Today I wanted to address why the next few months may be the best in history to sell a house and buy as a move-up buyer.
What is a move-up buyer? Someone who owns a home at an entry level price range. Right now the average price range in Utah County is $360,000, and in Salt Lake County it is $380,000. So if you own a home somewhere in the $380-320 range, this post is for you. The reason is that we don’t know where home values will go this summer, they could go up or down. If they go up, you are just going to spend more money buying that next property. If they go down, you’re going to get a better deal selling your house now where we still have a good supply of buyers, and then potentially pick up a house at a discount if things go down. Interest rates are fantastic, so even if prices don’t go down, you’re buying the house at a better price right now, than it would be in the summer if values go up.
I ran some numbers on the worst case scenario, and this is all just predicting off of nothing, but if history repeats itself here is what the numbers look like:
Say you own a house that is worth $330,000 right now, and you sell it at a loss of 10%, which is a huge loss. The last recession was 25%, and that was a crazy recession, so I don’t anticipate losses being that great, but 10% is a good simple number. That would potentially be $33,000 dollars off your house value, which would bring it down to $297,000. In the end that is a large painful loss.
If you are buying a $500,000, you would be getting it for $450,000 because it also lost 10% in value. This shows that buyers that normally could’t afford that price can start looking at more valuable homes because of the percentage of loss.
So why would a seller continue to sell their home if they are at risk to lose that much? The truth is that life still happens to people, and they still have to buy, sell, and move. There are also factors such as death, divorce, job loss, and many others that require a constant need to move.
A crazy number that I ran was about the luxury housing market in Utah County. There are currently 112 homes priced at $900,000 or above, and only 6 have sold in the last 30 days. This gives us around a 19 month supply of inventory, meaning if nothing else was listed in that market it would take 19 months to sell everything. Luxury is typically a longer market, but that is insanely long. For the million and above market it is even worse, because of those 6 sales, only 3 of them were above one million. So for that market there is around a 32 month supply of inventory. If you are buying in the million plus market it is a fantastic time to buy, because no one else is shopping in that market. The downfall is that jumbo loans have slightly gone away. They still exist, but not as many people are doing jumbo loans. In Utah County, out jumbo loan limit is $510,000, and in Salt Lake it is $600,000. Anything above that you either need to have a larger down payment or you’ll be paying jumbo rates.
It is a great time to be in real estate and an great time to be a move-up buyer. If you are thinking about doing it I would in the next few months, so we know we can sell your house and secure you a good, solid buyer.
If you are looking to buy, reach out to me here and have a great day.