Hopefully everyone knows by now that even though home prices are quite high, a bunch of people are looking to buy and unfortunately, there really aren’t enough homes for everyone. We’ve talked about how the current situation has driven home prices up to record highs; this again goes back to simple supply and demand economics. But another way to look at the current state of the market is what the sellers are actually taking away from the deal. Well, as this GoMN article references, Twin Cities’ sellers in Q2-2017 averaged a 24.4% gain on initial home price ($47k in terms of dollars). Not a bad return at all. Not only that, but the report referenced in the article also shares the average length of home ownership at 8.05 years, which is the longest duration since the data has been made available – a data set spanning over 17 years.
So, people are generally staying in their homes longer. 8 years ago was 2009. In fact, the stock market bottomed-out in March of that year – the lowest point of the Great Recession. The housing market didn’t reach its lowest point until 2012, or 5 years ago. Given that we’re looking at an average, there’s a whole lot of balancing going on. People who’ve owned their home for more than 8 years would have bought at pre-recession highs. So, it’s probably just within the last year that their home value has bounced back and they’re able to sell without losing money. They’re most likely not realizing any cash gains, but they’re pushing that duration of home ownership up. On the other side of things, people who capitalized on the low home prices of 2011-2013 are most likely the ones coming away with the most gains. Their length of ownership, however, would be dragging that average down. So, not everybody selling today is walking away with considerably heavier pockets, but most are getting at least a little gain.
Even though you could compare finding a home in the current market to a rat race, it’s not a lost cause by any means. You get your Realtor working for you, make sure your financial ducks are all in a row, and prepare to move quickly when the stars align. We can make it happen for you, and we’ll probably have some fun on the journey. Give me a call (952-258-3100) or email.
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