By Stacey McCarthy
Q: I bought my home in Parkwood in 2005 and I am financially ready to move to a bigger home but I am afraid I will not be able to sell my house for what I paid for it. Am I destined to live in my home for another 4 years or is it possible for me to move up?
A: News reports of slipping home values – up to 30 percent – have homeowners in a panic. But remember real estate is local. Although Florida and California have dropped considerably, Philadelphia homeowners have not had the same experience. In fact, Forbes magazine has named Philadelphia the fourth best city in America for long-term housing bets.
The market has shifted almost everywhere, and in Philadelphia in 2008 we experienced a slight dip, but not a steep drop. While sold prices have gone down in Northeast Philadelphia, the good news is that they haven’t dropped dramatically.
In Northeast Philly in 2008, the average sold price went down 4.5 percent from 2007 and 2006. In Parkwood it went down only 3.5 percent. However it was still almost 2 percent higher than 2005 sold prices. That’s not bad news if you bought your home in 2005 or before.
If you are considering buying a bigger home and are able to swing it financially, now is the time to do so. A buyers’ market is certainly a “trading-up” market. While you may not make money in the sale of your home, the smaller loss at sale can be compensated by greater saving on the purchase of your higher priced new home, resulting in a significant net gain.
If you decide to wait four years, the value of your home may increase, but certainly the value of the bigger home will, too. Since that increase generally goes by percentages, it widens the gap between the old and the new homes which ultimately means more money out of your pocket.
Your first course of action should be to consult your Realtor for guidance on the actual market value of your home. Most realtors will offer a free Comparative Market Analysis (CMA) so you can make an educated decision on whether or not to sell or hold. It may not be as bad as you think.
Stacey McCarthy is a real estate agent with the McCarty Group of Keller Williams Real Esate. Her Real NEastate column will appear on NEastPhilly.com every Wednesday.