As home equity levels improve, the move-up buyer is back on the market. More move-up buyers are selling their current properties to replace them with pricier homes, according to the latest report from FNC, a real estate data firm.
The move-up buyers are coming with larger down payments on new homes as recent improvements in home equity levels have allowed them to move.
“An important sign of a healthy and sustainable recovery is increased housing turnover driven by trade-up buying, which is more or less discretionary spending,” says Yanling Mayer, FNC’s director of research. “These buyers are typically more responsive to market conditions and financial incentives.”
Rising mortgage rates are driving the higher demand because move-up buyers are wanting to take advantage before mortgage rates rise any more, brokers say.
Plus, more move-up buyers are in a better position to move. Forty percent of all home owners now have at least 20 percent or more of equity in their homes now, according to RealtyTrac data.
Also, 8.3 million additional home owners are expected to have at least 20 percent equity within the next 15 months if home prices continue to appreciate at the same pace, says Daren Blomquist, vice president of RealtyTrac. Blomquist adds that if 5 percent of these home owners decide to sell their homes, that would amount to an additional 415,000 homes for sale in the coming months.
Source: “Move-up buying activity rises with home equity gains,” HousingWire (Sept. 12, 2013)