I believe we are seeing the sunset on the opportunities to purchase a really good deal on a home in this Boise Real Estate Market.
Not only is the Boise median home price up over 20% year to date in 2012, but foreclosures are becoming extinct in this valley, and interest rates will go back up, which will effect buyers’ ability to purchase more than home price increases.
If you have any desire to take advantage of the affordable opportunities in real estate, then you better get the ball rolling.
You may have already come to this conclusion, but if you are like most homeowners, you need to sell your current home to even consider buying a home. So there lies the catch 22. You are stuck. Or are you?
Here are 4 recommendations to anyone wanting to take advantage of rates and home prices now.
1. Take Action Now:
Call up a knowledgeable real estate agent and invite them over to see your home. They can easily determine what your home would sell for in today’s market. My agents at Front Street Brokers are trained and experienced at determining market price and can give you tips on inexpensive improvements that can have a big impact on selling price.
Even if you are just kicking the idea around but are not serious about buying or selling yet I would still advise you to invite a professional over to your home to find out what your home should sell for in this market. They also might recommend modifications to your home that would be worth considering if they brought a significantly higher price in the event you were to sell your home.
Front Street Brokers provides this service all the time to homeowners, so don’t be shy about asking, it doesn’t take us long to analyze a property and we do it every day. Folks are often surprised by how much (because prices are on the rise again) or how little (because home prices are still well below peak) their homes will sell for today.
The benefit of getting advice is it helps determine if selling is the right decision now or if it is better to wait. The costs of waiting could outweigh the costs of staying put. It depends on your situation.
When I got my degree in Business, my professors often talked about “Opportunity Costs.” How much will it cost you if you don’t act on a current opportunity? That is something you should try to answer now to see if it changes your action plan.
2. Sell or Rent Your Current Home?
I have many clients who have recently elected to keep their current home and rent it out rather than selling in this market. Rents in the Boise real estate market are up significantly over the last year or two. If you have recently refinanced your home to these historically low rates then there is a good chance you could exceed covering your current expenses by having a renter in your home.
Renting out your current home is not the ideal situation for all homeowners. Often it is best to just sell your home before making any big moves. But if you prefer to wait for home prices to increase another 15% or more before you sell, then it may be a good option to rent out your home so you can buy today at the lower rates.
3. Figure Out The Logistics
The logistics of renting out your home so you can buy another one can be tricky. If you are financially sound enough to purchase before renting or selling your current home, then you have a lot of options. On average it takes less than 30 days to identify a quality renter for your home. Demand is still very high for nice homes to rent. So you can purchase a new home, move into it, and then find a renter for your old home.
However, if you don’t have the luxury of buying a home until you rent or sell your current home (because you can’t get financing until you do), then logistics are much tougher. Many lenders will want to see that your home has closed or see 3-6 months of rent payments before they will approve a loan for you to purchase. You can find out what a lender will want to see in order to give you a loan if you follow step 1, and take action now by asking a lender or two about it.
I have a few clients who really wanted to buy or build a home at today’s prices and rates, but couldn’t get the price they needed to sell their home. So they looked for a home to rent (some chose a home nearby, others picked a fun new place to live temporarily, like Downtown or a resort area like McCall). They rented out their home, and then 6 months later or more purchased or built a home they really wanted.
4. Determine Your Risk Tolerance
This action may seem risky or difficult to you. I can tell you that my clients who made such a decision were nervous about it too. But they decided it was worth the risk because if interest rates went back up to 6%, or home prices or lot prices went up significantly, then the home they wanted to buy would be out of their reach or out of their comfort zone of what they wanted to spend.
I understand this dilemma all too well. I purchased my last home in 2006. I could sell it today, but I could also wait for home prices get closer to what I paid for it. There is a home on the market that I really want that would be the perfect fit for my family, however it is at a higher price point than my current home.
If I bought this other home today at 3.75% interest rate, then it would be well within my budget and I would get what I wanted. However, if I waited until my current home increased in value before selling, the other home, if still available, would be out of my reach if interest rates jumped back up to 6% (which they were a few years ago).
My payment on my home is $1200 a month; the market rent for my home is about $1400-1500 a month. So I could make the move, the question is should I sell or should I rent. The answer is different for everyone, as we all have different circumstances and preferences.
Understanding your options, and the pros/cons of making a move now or down the road is essential for determining the best outcome for you and your family. My best advice to you is to make a decision now to get more information. Information is the power you need to determine the best course of action.
Taking no action now could cost you more or close the door on options down the road.
Don’t be shy to ask for advice or help in determining your options right now. We can help you discover the value of your home now or recommend a good lender to you, answer your questions about the real estate market, and more. You can call me personally or any agent at my office at 208-740-5000.