Homeowners Looking to Buy a Nicer Home Should Not Wait According to Analysis from Real Estate Broker Redfin
Waiting for Prices to Increase Before Selling One Home and Buying Another Means Less Money in Homeowners' Pockets
SEATTLE, March 20, 2013 /PRNewswire/ -- Technology-powered real estate broker Redfin (www.redfin.com) today released an analysis showing homeowners why waiting to sell their current home to buy a nicer home could be a financial mistake.
Although waiting a few years to sell a home will likely mean a higher price, the price of the new home will increase as well. Financially, it makes more sense to capture today's prices on the more expensive home. Additionally, interest rates are still very low, but will almost certainly rise over time, which means a higher monthly mortgage payment.
"If you're selling one house just to move up to another, it does you no good to wait for prices to rise -- the price of the move-up home will increase faster than the price of the place you're leaving behind," said Redfin CEO Glenn Kelman. "But waiting until interest rates rise is what can really cost move-up buyers, because most economists believe that rates at some point will go back to historical norms, well above 5%. This means that most move-up buyers are likely to be trading in a low-interest loan on the old place for a higher-interest loan on the new one. In this scenario, the only winner is the lender."
Just in the next 12 months, the Mortgage Bankers Association expects rates to rise to 4.4%. Over a longer period, they are likely to be even higher, considering a 20-year average of about 6.5 percent.
To read the complete Redfin Move-Up Buyer analysis, including a real-life example and a Move-Up Calculator to help homeowners determine how much they can afford, click here: http://blog.redfin.com/blog/2013/03/move-up-analysis.html.
Redfin (www.redfin.com) is a technology-powered real estate broker that represents people buying and selling homes. Founded and run by technologists, Redfin has a team of experienced, full-service real estate agents who are advocates, not sales-people, earning customer-satisfaction bonuses, not commissions. Redfin's online tools feature all the broker-listed homes for sale, as well as for-sale-by-owner properties that don't pay brokers a commission. The company serves 21 U.S. markets and has closed more than $8 billion in home sales. In 2012, Redfin was named one of The DIGITAL 100: World's Most Valuable Private Tech Companies by Business Insider. Follow us on our blog (blog.redfin.com), Twitter (@redfin), and Facebook (facebook.com/redfin).
SOURCE Redfin Corporation
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