There have been some interesting trends in the housing market in recent months. With a volatile economy, political instability and an ongoing global pandemic, there is almost no way to predict what will happen in the upcoming months and years.
In southeast Wisconsin, as in most of the country, the most obvious trend has been a market uptick in housing costs. But if you are considering a move, is this trend a positive benefit for you? The answer might not be as simple as it seems.
Rising housing costs
The primary trend in the last six months has been steadily rising housing costs. In fact, when you look at the trends over the past five years, the costs of a new home are skyrocketing.
According to the Wisconsin Real Estate Association (WREA), the average home purchase price in Southeast Wisconsin in Q1 of 2016 was $129,950. In Q1 of 2021, the average cost in the same region was $187,900. That’s an increase of over $50,000 in five years – a remarkable uptick.
What are the benefits?
The primary benefit of rising housing costs goes to sellers. If you bought a home in 2016 and generally took good care of the property, you could be looking at a $50,000 profit at least. Even you have done any significant upgrades, your profit could be much higher.
What are the drawbacks?
Of course, the converse is true when buying. A lot of people get excited when they see they can sell their current home for such a profit, so they’re tempted to move. But they quickly realize that those same bloated prices apply to any home they might buy.
If you are selling your last home, maybe as part of your retirement plan, this is a great time to sell. But it is a risky time to buy.
If you are doing a sale and buy to get into a new home, the high prices will probably not be that significant, because they will wash each other out. However, you will be paying an abnormally high price for a home, which brings risks. You could lose if you have to sell again down the road when the prices are down. Further, buying a high-priced home makes it even more important to inspect the home thoroughly before buying. Work with an experienced real estate lawyer to protect your interests through the process.