I keep hearing about the “housing recovery” and how prices are rising while inventory is falling, but it doesn’t seem to have hit our home yet. In fact, our home’s value has fallen significantly since we bought in 2012.
According to CNBC.com, “Sales of homes priced below $100,000 fell 18 percent in February from a year ago, while homes priced between $750,000 and $1 million jumped 13 percent, according to the National Association of Realtors. While improvement in the move-up market is certainly welcome, sales of homes priced over $500,000 made up just more than 10 percent of all home sales. Those priced under $100,000 make up more than 20 percent.”
So while this divided housing recovery might be helping the rich, it’s killing our home’s value.
Reviewing area home prices
Reviewing area home prices is probably one of the best ways for us to determine how real estate is doing in our area. However, in so doing, we’ve found that there is a vast difference between the home prices in the area and that of condominiums, in one of which we reside.
This is a good example of how the divided housing recovery is hurting our home’s value. While many of the homes in our area go for well over $500,000 (many closer to the $1,000,000, and have seen decent appreciation during the housing recovery, many area condo prices however, fall into the $100,000 to $200,000 range. These lower value range properties have not only not seen the appreciation of the higher value properties, but some (like ours) have actually seen their values falling.
And while certain home sites on the internet provide value estimates, we find that reviewing actual listing and final sale prices help us drill down to put a more exact value on our own home.
Determining our own value
But home sales within even a general area or neighborhood can range drastically in price. Thankfully, we can review actual sales in our direct vicinity and even within our own condo complex through sites like Homes.com, Realtor.com, Zillow, Trulia, and more. In this way, we can look at pictures, condo sizes, amenities, updates, and more to see what our own home has going for it and what it doesn’t, which helps us better pinpoint our home’s actual value.
Through our best estimates, this value has dropped nearly 15 percent since we purchased in 2012.
How we suffer through such downturns
Even with such a drop in value though, we’ve developed a situation that allows us to suffer through such downturns in home prices. While it’s a longer-term plan, it’s a plan nonetheless.
Besides continued monitoring of area home values, we’ve taken a more extreme step to help us weather lower value housing trends. When we sold our previous home in 2011, we decided to downsize significantly. This allowed us to purchase a much cheaper home condo outright when we re-bought. Therefore, whether prices rise or fall, we are able to sell if or when we like. While this isn’t a perfect plan, as selling at a lower price than that at which we purchased would still cost us money, it reduces our overall carrying costs of owning a home when it comes to things like mortgage interest and mortgage insurance, and it allows us more freedom of movement when the time comes to move on no matter what the housing market is doing.
Therefore, while this divided housing recovery has hurt our home’s value temporarily, with some forward thinking and planning, we hope it won’t shake our financial foundation too much.
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The author is not a licensed financial or real estate professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.