Should I Buy or Sell My House?

INTRODUCTION

Real estate has always been a part of the great American dream. We have all been told that with some hard work and planning, owning a home is an attainable goal for anyone. The real estate market, like anything, is cyclical and experiences ups and downs. The wonderful part about purchasing real estate – and most particularly your own home – is that real estate has been one of the greatest personal wealth builders of all time. And if you are buying your own home our government helps you foot the bill by allowing you to deduct your mortgage interest from your income. Real estate is always the best investment you can make in the long run.

IS NOW THE TIME TO BUY?

Ask friends, family members or colleagues if this is the time to buy real estate and you will probably get conflicting answers. However, ask anyone who bought their house, land or investment property eight or more years ago and the answer is always a resounding YES. Due to cycles in the market those planning to stay in a particular home or location for less than five years needs to seriously consider the overall market conditions. Please keep in mind that when everyone tells you not to invest that is the exact time to invest. The market works in extremes. Part of what created the housing bubble on the east and west coasts that the newscasters are so fond of telling us about was the “truth” that the market was going up 20% per year and there were no bad investments. The real truth is that the market has averaged over a 6% return per year over the past 70 years, including the bad years of the Great Depression. The market will continue to see a 6% or so rise per year on an annualized basis over the long term. If the market is exceeding this rate you should be careful about purchasing. If the market is below this rate then now is the time to buy because this is a buyer’s market!

Another important factor in your consideration about the time to buy should be interest rates. Keep in mind that a 1% decline in price is more than offset by a 0.25% rise in interest rates. Kentucky averaged a 1% decline last year in average selling price and was flat on the median sales price. Long term prospects from the Federal Reserve sound as if interest rates will rise. Now is certainly the time to buy in order to get the lowest interest rate and therefore the most amount of house for the money.

IS NOW THE TIME TO SELL?

The real question is why are you selling? If you are moving to another city, you just became empty nesters or you are feeling squeezed by your current mortgage payment, of course now is the time to sell. You may be selling for slightly less than you could have gotten a year ago, but likewise you will be purchasing for slightly less than you would have a year ago. If you’ve outgrown your home the answer is probably still yes. There is a consumption factor question to ask yourself: do you have the spare income to justify the higher mortgage payment and/or initial capital outlay for the bigger house? The only other selling category that may want to hold on to their property is investors. Locally our market has not gone down and our long term prospects are strong. For an investor why would you want to sell? Where can you buy that has better long term growth prospects with less downside risk?

SO WHAT DO I DO?

Whether buying or selling in the Bluegrass, now is a great time to be in the market. Call a Turf Town agent today for a consultation.

As a buyer, interest rates are still low and inventory of homes is high. There are some great opportunities for the buyers who are ready. For today’s buyers, the opportunity to buy more home for the dollar is a compelling attraction. Stricter lending standards overall are a good thing because they help buyers make certain they can really afford the home they are buying. There are still many ways to finance and a Turf Town Realtor can help buyers sort through these options and find the best solutions. Click here for our financing information.

For sellers, the FHA has increased purchase margins, allowing for greater numbers of potential purchasers. Other lenders are monitoring their mortgages more carefully to protect all parties in the transaction.

As a seller, being realistic about the price of your home is of the utmost importance. A Turf Town agent can assist in the home selling process, from pricing to staging to paperwork. Realtors have access to the most up-to-date information and can help with the preparation of your home. Base your list price on good comparable sales of closed homes in your neighborhood. There are serious buyers out there – so price your home right, do some spring cleaning and de-clutter, and do not forget to spruce up the yard!

For investors, the foreclosure rates are creating a new market of rental properties. This is a window of opportunity to initiate an investment portfolio or add to an existing one.

SUMMARY

Current housing market conditions have left many wondering if now is the time to make a move or just stay on the sidelines. Contact an experienced Turf Town agent who will work for you to make your transition as smooth as possible.

Since its founding in 1978, Turf Town Properties has consistently sold fine properties in a broad price range with an emphasis on quality service. We are an independently owned and managed real estate leader and an integral part of commerce in Central Kentucky. Contact us if we can help you or someone you know with their next real estate transaction.