Did you save money by not selling your home at the peak?
In Boise, Idaho it seams that people sell a home and traditionally buy one for about 50% more than what they sold for (unless they are retiring or buying/selling investment property).
This may not initially sound logical that by selling your home for less money today, that you can actually net more equity, but check out the math.
Assuming property values have dropped 20% from when you bought your home (or wish you would have sold it in the peak in 2005) and you are going to buy a more expensive home at 150% of the sales price.
In 2005 your home may have been worth $250,000. If you sold it then and traded up 50%, your new home would have costs you $375,000. If that home then dropped 20%, it is now worth $300,000.
However, if you sold today, that $250K home would only be worth $200k. If you traded up the same 50%, the replacement home would still be $300K.
The net effect is you would have potentially lost $50k by not selling your home at the peak, put you will have not lost $75k on the new home, so you would be $25k better off!
If you were a renter for the past five years, you would have paid at least $1,000 a month in rent so $1,000 x 12 = $12,000 a year in rent x 5 years = a $60,000 loss while having acheived no tax benefits or pride of home ownership.
I am tired of people always only looking at the negative side. Lower house prices can in fact help sellers as well as buyers!
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