Welcome reader! Prepare to be amazed as I do the unthinkable. I am going to take your mind and transport you back to a different time. Not only will you time travel but you will awaken as a different individual with a different life. You think I’m kidding?
Take a deep breath and count to 3. Ready?
Welcome to the year 2010!
The housing bubble just popped a few years prior and sent the economy into a spiraling collapse. You’ve seen dozens of your friends and co-workers laid off from work. The collapse sent people into a frenzy, but not you. You have a family to provide for and thank God you still have your job. In fact, your company decided to promote you and relocate you to Boston, MA! How exciting! Anyways, you’re starting to plan the move and decide that this company is reliable and secure (even through a downturn) so you want to settle down nearby.
You noticed home prices have dropped significantly and being the savvy consumer that you are, you decide to purchase a home in Cambridge, MA. The sale price is only $600,000 which is much much lower than it was pre-crash. What a bargain! You use up most of your savings for the down payment and closing costs and you become the proud owner of a 3 bedroom/2 bathroom home in the bustling city of Cambridge! Congrats!
Over the next 7 years you went about your life as normal, raising your kids and working hard at this same company. You spent some extra money in repairing the house and updating/modernizing it a bit. Your home looks great and you now you feel great!
You’re talking to your friend John at work one day when the topic of Real Estate gets brought up. He’s leaving the company and moving up to New Hampshire to pursue his life long dream of becoming a Lumber-Jack! Wow, go John! Since he’s leaving he decided to put his house up for sale in Somerville, MA and was shocked to find out that his real estate agent, Jackie, valued his property at $750,000! Go, John, Go!
You finish up your talk with John and head back to your desk. You can’t get that number out of your head….$750,000. “I’ve seen John’s house and mine is WAY nicer than his. I wonder what I could get?” you think to yourself.
So you call up a local agent from the newspaper and start a casual chat. You end up learning that Cambridge has appreciated more than ANY other city or town surrounding Boston and that your house is now worth $900,000! That’s a whole lot of moolah!
You start doing some intense and complex research. The numbers running through your mind like that of Good Will Hunting.
$900,000 – $600,000 = $300,000 Gain
After a long talk with the wife you decide that you can sell this property now for $900,000, buy a new house further outside the city in a nice suburb while also padding your savings and retirement accounts with the earnings.
That’s a no-brainer. The wife agrees and the process moves along swimmingly. You are now the proud owner of another spacious 3 bedroom house in the small, quiet town of Wilmington, MA where your kids grow up safely and happily, graduating and moving on to college where their tuition is all but paid for. Life was comfortable and you look back upon this original Cambridge purchase as the single greatest thing you’ve ever done. Hat’s off to you and your exceptional decision making skills.
Okay it’s time to come back to present day, 2018. Close your eyes and count to 3.
Did you feel that? You’re back!
I admit the above lifestyle was fictitious, however, it was very realistic.
From 2010 to 2015, home prices in Cambridge climbed an insane 50% higher. This means that a purchase price of $600,000 in 2010 would then sell for $900,000 just like in our example above. The scary part is….homes have not stopped appreciating even today.
Here are some other interesting facts about 2017:
- In 2017, it was a historical time to borrow moneyMortgage rates on a 30-year fixed rate loan were at an average of 3.81% which is very close to an all-time low (Freddiemac)
- They have steadily increased in 2018
- In 2017, the average sale price for new homes was $379,300 (US Census)This was an all-time high at the time but prices have continued to climb today
- In 2017, the average sale price for existing homes was $289,600 (Fed PrimeRate)Same comment as above
- In 2017, the DJIA (Dow Jones Industrial Average ) reached 23,250 in SeptemberThis again was an all-time high at the time but has reached higher levels in 2018 (Macro trends)
- In 2017, the Consumer Sentiment rating was 95 (Trading Economics)This is the highest level since the early 2000’s
2017 provided a unique mixture of High Home Prices, Low Borrowing Rates, Increased Economic Stability, and a High Consumer Happiness rating.
The above factors have never been so much in alignment with each other and have given sellers in the market the perfect atmosphere to sell their homes. We are now at a time when rates are starting to climb back up to ensure the market does not overheat. The stock market has had a recent correction and economic events such as trade wars will surely have an influence going forward.
I stand to say that 2017 was the absolute BEST time to sell.
If you disagree, let’s hear it. Comment below and share my page.