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Mortgage rates are still near historic lows and with the housing market still slumped it seems like a great time to move up to a bigger house.  That leaves people moving up (including me) with their old house still to sell - no small challenge in a down market.  The people who are really suffering, though, are the people moving down. 

 For example, Bobby B. Yuppy (me) sells his condo at a loss (or minimal gain) from 2005 value, but gets a steal on the house he’s upgrading to.  If he takes a 10% loss (from 2005 numbers) on the condo but gets a 10% gain (again, based on 2005 appraisal) from the new property it’s a net win because the new property is significantly bigger, better, and more expensive.  Johnny A. Baby-Boomer (he and his wife combined last names on marriage - those crazy 60s feminists) is looking to move down from the big house where they raised their kids and into a smaller retirement nest.  He’s also happy about unlocking some of that big equity in his house to help out their retirement.  If he gets the same 10% gain on the purchase of his new retirement bungalo and a 10% loss on the sale of his big empty nest (the one with all the kids’ empty bedrooms) he’s taking a net loss.  As an added bonus, he’ll also be really surprised about the loss of his expected retirement monies he thought he could count on in his equity.  Sorry, Johnny, you don’t get to buy that boat or RV after all; you’ll have to settle for an off brand motorcycle.

 Food for thought.  No matter what the market’s doing, someone is always winning and someone is always losing.  Always try to consider what you can do to put yourself in column A.

Tags: economy, finance, housing

This entry was posted on Wednesday, March 19th, 2008 at 5:43 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.