The other day I heard someone describe living in their 3 bedroom home with 2 toddlers as “6 pounds of sugar in a 5 pound bag”. When I asked her if they were considering moving to a larger home, she said they were, but weren’t sure if the timing is right. Many people find themselves in this situation, where buying a new home and selling their current home is on the horizon, but there isn’t an immediate urgency. Here are some reasons why now is an excellent time for people in Maplewood, NJ to let out the seams of their living situation, and move to a larger home.
The Maplewood NJ real estate market is seeing an increase in property prices, and if you are thinking of selling your home this can make it tempting to wait until they rise even higher. However, if you are looking to buy a more expensive home, this can actually be a costly decision. Let’s say your home is worth $500,000 today, but that dream home with an extra bedroom and a Man Cave is going to run you $800,000. Ideally, you would like to sell your home for $520,000, 4% higher than today’s market, and are considering waiting for that to become a reality. As attractive as the extra $20,000 may seem, remember that this increase in price may also affect your dream home. In fact, the price of the $800,000 will have likely also increased by 4%, making the market value $832,000. Although you would be getting $20,000 more for your current house, you would be paying $32,000 more to upsize. That’s a $12,000 difference that could have gone towards the 60 inch plasma and ping pong table you’ll need for that Man Cave!
The current housing inventory in Maplewood & surrounding areas is low! According to Federal Reserve Economists William Hedberg and John Krainer, inventories are not rising in accordance with rising home prices.* The effect this has had on our market is a natural economic occurrence when demand outweighs supply: with less for sale people start the bidding! In fact, of the houses that have sold in the past year, 40% have sold at or above asking price! That could mean extra cash lining your pockets, or the ability to choose a buyer with more favorable contract terms.
Experts from Forbes and the New York Times predict that mortgage rates, while still staying at an all time low, will increase in 2014. The director of mortgages at Zillow.com, Erin Lantz, predicts that a 30-year fixed rate mortgage interest rate will hit 5% by the end of this year! Since most people do need a mortgage to get into that dream home with more space, it makes good financial sense to upgrade your home before the numbers spike. (Stay tuned for a post about interest rates and how they affect your buying power!)
So, if you think you need to start making that moving house checklist, know that moving sooner rather than later can save you money! Of course, everyone’s situation and needs are different, but I’ve had many people tell me that, after having that first baby in their starter home, three’s company… but it’s also a crowd.