Real Estate Report: "Move Up" Buyers Stuck in Mud
Our real estate market is missing an important element these days. Many homeowners who would like to upgrade to a larger home, commonly referred to as the "move up" buyer, have to hold off making a move.
A recent Los Angeles Times article reported that "Potential move-up buyers… are largely sitting on the sidelines these days, leaving a key part of the housing market stuck in neutral. The promise of rising prices and upward mobility, once a powerful force in the American housing narrative, has been all but shattered by the downturn."
Move-up buyers are often homebuyers looking in the $300,000 to $800,000 price range, according to the research firm DataQuick. It is an important segment of a healthy real estate market, since trading up creates a chain of buyers and sellers that helps to drive market values up and in turn helps homeowners build equity.
A large segment of buyers are trapped by a sluggish housing market and loss of equity in their current home, as well as the threat of an unstable economy and a very tight lending market. Of course, bigger and better is not always the best financial move for families, and a large number of homeowners are trending towards a simpler, more economically sound lifestyle.
However, it’s the chain of trades that occurs in a normal market that is lacking right now. For example, a common chain of trades is: Family A has another child and buys a larger house from Family B, who are retirees. Family A sells their house to Family C, first time homebuyers, and Family B buys a condo in Florida. This chain of trades is needed to help restore re-sales and their subsequent values.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
