Even a current homeowner can find some good news in dropping real estate prices.
In spite of what you hear in the media, the downturn in real estate is not all bad news.There are actually some benefits.With an oversupply of properties, buyers are much more likely to find the home they are looking for with a price much less than two years ago.Another benefit is the lower property tax that will be assessed to the property.Since the property tax base is about 1%, a price decrease of $100,000.00 is a yearly savings of $1,000.00
The largest savings come for the move-up buyers.The average move-up buyer spends 50% more for the replacement house than what the first house sells for.Since a declining market usually effects most price ranges about the same, the move up buyer saves many thousands of dollars over what would have been spent in an appreciating market.
Example:
If the first house sold for $500,000.00 and the replacement house was $750,000.00 and both had depreciated 10% from the previous year, the buyer saved $28,340.
$833,400-10% ($83,340) = $750000.00
$555,000-10% ($55,000)= $500,000.00
$28,340 Total Savings!
So if your equity is slipping away as prices continue to decline and you want to move up before you run out of money for a down payment, give me a call.I’ll get you moving.
