There is a first home, a next home and a forever dream home.
If a high-end home is left empty and available for sale, it provides an opportunity for prospective buyers who are ready to move up into their next home. They then leave a vacant home behind for someone wanting to move up in the market as well.
The challenge is that in today’s market, both sellers and buyers are waiting for interest rates to go down. Sellers might not want to sell their home and pay higher interest rates on their next purchase. As a result, available inventory for prospective buyers is limited.
If one just focuses on the investment side, the key is to get on the equity train and keep your money moving, instead of just waiting at the station. No home is perfect, and for most people who are buying or selling it’s a process of needs, putting the family first, instead of waiting for the perfect deal. While it is possible to sell high and buy low in a normal market, this is not the time.
Some people are waiting for a better credit score, but purchasing a home may be the best way to do just that. Others might choose to wait until they’ve built up enough for a 20% down payment in order to obtain a great loan program. However, with prices rising, they may just need to get into a house, fix it up, and sell it. Testing the waters in this way, they can keep focused on positioning themselves to purchase their next home, until the day that they find their forever dream home.
Surprisingly, people may wait in order to pay down their debts before investing in a home, when building equity in a home might be the answer. People may also wait until they make up their minds about the location of their forever dream home. In my opinion, buyers may need to go through a couple of next homes before finding that dream home.
Homeowners might be retiring with a 42% equity that increased for the last three years. A few months ago, interest rates were down, and high-end home owners were moving in an exodus out of California. The state has one of the highest housing cost rates in the nation. High-end homeowners were replacing their California homes for less expensive markets and lower tax assessments out of the state. Every state’s economy and tax laws differ from one from the other. The exodus slowed down, and home owners are waiting for interest rates to go down again. As a result, home prices are increasing due to a lack of inventory. Sellers are benefiting from multiple offers in this low-inventory seller’s market.
I suggest to do your research and balance the pros and cons. Consider equity as an important part of creating wealth, and that California is still a great place to invest.
The real estate market differs from the economy. The national economy is not always cyclical and the local economy is correlated in an indirect way. The real estate mark cyclical and subject to the overall economy. It is more sensitive to interest rates, and home prices may differ from one street to the next.
Buyers want to be prepared for costs involved in purchasing their next home. The budget in selling a home needs to be planned as well. For instance, during this seller’s market, sellers might not be willing to pay for repairs, or other items which can include any concessions to the buyers.
Buyers may succeed by committing to prioritizing the purchase of a home, instead of paying somebody else’s mortgage. If thinking of investing in another state, think about a future home upgrade investment. Buyers should research the state’s economy and tax laws during the process of finding the next home.
Carlos Ezquerro, Realtor
DRE: #01238493
KW Bay Area Estates
[email protected]
(408) 898-0336.