Blog :: 01-2012

Now is a Fantastic Time To Move Up

Even though the economy is tough these days, there is opportunity for some of us! If you've kept your job at roughly the same pay and hours, and there's no reason to expect any changes , you may be able to get a great deal on a more substantial home in the White Mountains of NH or Western Maine. If you own a starter home, or a home in the best selling range of our area, you're in an excellent position to "move up". Many homes in the mid range market are just sitting, waiting for a buyer. Opportunity knocks! First, determine how much more you may be able to afford. Interest rates are at historic lows. If you haven't refinanced in several years, you may be able to get more home for the same money you're presently paying now. Interest rates are currently at about 4%. If your current loan is at 6% or even more, that could make a big difference in your current borrowing power . A $200,000, 30-year loan costs $1,199/month at 6 percent interest. At 4 percent, that same loan only costs $954. That's nearly $250 less per month. You could actually buy a home for $50,000 more with a slightly lower monthly payment than you currently have now . Of course, if you don't want to move, you might want to consider a refinance of your current home. Another housing expense you want to take into account are your real estate taxes on your current home . From town to town in our valley real estate taxes can vary to a considerable degree. Taxes in the Mount Washington Valley and Western Maine can range from $9.15 per 1000 dollars evaluation to as much as $ 21.78 dollars per thousand . On a $200,000 home, taxes alone could range from $1,830/year to $4,500 /year. If you live in a town with the highest tax rate, you're paying $2,526 more per year, or over $200/month more than the town with the lowest rate. That can give you a lot more borrowing power without increasing your monthly housing expenses. Compare the homes first, then compare the taxes. Moving up doesn't necessarily mean buying a larger home. You could buy a home in a more convenient location for your family needs, or have a mountain view, more privacy, better amenities, or a higher quality home. In our valley mid-range homes have been discounted substantially more than starter homes and there is a better selection too. In a stronger market, mid-range homes sell for substantially more. Moving to a home in the $225,000 and up range in this area generally means a substantial discount in value when compared to starter homes. To take advantage of the opportunities in a down market, it's time to look at your loan, your taxes, and properties that are in slower moving price ranges 225K to 400K . It's the same opportunity you've always heard: "Buy when everyone's selling. Sell when everyone's buying." As you can see, our present real estate market may provide you an opportunity to improve your long term equity position and have a nicer home to enjoy too, especially if you have an older loan and live in a higher tax-rate area. Even if you don't, there are plenty of deals out there. When buying a home, you should be aware of some of the changing factors that add value to a home. Energy efficiency is becoming very important and quality has become more important than size. These homes can save you money in heating, cooling and maintenance costs, as well as improving the comfort of your new home. Is it time to start looking at your options?

Median Sales Price Does Not Equal Local Home Values

We're often led to believe that the median sales price in any given area is a reflection of home values. Most economic reports and local housing indicators use this number to determine market conditions. The median home sale price is actually the point where half of all homes sold above a certain price, and half sold below. It is reflective of sales trends, not home values. When the median homes price is low for any given area, there are many potential causes that are unrelated to true home values. For instance, during a slow market, or season, most sales may occur in the entry level range of homes. Just because a large number of fixer uppers, foreclosures and mobile homes have sold during a given period does not mean that the average family home has lost substantial value. It means that most buyers are looking for low end properties. Again, the median sales price reflects a trend, not the value of any particular home. Similarly, when a high number of upper end home sales occur in a particular area, that does not mean that prices have gone through the roof. It simply means that more people have bought higher end homes. Do not, however, ignore median home price trends. If most sales are on the lower end of the spectrum, that generally means there's less competition for mid-range and luxury homes. For example, if there are 20 homes on the market in the $300,000 price range, and 2 buyers per month purchase a home in this price range, then it will take an average of 10 months to find a buyer, given that all of these homes are of the same general quality. Those who need to sell will reduce the prices on their homes, or improve the value. The best valued homes will sell first. The least valued homes may not sell at all. Sellers must compete for buyers. In a recovering market, where most entry level homes have already sold, there's generally a push to move upward, into a more substantial home. Many families have either outgrown their home, or have made improvements over time and would like a better home. This increases the demand for mid-range and luxury homes, and is an indicator of the market heating up. When selling a mid-range or luxury home, after this point and before the peak of the market is the best time to sell for those who plan to downsize, or rent. In contrast, if your plan is to move up to a larger home in the same area, a slow market may offer better opportunities as most buyers are competing for entry-level homes. You'll have greater bargaining power if you're moving into higher price range. Another commonly used measurement of market trends is the Average Sales Price. This is where the total dollar amount of sales is divided by the number of homes sold. This can be skewed as well. If, for instance, the multi-million dollar mansion in town that sells every 20 years or so is sold during a given period, the average home sale price will be very high. Several factors can have a very distinct effect on the value of homes in a given market. Employment and incomes have a direct influence on home values. High employment increases value. High income levels increase values even more. As you've always heard, location has a direct influence on value. Homes by the ocean, lakes, mountains, and many urban developments are often in greater demand and command more value. Where location is the driving influence, everything counts: excellent schools, low crime, desirable locations and neighborhoods. To get a realistic idea of the value of your home, a real estate agent will conduct a Comparative Market Analysis (CMA). This will compare your property to homes that have already sold. This is important because you may need this information if an appraiser comes up with a lower figure for the value of your home. In a CMA, your property will also be compared to similar properties that are currently on the market. This will give you substantial insight into the properties your home must compete with. If you're looking to get a true reflection of your property's market value, contact a Realtor. Realtors rarely charge for a Comparative Market Analysis when you're looking to put your property on the market. If the price meets your needs, and fits into your plans, your agent can usually get your property on the market very quickly.