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Which Homes Sell Faster - Less Expensive or Expensive Homes?

Real Estate Investing Concern - Sale Time on Market By Jeanette Joy Fisher Dr. Irwin Kellner, chief economist for MarketWatch, the Weller professor of economics at Hofstra University, and chief economist for North Fork Bank said "Logic would tell you that when interest rates rise, the more expensive homes, whose buyers are not as likely to be as affected by stiffer borrowing requirements as buyers of less expensive homes, will sell faster than lower-priced models." While no one would doubt the wisdom behind Dr. Kellner's prediction, other factors should be considered. Over the past few years, many home owners purchased homes with low down payments and adjustable interest rates. If these home owners get into trouble when their payments escalate, they will sell their home. Where do these displaced home sellers go? To a less expensive home. So many home owners, just one paycheck ahead of financial disaster, purchased homes hoping that they could keep up with the rising mortgage payment. After all, the original payments with either no paying down of principle or negative amortization, offered tempting low monthly payments. If a home owner or partner gets laid off or gets sick and they have no savings, their home's in jeopardy. They may be forced to sell and move down. Many areas simply have insufficient rental properties. We rented our last two houses before we even closed on the purchase in February, 2006. The tenants didn't care about dirty carpets and walls needing paint. They agreed to take the property immediately "as is," for a full-price lease. Because there aren't enough rental houses, people buy houses with low payment options, which sometimes means that the house payment is less than rent. This tenant-to-buyer home purchase keeps pressure on the low-end market in California. Rob Kramarz, NationWide real estate agent and loan officer, Orange County, California, says "The relatively expensive houses, when being resold, have been sitting on the market longer because the sellers are waiting for the price appreciation they have learned to expect. These owners are less often moving for financial reasons, and more for personal reasons. The less expensive homes seem to move faster and the owners are more open to price negotiation, because the owners are more often being forced to move for financial reasons." In summary, upscale buyers won't be "as affected by stiffer borrowing requirements as buyers of less expensive homes." However, housing demand will keep lower-priced homes selling as quickly, if not faster, than the higher-priced homes. Copyright © 2006 Jeanette J. Fisher Jeanette Fisher offers FREE "How to Start Real Estate Investing Teleseminar," free ebook, "The Truth about Making Money Flipping Houses." Ever wonder how those multimillionaire real estate investors got started? You might be surprised at how easy it is to buy your first investment property! Are you willing to follow four proven steps to make money investing in real estate? Fixing and Flipping Houses   Real Estate Bubble in Southern California?   Real Estate Investing Business Plan Get all the tools you need to start your real estate investing business.

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