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UPGRADING YOUR HOME IN A BUYERS' (DOWN) MARKET

Posted by Mani Bagga on Tuesday, December 11th, 2018 at 9:54am.

Upgrading your home is a significant, often life changing decision so it’s natural for sellers to wonder when’s the best time to make such a monumental move.

If you are upgrading homes — selling and buying — waiting means the price of home you are trying to sell also drops.

Buying and selling simultaneously means that you’ll still be ahead of the game because the price reduction on the new house is likely to be greater than the loss on the old home, if the new home is worth more — that’s just a simple math in terms of percentages.

Example of 10 per cent down market

$300,000 current home: Down 10 per cent of $30,000 would make it now $270,000

$500,000 future home: Down 10 per cent of $50,000 would make it now $450,000

$50,000 - $30,000 Gain = $20,000

$450,000 - $270,000 = $180,000 (i.e. you are spending an additional $180,000 to move into your dream home)

Housing markets drop but they also spike back up. Wait too long and you may be facing the opposite problem.

If your home goes back up to 10 per cent to $300,000, this is what happens.

Example of 10 per cent back up market

$300,000 current home

$500,000 future home

$500,000 - $300,000 = $200,000 (i.e. you are spending an additional $200,000 to move into your dream home)

While it’s important to look at the general market trends, trying to predict where they’ll head next can turn into a guessing game.

You simply cannot time the market perfectly but spending “time in the market” beats trying to “time the market.”

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