If you are thinking of moving up to a bigger home, now is the time. We are currently in a buyers' market in Calgary. There are more homes coming onto the market than are being sold and buyers have the advantage of selection. Typically, in a buyers' market, prices will be stagnant or will fall. This can cause home owners, looking to move to a larger home, to pull back from selling because they are concerned that they will not get as much for their home as they would have in the past.
Moving up is the norm for a maturing family. Most often, a first time buyers will purchase a smaller home. They do not need a lot of space and the smaller home is more affordable. As the family grows and the family income grows a larger house becomes more affordable and even necessary for the larger family. When are the best opportunities in the market to make this move up to a larger home?
Let me explain why a buyers' market is the best time to move up to that next home:
The graph above shows how home owners are presented with opportunities to “buy up” to their next home. The green line represents the value of the existing home, the yellow line, the value of the move up home and the red line represents the difference in price between the two homes.
In this chart, the percent value change is the same for both the existing and the move up properties. When one increases by 2%, so does the other. That is generally the way the market reacts. Notice that as the market matures throughout this 25-year period, even though the percentage in value increase stays the same for both homes, the dollar value of the higher priced home increases more.
Now let's look at the price difference. This is the critical factor that can influence the buying decision for people moving up. It makes sense to move up when the difference is at the least amount. The dotted red line shows the upward trend in price difference, where the solid red line shows the actual difference in price. As you can see, there are times where the actual difference is above or below the trend line. When prices are stagnant or dropping, the price difference is lower than the trend and when prices are increasing, the actual difference is above the trend line.
If the owner of the existing property wants to take advantage of the best opportunities to move up they need to make a move when the market shows the least difference in price. They should make their purchase when the actual price difference is below the trend line or when prices are either flat or are falling. This would be during a buyers' market.
Calgary is currently in a buyers' market and the June 2018 sales in Calgary paint a good picture for move up buyers for the next few months. If you are selling a home in the $300,000-$500,000 range, you can see that sales volumes in these price ranges are much stronger than in the move up ranges of $500,000 and up. There are certainly more people looking for houses and buying houses in the starter home range. This translates into a better buying price for the move up home and a good selling price for the seller's home. These appear to be excellent market conditions to make the move to a larger home.
Feel free to contact me if you have questions. If you are thinking of selling, I would be happy to do a comparative market analysis of your home.
Jim Perks is a Calgary REALTOR who divides his time working with both sellers of houses and buyers of homes. He has been an agent since 2010