Is the future of the Move Up Buyer Dead??

Twice this week past clients express their frustration wondering if they will ever be able to "move up" to a bigger house in a better area. Both clients are in their late 20s/early 30s and want to emulate the way their parents moved up the property ladder during the 1970s through mid-2000. These clients bought their current homes a little after the start of the skyrocketing climb about 5 to 6 years ago and now have growing families...and growing expectations that now is the time for the next step in their lives to a bigger, better home.

I think the past decade warped our sense of what moving up entails.

Whether it is right or wrong, my parents pinched pennies to get their first little 2-bedroom, 1-bath house--the worst house in a good neighborhood. They had home-improvement projects every weekend for years turning the fixer into a charming bungalow. My sister and I shared a room and until baby 3 came along and then it was time to move up. My dad's salary increased so they were able to spend more for a bigger house. These bigger, better moves occurred over a period of 5-10 years in between each of move and significant increases in my dad's salary.

Fast forward to 2001-2008...people are selling homes every two years (or less!), raking in the equity for the next down payment and moving up fast. Not to mention how easy it was to get into a house to begin with. Add HGTV home shows and everything seemed so normal. Of course, we all thought, this is how it works.

Fast forward to today...fortunately these clients had enough down payment that they are not upside down so they can sell but there's no profit and they can't "break even" if they consider the cost to sell. The job market has done little to increase salaries over the past six years so how do these young families move up to the next step??

I think it's really hard to move up in terms of BOTH "bigger" and "better" without a significantly higher payment. BUT because of low interest rates people can take a slightly upward more lateral move EITHER bigger OR better. Now is the time to take advantage of the low interest rates because if they go up a percent--or two--homeowners will be looking at purely lateral moves or just staying in their current home upgrading through expanding the square footage or remodeling.