With Home Prices Down, Time To Trade Houses?
With home prices down to some extent most everywhere, some folks wonder whether it might be a good time to "upgrade" or change their own homes. That was a question Urban Rehabber member Gail D. asked earlier this week.
I have been thinking this over and want to get your thoughts. If I sell my primary home during this downturn with lower value (equity) and I purchase another primary home with a lower value due to the market, would this be a wise decision? Would this be a "wash" or would I do better selling when the market goes back up?
Your thoughts please?
What would you say to Gail? I did have a few thoughts...
In pure economic terms, it'd be a "wash". So, if you're ready to improve your housing in terms of comfort or location, do it. You also have an
excellent financing option available in the FHA 203K (great terms, great rate). And, as a Bonus, maybe you could keep your present home as a rental "investment property"... [ a question for your FHA advisor ]
The Worst Is Over
There's no question in my mind the worst is over. No we haven't seen the last of REO's. As I have written elsewhere, foreclosing banks are building up huge inventories of homes that will be coming on the market in the monthsahead. But the trauma of this "market adjustment" has passed.
Like Gail, more and more people - and investors as well - have adjusted their expectations for the near term. Life does go on. For those of us with a financial stake in housing, we've taken our hit and we're ready to move on.
Good Business Sense
And, for now, we're more than willing to trade our expectations of appreciation in the future for exceptional cash flows today. With vacancies at historic lows and demand for affordable rental housing pushing up rents, we're seeing "spendable income" like we haven't seen in years. It just makes good business sense to be a landlord.
At the end of the day, people will always need a place to live. Given our considerable skills and resources as Investors and Rehabbers, particularly in dealing with distressed real estate and foreclosures, we are uniquely qualified to help fill that need.