I had an interesting question posed to me this week – why should I sell, only to then pay more to get back into the market?
Well, its not a silly question, but nor does it have a simple answer.
Rather than moving on a secondary home or investment property, I can only assume that the gentleman in this case was referring to an upgrade – selling your existing home to then purchase the next, larger or more premium property. The market rises as a whole so that next property costs more comparatively. And indeed in that scenario many people will stay put, particularly if they have no need to change their address.
That does however, leave quite a number of scenarios where making a move can be worthwhile.
The downsizer is the easiest case to examine – an older couple perhaps with an empty nest (and too many bedrooms) that sells up to purchase a smaller home or apartment with lower maintenance requirements and a “just right” fit. They’re generally spending less than what they have gotten for their older, larger home, giving them both the new address and extra money in their pockets – particularly if they have made the move to apartment living where prices have yet to accelerate to the same degree as houses (though this could be set to change).
A lateral move can also work well – i.e. a change of area but not price range. This could be due to kids leaving home and a school catchment no longer being critical. Alternatively you might find that you swap the 4 bedroom house for a 3 bedroom that comes with the pool and shed you didn’t have room for before.
In contrast to the empty nesters, there might be new additions coming to the family, or small ones that are no longer so small and in greater need of their own space. A change in circumstances (or just plain good saving habits) might also mean an upward move is on the cards - maybe the pool and shed are finally on their way? An increased price tag for your next home however, shouldn’t mean an upgrade has to be taken off the table, particularly with low interest rates potentially making repayments on the next home cheaper than the last as rates have changed dramatically in 5 years.
Whatever your circumstances and whatever you choose though, be quick about it – or risk missing out.