West Essex Neighborhoods and Homes: Move-Ups Are Coming Back

From the
Coldwell Banker Residential Brokerage
Market Watch Newsletter...

Two months ago, 60% of homebuyers were first-time buyers. Last month, 60% were repeat buyers showing that more homeowners are moving up. As the first-time buyers with the $8,000 tax credit incentive bought the starter homes, more sellers could move up to a new, larger home. Today's environment with lower prices is the perfect model for "moving up".

Selling High and Buying Higher

The fast moving days of 2004-2005 actually were not the best time for buyers. There was a sharp increase in home prices and although there was low inventory giving rise to those increases, a significant number of homes were sold. Sellers were selling high and buying higher as prices spiked up.

We know that this is a great market for first time home buyers, but...

Is this a move-up market?

You bet it is and here's why. If a homeowner wants to move from a townhouse or condo to a larger home, many are concerned their current home is not at the value it was a few years ago. Because all properties in the area have depreciated by the same percentage, there is a monetary advantage in moving up now. Assume a home was valued at $250,000 and then depreciated by 20%, leaving a current value of $200,000. A previously valued $500,000 home at 20% less is now $400,000. A homeowner would sell their home for $50,000 less than its high value, but could buy the larger home for $100,000 less, giving that homeowner a $50,000 positive increase.

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