The Move Up Buyer

I thought I'd share with you this week what I believe is an interesting perspective on a segment of the market that has been dormant recently, the "move up buyer," i.e the folks who are currently in a home but would like to move up to something bigger. These folks have been sitting on the sidelines of the real estate market because they feel that they would lose money on the house they're currently in. But in my opinion, move up buyers are losing a real opportunity if they don’t act right now. Yes, they may not realize what they'd like on the house they’re currently in, in many cases from the 2006 price, but they will save significant money on the house they’re moving to. The first chart below illustrates that concept given some hypothetical current and move-up home values. The second chart illustrates another important concept and that is that monthly mortgage payment savings on the new home bought at the 2012 price versus the mortgage payment on the same house purchase in year 2016 when presumably the price has gone up, given the low historical rates right now (this illustration is based on a jumbo loan rate).