The More You Buy, The More You Save!

Red Tag Sale, Everything Goes!

OK, that’s really not where I’m going with this.  The last thing I want to do is sound like a bad TV pitchman.  However, there is some real truth in the concept that there might well be value in selling at “loss”, but buying at a discount.

For nearly two years I’ve been trumpeting what a perfect market this is for the “trade up buyer”.  The logic is impeccable, even if it’s an emotionally difficult pill to swallow.  If the market is down 10%, for example, across the board, then simple mathematics says that if you sell your $250,000 house at a 10% discount and buy a $350,000 at that same 10% discount, you’ve made out with $10,000 net gain.  Right?  Not to mention that you’ve traded into a house you prefer, be it larger, nicer, in a better neighborhood, etc.

The math is simple, even if the decision is not.  People are very tied to their homes in a way they’re not tied to anything else they own.  Homes are more than just houses, which are simply sticks and bricks.  No, homes have emotions, memories, etc.  But when a potential buyer/seller can see the value and get beyond the emotion, they soon realize that today is the day of the Trade Up Buyer.

For further reading, click here for a CNN Money article on the same topic.

The Market – August to September

I think most rational people would argue that the market is significantly improved versus last year.  I certainly would.  While there hasn’t yet been a true bounce back, there has been some serious stabilization.  I’ll take a stabilized market over a market (and economy) in free fall any day of the week.  Of course, I’d love to see a robust recovery, but you need to walk before you can run.  Really, you need to crawl before you can walk.

Here, then, are some stats courtesy of RMLS’ August Market Action report:

August 2009 vs August 2008

• Pending sales up 13%
• Closed sales up 4%
• New listings down 14% (excellent news! we need to clear out the inventory.)
• Sales price down 10%

August 2009 vs September 2009

• Closed sales down 7%
• Pending sales down 1%
• Inventory 7.8 months vs 7.3 months (I’d like to see inventory down to about 6 months)

12 Month Sale Price vs Previous 12 Month

• Average price down 11%

I understand that these numbers don’t necessarily make you feel all warm and fuzzy, but in my opinion they point to stabilization and a sooner than expected recovery.

1st Time Buyer Alert: Make Your Move!

Let me put this as simply as possible, time’s running out!  I hate to beat a dead horse, seriously I have ABSOLUTELY NO desire to beat a dead horse.  That sounds terrible to me.  In any case, mortgage rates are at near historic lows, inventory is still up, and the clock is ticking away on the first time buyer tax credit.  Basically, the stars have aligned and it’s simply the perfect time to buy.