Real Estate values have declined across the board in every sector of the country. It is a fact that every homeowner has lost a significant amount of equity in their home.It is still very possible that values may continue to decline in certain areas.

Does this mean it is a bad time to sell or buy?Actually the market is perfectly balanced to make that next real estate purchase. Let’s examine the factors; your current home is worth less, so when you go to sell you do get less in the amount of proceeds. You also have less in the way of closing costs. Most closing costs are based on value. When you buy the next home, guess what? That purchase price is lower too! This means that based on the new lower purchase price your mortgage payment will be lower, property taxes lower, insurance lower and yes closing costs will still be less than if you bought in an overheated market. There are also way more properties to chose from. This is all really positive news.

The equity exchange concept is really fitting for the current market conditions in real estate. Usually the equity exchange concept is used with stocks, bonds and other financial instruments. When you sell a stock that has lost value and exit the market you have realized your loss. If you take your proceeds and invest in another stock, and that stock goes up, you have effectively taken your equity from a position of loss and exchanged it to a position of gain. Even if the new stock does not go up for a long time, as long as you are still in the market you have a chance to recapture your loss and make a profit. Once you exit the market entirely, that possibility is gone. The same can be said and done in the housing market.

The best time to move up in the housing market is when prices are down! What? Buy in a declining market? Absolutely, you make money when you buy real estate, not when you sell. The time to buy is when there is less competition. Rates are really historically low; there are many creative and aggressive financing options available. Some financing with utilizing as little as 3.5% for your down payment.

Take a strong look at your current housing situation and see if the Equity Exchange might make sense for you.

By Bill Grasska, Teles Financial/ www.telesfinancial.com

For more information, please contact Bill Grasska at 310-442-4040 or email him directly at bgrasska@telesfinancial.com.

Filed under: Micro Market Updates, Uncategorized on August 14th, 2009