In last quarter’s newsletter, we mentioned that home sales in the mid-range ($300,000 -$500,000) would start to move again. After falling off sharply throughout the second half of 2009, sales in that range are now back to levels seen a year ago. More sellers have recognized the need to price competitively; and buyers are seeing the opportunity that trading up in a down market brings.
As prices started to correct downward, many trade-up buyers put off moving because they believed their own home would not sell for what they wanted. However, selling their current home is only half of the equation. The purchase of the new home is the other half. Purchasing that trade-up home makes more financial sense in a down market than in an overheated seller’s market. The recent sales numbers indicate that more buyers now recognize that fact.
It seems that most sellers in this price range are also able to benefit. Homes bought in this price range are the homes that owners hold the longest. As a result, they have built enough equity over that longer holding period to realize a nice return - even if it is not the abnormally large gains some realized a few years back.
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