There are many homeowners (65+ %) who refinanced in 2021-2022 at historically low rates.
This has been the major cause of the lack of inventory satisfying demand over the last few years up through today. However, I am quite sure from having conversations with many homeowners that they would move, whether upgrading or downsizing, if they could keep their existing low rates. Unfortunately, this is not possible.
Few need to sell and are able to quench the existing buyer’s thirst for homeownership. There just aren’t enough choices.
Many are unwilling to settle because of the high prices they must pay without sufficient choices. Moreover, they may fear purchasing a home that they are not in love with or where the vibes aren’t there.
If you own a home with a large equity position and plan to put a large down payment on your next purchase, leaving your low interest rate shouldn’t be an issue.
The smaller mortgage and potentially lower monthly payment shouldn’t be an issue, even at the current 6.86% rate. Cashing out today could be to your benefit, as the first quarter of 2025 showed a yoy median sale price of $716,000 on Long Island, an increase of 10.1%. The median sale price per square foot is $453, a 10.2% increase.*
Selling in the current market and taking advantage of the potential windfall you will receive actually reduces your cost on paper on your next purchase compared to the current mortgage rates. So, giving up your low interest rates and paying more will not cost you more, as you are making up the difference in the increases in yearly appreciation.
Even though this analysis is a calculated projection on current statistics going forward, you are still taking advantage of and benefiting from the greater appreciation that is currently occurring as opposed to waiting.
This is obviously not a guarantee going forward, but as long as demand is greater than the existing inventory, then I don’t see prices decreasing; rather, I see them increasing.
There are variables, e.g., tariffs, wars, and severe climate change, that no one can predict their impact on appreciation and the price of homes. Moreover, if there is a major impact on the changing value of the dollar, then you will need more money to be able to purchase.
Most importantly, one must keep ahead of whatever inflation is happening by utilizing the smartest investment strategies.
There are three obvious choices for shelter: purchasing, renting, or staying with in-laws. Each person has to decide which makes more sense in the short and long term.
There are gurus who say renting is now cheaper than buying, and others say buying is still more advantageous. This will be predicated on your particular situation and where you want and need to reside.
Job, family, health and financial issues will be determining factors. Comparing the local rental prices with the overall cost of purchasing will provide greater insight as to what direction to consider.
If you leave our area to relocate south and to the Midwest, you will find median rentals much less, e.g., $1331 in Omaha, Nebraska, than a comparable mortgage of $1992 plus insurance.
Detroit, Michigan, where rentals are $1295 and mortgages are $516 .00 plus insurance.
Then there are places such as New York, Boston, Philadelphia, Miami, Tampa, and New Orleans, where mortgages are thousands of dollars greater than rentals when factoring in all the costs of ownership. Planning your move is ultimately the most crucial consideration to make in order to come to a logical and pragmatic decision.
If you decide that renting is preferred, and you are able to invest the entire or partial difference between the costs of ownership and rental costs, you will hopefully keep you ahead of inflation. Hire a Certified Financial Planner (CFP), who will assist and guide you in building your future wealth.
Paying cash for your next purchase and investing what is left in a well-thought-out commodity that will provide you with a solid return will be a more advantageous path to consider pursuing. You will earn money on your investment plus whatever increases in appreciation you gain on your purchase.
The question is, do you want to move or stay put? If you are a baby-boomer, could you renovate as you age in place to accommodate your specific needs and wants?
Or would you rather downsize to a smaller ranch-style home, condo, or coop? There are choices, but they must fit your lifestyle, as this might be your last move. It can be a challenging proposition, and you need to ascertain the reasons to move or stay.
*Redfin/Realtor.Com/Zillow
I hope you are enjoying the July 4th holiday with family and friends and cherish all the freedoms and the independence that so many have sacrificed and fought for since 1776.
Philip A. Raices Broker Consultant of Turn Key Real Estate,
3 Grace Ave Suite 180 in Great Neck, NY 11021-2415
For a free 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns, call
(516) 647-4289 or by email: Phil@TurnKeyRealEstate.Com Search properties at your leisure and convenience at:
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