As far as the U.S. real estate market goes, the opening line from Charles Dickens' masterpiece "A Tale of Two Cities" pretty much sums things up: "It was the best of times. It was the worst of times." However, if you've considered downsizing and were waiting for the right time to make the move, this could be it. Here are 4 reasons why downsizing now might just make sense.
- Mortgages are at historical lows. In some areas of the country, interest rates on mortgages are below four percent. That's historic—especially if you purchased your first home 20 or 30 years ago, when getting a mortgage rate with interest in the low double digits seemed like a good deal. Even with these great rates, people still aren't borrowing money, meaning banks could be lining up to work with you. So as long as you have great credit, getting a mortgage to buy a new house shouldn't be too hard.
- Even with depressed housing prices, you can still turn a profit on your house. Let's assume that you bought your house a decade or two ago, and over time you've built up equity in your house. If you've never drawn on your equity—or you have but have paid it back—chances are that your house is worth today way more than what you paid for it back then. So when your house sells, that's cash in your pocket.
- You can price your house to sell. Probably the biggest reason that homes aren't selling is that the homeowners have priced them too high. Remember: what your house is worth is based on what buyers are willing to pay, not what you think your house should sell for. So take a good look at what other homes in your neighborhood are listed at, then look at the ones that sold, and make sure your price comes in below those that are still on the market but right in line with those that successfully sold.
- With so many homes for sale, it's a buyer's market. It may be strange to switch hats from home seller to home buyer, but all the tactics that people are trying to use to buy your house at the lowest price possible, you should be using when trying to buy your new house. And when you find that perfect house that you can downsize to, make sure that you do the same homework that you did to price your house competitively so that you can make an offer that's reasonable, competitive, and that the sellers will accept.
If you have any tried-and-true tips for selling or buying a home in today's market, please post a comment to share your ideas.
