The family actually saves $46,500 making the move today despite the loss they may feel they have taken on their existing home. In addition with current rates at all time lows, the new mortgage will likely save them additional dollars.
But that is not all, if we project into the future when prices will again rise and homeowners will receive the benefits of appreciation, we can see an additional inpact on a family's net worth. The following table gives you this scenario.
| This family just gained $78,500... | ||
| Current Home | Move-Up Home | |
| Current Price | $160,000 | $320,000 |
| Future Price (+20%) | $192,000 | $384,000 |
| Future Gain for Owner | $32,000 | $64,000 |
| Future Difference for Move-Up Buyer | $32,000 | |
| Current Gain for Move-Up Buyer | $46,500 | |
| Total Gain | $78,500 | |
| Plus Savings on current interest Rate | ||
With the additional equity increase the larger home provides, the family net worth total increases by over $78,000. We can plug in the numbers that apply to your house and your dream home and see what the bottom line return you will for you.
Wealth in this country is built by purchasing real estate at the right time at the right price for the right terms. Go out and find your family's dream house and buy it! 10 years from now, you will be glad you did.
Great Article. Your charts make it easy for everyone to understand why now is a great time to make the move up.
Posted by: Steve Hirschler | December 12, 2009 at 03:21 PM