Picture this: you’re some years older, you’re retired. You are living a happy life doing exactly what you want to do. The grandkids come over every once in a while, you go on vacation for a few weeks every year. You’re waking up every morning in your dream home—having coffee on the patio or in the kitchen, watching the birds out the window.
Now, a question: when you were imagining your future, did you see the house you’re in now?
If not, that’s okay. Most people don’t stay in one place forever. Whether you’re in your starter home looking for an upgrade or an empty nester ready to downsize, moving is a normal fact of life. However, there are some factors to consider when you’re trading up from your current home, including your mortgage, the value of your current home, and your future finances.
The Average Homebuyer Tenure
In the United States, trading up and moving out is a pretty normal fact of life. A study published by the National Association of Home Builders shows the average American homebuyer stays in their house for 13 years. That means if a buyer has a child the month they move in, that kid will be finishing 8thgrade when they’re ready to move again! In the grand scheme of things, that’s really not that long at all.
Surprisingly, 13 years is slightly longer than the average from a few years back. The real estate market went through a downturn with the rest of the economy about 10 years ago. This caused many homes to generate equity much slower than in years past and homeowners held onto their property much longer than before. Of course, we are in a real estate boom now, so many homebuyers who stayed put for 13 years are in luck and their houses are worth much more than they were before. In that case, today’s market may be the perfect opportunity to sell.
When to Sell Your Home: Building Equity for the Future
Determining the right time to sell and move up or move out depends on one thing: equity. Think of your home as an investment from the time you move in to the time you move out. In an ideal situation your property will increase in value over time, especially if you bought in an up-and-coming neighborhood or in a town that just hit a boom in the past few years. If you own a home in Asheville or one of the nearby cities like Weaverville, Hendersonville, or Canton, you’re well aware of the boom we’re talking about.
Most mortgages are on 30-year plans, which is far longer than the 13-year average we mentioned above. That doesn’t mean you’re stuck in your starter home for 30 years though. Real estate investors often cite the five-year rule. It’s rare that homeowners are able to pay off the principle cost of buying a home—including commissions, closing costs, and moving expenses—in less than five years.
Equity doesn’t build at the same rate for everyone, though, and some homeowners pay off their principle much quicker than others. While the exact number of years may not be five for you, the main takeaway is to stay put until you have equity in your home. Remember, the goal here is to make money and move into a nicer house! Every dollar you sell your house for over how much you paid for it is another dollar that can go towards the down payment on your new mountain town dream home.
Making a Real Estate Investment in Asheville
There are a number of factors to consider when you’re moving up and moving on. This is where that thought exercise from earlier comes into play. You already imagined the perfect morning, but now imagine everything else happening. Do you want a mortgage 30 years from now? Will you have other investments or a retirement plan? Do you plan to work part- or full-time? Do you need space for kids and family to visit and stay with you?
Of course, what you want will change over time and nobody has a crystal ball. We don’t know what the future holds, but we can help you make smart investments in your future living situation. If you’re looking for the perfect home in Western North Carolina, get in touch with Keller Williams Asheville’s team of real estate experts today. We’ll help you find what you’re looking for.
We Are Here To Help
Our agents receive extensive training and are equipped with the latest technology to help you find your next home. Most importantly, they love working with people just like you!