The #1 Issue…
June 19, 2008 by Gordon Corsie · Leave a Comment
As I talk with homeowners I keep hearing the same story over and over…
“We cannot move because our home price has fallen, In fact we need to wait until prices go back up so we can move to a larger house!”
While it certainly is true that prices are down in Pleasanton and Livermore and that can definitely affect our equity and sales proceeds, I believe we need to look at the big picture. Historically housing is selling today at 2004 prices. This is true all over the country. If you sell today you will net a lot less than 2 years ago no doubt. What is also true and overlooked is that if you sell and at the same time buy a house today, you will pay a lot less than you would have 2 years ago! In fact when most potential sellers analyze their specific situation they can find that it is actually more affordable in real dollar terms to move today, than at anytime in the last 10 years!
For Example…
2005
Sell for $900,000 Buy for $1,500,000
Market price down 18% so now…
2008
Sell for $738,000 Buy for $1,230,000
A $100,000+ cost difference moving today.
This is just one example, and it leads me to believe that there is more of an emotional issue today regarding moving than there is a practical one.
Affordability index up!
Remember when newscasts published the falling ‘affordability index’, a measure of how many could afford to purchase an entry level home in the Bay Area? At one point this was considered to be in the low single digits. Recent statistics show this index for new homebuyers now stands at 44%! Theoretically 44% of the public can now afford an entry level home in the Bay Area. Surely looking forward this is great news for our industry, our kids and will have an impact on job growth.
From California Association of Realtors…
For release:
Tuesday, May 20, 2008
C.A.R. reports entry-level housing affordability rises 18 percentage points in first quarter
LOS ANGELES (May 20)—The percentage of households that could afford to buy
an entry-level home in California stood at 44 percent in the first quarter of 2008,
compared with 26 percent for the same period a year ago, according to a report
released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures the
percentage of households that can afford to purchase an entry-level home in
California. C.A.R. also reports first-time buyer indexes for regions and select
counties within the state. The Index is the most fundamental measure of housing
well-being for first-time buyers in the state.
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