By Michael Edlen
Special to the Palisades News
Have you outgrown your home or has your home become much larger now that your household has gotten smaller?
Is it becoming more difficult to maintain your home and to go up and down stairs? Have your children moved far away, and you have grandchildren you would like to see more often? Or are you about to take in an aging parent?
There are several reasons why there has never been a better time to sell—and reasons why selling might work out better than waiting.
First, some prices in our area have recently reached new all-time highs and are showing signs of possibly leveling out. We are in the tenth year after the last home price correction period began, and over the last 40 years we have seen 8-10-year cycles repeat, with an average correction, or downward price movement between 25-32%.
Interest rates on home loans are still low, which enables more potential buyers to qualify. People who wait to sell may find it more difficult to find a buyer who can afford the loan. Gradually, this will lead to a softening of prices.
The housing market has been affected by recent tax-code changes. Due to a diminished ability to benefit from various tax deductions, some buyers have become more conservative. If the stock market does enter into a significant correction phase, as many expect, it could seriously limit the down payment funds available to prospective buyers.
Of course, if we enter a recessionary period soon, home prices will be impacted. I recall some local homeowners in the 1990s who felt that the prices would continue to reach even higher levels than the new highs they had already reached. Some of the seasoned speculative investors and builders continued to purchase old places and build new homes that gave rise to the term “mansionization.”
Eventually, the market had a correction phase and prices began to fall as rapidly as they had been rising. Faced with such a declining market, many of the investors had to sell at a loss, and some even experienced foreclosures.
Since the inventory level of homes today is less than half of what it was in those years, it is probably unlikely that we will experience a market quite like that. Nonetheless, there are definitely some signs that the continuous upward moving market has about reached its peak.
Many people have told me they would love to sell now but feel they cannot do so because of taxes that would be owed.
I have even counseled some people who have been experiencing difficulties in paying for basic living needs yet feel unable to sell their homes because they or their family members do not want to pay the high taxes.
It may be worth waiting for more favorable tax legislation, or to simply hold on to the property so the children can inherit it at a higher, stepped-up basis for tax purposes.
However, owners should consider the 8-10-year cycle, as it could be that long before home values attain the same levels reached at this time.
There is still a demand for homes in Pacific Palisades. What price would it take for you to be willing to sell your home?
The time might be right to discuss a variety of alternatives or solutions to various potential challenges or options with a reputable and seasoned real estate agent.
Michael Edlen provides complimentary counseling and can research and connect you with excellent agents across the country. For more information, call 310-230-7373, e-mail firstname.lastname@example.org or visit EdlenTeam.com.