Critical Items, Move Up Buyers, Delaware County, Nether Prov Twp

Move Up Buy in Your Immediate Future?

So you are thinking about making that move up to a bigger house this year. What are the critical items you must understand before making the move?

Price Trends, Where You Live, Where You Want to Live

If you are thinking of making a move up to a larger house, you will want to time it so that the cost of the move up is the smallest possible. For example, lets just say that the value of your house is $300,000 and the expected value of the house you want to buy is $500,000. If prices are going down by 5% a year, the value of your house is decreasing by $15,000 a year. The value of the house you want to buy is going down by $25,000 a year. That means if you wait a year, the transaction will cost $10,000 less than buying now. Under this scenario, you would want to wait until prices stabilize.

However, if prices are going up by 5% a year, the value of your house is increasing by $15,000 a year; the value of the house you want to buy is going up by $25,000 a year. Every year you wait will make your purchase $10,000 more expensive. Under this scenario, you would want to make your move as soon as possible.

In general, home prices in our area have been stable for the last 2-3 years after several years of general decline. Here are the specifics for Nether Providence Township since 2006.       

We had a generally steady decline since 2006 with a strong rebound in 2013. That may turn out to be a temporary blip in the data, but it does indicate that we probably hit bottom and are on the way back up.

What Does the Future Hold For Prices?

Predictions are always dicey but there is a strong relationship between home inventory levels and price changes. Please refer to the below chart:

Months of inventory is the best predictor of home prices. For several years, we had inventories well into the double digits. For example, two years ago we had 10 months of inventory in Delaware County; last year it was down to 7.5 months; now we are at 6.2 months and declining. That signals that prices are probably going up. Naturally there are some variations by neighborhood but overall the trends are the same.

In Nether Providence, we had only 4.5 months of inventory at the end of February. That says we should be in for a strong sellers' market with increasing prices.

What About Interest Rates?

Most people are not cash buyers so they will have to take out a mortgage to buy that move up house. Interest rates are rising as shown by the below chart:

Interest rates were at 40 year lows about a year ago and are up about 3/4 of a point at present. They are forecast to rise more. Please see below:

A reasonable consensus is that interest rates will be at 5.3% a year from now; that is about one point higher than today. If you plan to finance $200,000 for your move up house, that would cost you $990 a month at todays rate. At 5.3%, it would cost you $1,111 a month. That is a difference of $121 a month.

What is the Bottom Line?

RIGHT NOW IS THE BEST HOME BUYING OPPORTUNITY YOU WILL HAVE FOR THE REST OF  YOUR  HOME BUYING LIFETIME. If you want to be living in your move up house a year from now instead of kicking yourself for not making the move, now is the time to get the process in gear and save yourselves lots of money. Click here to get started.