|
 When they found a nearby condo they loved, they pounced. That set
off a chain reaction allowing Peter and Leah Baiocco, a couple in
their 30s, the ability to trade up.
The Baioccos lived a few miles away, contemplating a future move to
a bigger home once kids came along. With favorable economic
conditions, they jumped at the chance to buy the Valerios' $2.7
million house last April. After renting it out for nearly a year,
the Baioccos' starter house in Fairfield, Connecticut is on the
market for $739,000.
This seemingly simple sequence of events is still relatively rare in
the U.S. housing recovery. Despite an improving economy and
rock-bottom rates, inventory of available homes is inconsistent.
Anything more than a trickle of listings sends prices down, causing
sellers to pull their homes off the market.
Then prices go up again because competition gets fierce, and sellers
re-emerge. As a result, a bustle of trade-up activity is expected
for this spring's selling season, before conditions change again.
"I think a lot of people have made a lot of money in the stock
market the last few years. People who want to enjoy a luxury home,
now is the time. Everyone has more cash available to them," says Ken
Barber, a real estate agent in Wellesley, Massachusetts.
Other positive signs: new single-family housing starts are at a high
since 2008, according to the Commerce Department's latest report.
Also, fewer homeowners are renting out their homes to delay selling
them, down to 35 percent in 2014 from 39 percent in 2013, according
to Redfin, a real-estate brokerage.
And more consumers have positive equity. Last spring, 19 percent of
homeowners in Redfin markets (such as Atlanta and Philadelphia) had
low or negative equity. That was down to 11 percent in November.
Nela Richardson, Redfin's chief economist, expects it to hit 8
percent by March 2015.
Even better for buyers, interest rates are near-historic lows below
4 percent. "The question of staying versus leaving is shifting. For
people who were afraid to leave their mortgage because they thought
it was the best they're ever going to get, now there is another good
mortgage around the corner," Richardson says.
Those trading up in 2015 should hit a sweet spot of selling near the
top but not buying at the top, says Margaret Wilcox, an agent from
agent in Glastonbury, Connecticut, for William Raveis.
[to top of second column] |
Wilcox says a client couple recently traded up from a $500,000 house
to a $1 million home. They did not get quite the price they wanted
for the sale of their old home, but they got a discount of nearly
$300,000 on their new purchase, Wilcox says.
There are a few red flags for buyers and sellers. Seller confidence
is still low, with just 35 percent of sellers thinking now was a
good time to sell, versus 48 percent the previous year, according to
Redfin.
Keith Jurow, a housing market analyst who writes the Capital
Preservation Real Estate Report, is something of a doomsayer and
thinks talk of a housing recovery "is phony and only an illusion,"
he says.
Given the number of mortgages originated between 2004 and 2010, he
feels that too many of the people who would like to trade up still
have little or no equity in their homes and are not prepared to do a
sale below their purchase price.
"Unless you bring more cash to the table, you can't trade up," Jurow
says.
Also, foreboding makes some people want to act now. They do not want
to be the family that missed their chance, adds Bob Walters, chief
economist for Quicken Loans. "People won't delay forever," he says.
The Valerios and the Baioccos have only happy thoughts about their
real estate choices. They love their new homes.
"In our mind, it's the house we're going to be in forever," says
Peter Baiocco.
(Editing by Lisa Shumaker)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
