Is this the time for one and two bedroom owners to upgrade to larger apartments even though market volume and pricing is down significantly?
That may be the case depending on a number of factors. Usually we see an upgrade to a larger space because of a growing family and the need for extra bedrooms to accommodate a larger brood. That is still happening, but not with the same frequency as it has in the past. There is a wait-and see attitude with buyers now on the presumption that the market has not yet hit it’s plateau, and that they will hold off on the purchase for three to six months, or longer, until they can feel assured that the market has bottomed out. With owners who have purchased their one and two bedroom units five years or earlier, there is still a tremendous upside to selling now and purchasing a larger apartment. The reason for this is that the proportional increase in the value of the apartment has been significant since the purchase price at that time was averaging $500 a square foot or less! Also bear in mind that a gain in equity up to $500,000 for a married couple, and $250,000 for a single owner, is as a general rule considered tax free gains on the sale of said property. That tax free equity can be utilized as part of a down payment on the new, larger space. (more…)
A friend in Boston just told me about a creative approach to financing in this topsy-turvy world of late, brought to you by the intrepid uber-entrepreneur, Sir Richard Branson. Virgin Money operates on all levels of finance for a multitude of needs including mortgages, seller financing, small business and even student loans. The idea is to eliminate the bank and make all elements of the process a more informal affair. With the level of creativity required to keep deals going forward, this may be one approach that fits the bill.