There are 4 types of buyers who are the best candidates to profit from today’s market conditions:
Move Up Buyers: Buyers selling smaller homes and moving up to a larger, more expensive property can more than recover any losses they get from selling with the savings they’ll proportionally receive when they buy a more expensive home. A few cautionary words, though….these buyers should make sure they sell their present home before purchasing their “move up property, even if it causes them to go into a rental home temporarily. This allows them to gauge how much money they’ll have to put into another home, rather than guessing. They must take the time during which their present home is on the market to research other neighborhoods and narrow down where they’d like to look once they are free to make an offer. They should choose a neighborhood which is sound, without a lot of run down, depressed properties…and ready to ride the wave up once home prices begin to rebound.
First Time Buyers: Unencumbered of a home to sell, these buyers are prime to take advantage of today’s lower interest rates (though higher than earlier this year, still traditionally low) and low home prices. Any further waiting may see higher prices and higher interest rates which would end up in higher mortgage payment.
Empty Nesters: These baby boomers normally have been in their homes 10+ years so they have some equity to work with when selling. Any price inflation they saw during the mid 2000’s was on paper and they need to forget what they can’t have and deal with the reality of the 3-5% appreciation which is normal in a balanced economy and use that to determine whether or not it is a good time to sell and get into a smaller home, putting equity into that home and creating lower or no mortgage to take them into their retirement years.
Investors: This buyer class has become very active in this market, realizing that purchasing homes at today’s prices and sitting on them until prices start going back up again (renting them out to the huge number of former owners who have now entered the rental market) or buying them at auction, fixing them up and flipping them. Many of these buyers are from outside the US (Canada & Europe, even the Orient & Australia).
There is a lot of reason to be optimistic about this market. It is a good time for many buyers to act on the present inventory of homes available at historic low prices. If you want information on how you can take advantage of this market, contact me at 602-739-0095.