Sell now or wait?
Housing market complicates empty nesters’ plans to downsize
Laurie and Chris Ying of Lexington began thinking about selling their four-bedroom home after their daughter left for college in 2005. When they couldn’t find a suitable smaller home, they decided to renovate and wait. Then the housing market crashed, convincing them to stay put even longer. But last year, sensing an improvement in local real estate conditions, and needing to spend another $120,000 to update the kitchen and dining area, they decided to put their home of 25 years up for sale. With nearby construction coming onto the market, they figured they had “maxed out’’ the profit they could make.
“There were approximately 15 new houses built within one mile of our home,’’ said Chris Ying, 59, a Lahey Clinic physician. “Even though we lived in one of the most desirable neighborhoods, competition was growing.’’
The Yings are among many empty nesters forced to weigh the desire to move to smaller homes against a real estate market that remains difficult for sellers. For these homeowners, the question is whether to sell now, and accept lower prices, or hang on with the hope the market will rebound in the not-so distant future.
When that might happen is unclear. Some real estate analysts expect the market to stabilize, or even pick up in some communities this fall. Others expect a further decline in prices.
Whether to sell now or wait depends on several factors, real estate specialists said. Those factors might include when you bought the home and how much equity you have; how much you need to realize from a home sale; what and where you want to buy next; and whether you can offset a lower selling price by getting a bargain as a buyer.
Just as important is where you live, since real estate markets differ from community to community, neighborhood to neighborhood. In areas considered desirable, because of schools, proximity to Boston, or other factors, sales and prices may already be on the rise.
For example, the market is rebounding in Lexington and nearby communities, said Kurt Meehan, senior vice president and manager of Hammond Residential Real Estate in Lexington.
If sellers price homes carefully, based on recent comparable sales, they are going to get offers close to asking prices, Meehan said.
Another factor to consider: type and condition of homes. In sought-after locations, such as Lexington, there’s short supply and strong demand for smaller, well-maintained, and updated single-family homes, Meehan said. “Now may very well be an ideal time to sell for a homeowner with a house in truly move-in condition.’’
While the Yings waited for the real estate market to recover, they renovated their home to improve its value, modernizing the master bedroom suite and an upper-level bathroom. As a result, when they sensed the market improving, they felt they could get a good price for a home that their investments had made “very desirable.’’
“Lexington was in a unique position,’’ said Laurie Ying, 54. “Houses and values slowed down but never stopped.’’
Personal finances and timing also play a role in when to sell, said Betsy Trethewey of Trethewey Real Estate in Milton and Hingham. Trethewey expects prices in many communities to continue to fall, so someone who wants to sell in a year might be better off selling now.
“The market is still in a freefall decline,’’ she said. “To wait a year, you could be looking at substantially less than what the market could currently give you.’’
Tom Weyl, 50, director of municipal research at Eaton Vance Management, and his wife, Pam, 45, planned to renovate a summer cottage in Kennebunkport, Maine, into a more spacious, year-round home, using the proceeds of the sale of their Medfield house to help finance it. With their children off to college, and believing prices had further to fall, they put their five-bedroom colonial on the market in spring of 2010, sold it within a week at the $919,000 asking price, and moved into an apartment in Sharon.
Later that year, Tom Weyl recalled, comparable homes sold for less.
“We sold basically to build in Maine,’’ he said. “By downsizing, we were able to borrow more to build in Maine and still have less debt overall.’’
Thom Schoepfer, Century 21 Shoreland Real Estate on Cape Cod, said he had advised clients to wait unless they found another home to buy at an attractive price. But now, the mid-Cape market is picking up, particularly for homes between $325,000 and $380,000. “We’re having an unusually active July,’’ he said.
The Yings put their home on the market in February 2010 after deciding to buy a townhouse in a new development in Lexington. Eight days later, they sold it for the asking price of just over $1 million. It was less than they would have received before the housing crash - and perhaps a bit less than this year - but enough to allow them to also buy a condo in Falmouth.
The Yings said waiting, watching, and keeping options open until the time seemed right paid off - if not perfectly, at least suitably in this uncertain market. They may not have received top dollar for their family home, but Laurie, happy to have a getaway on the Cape, said, “We took one property investment and turned it into two.’’
Mindy Pollack-Fusi can be reached at firstname.lastname@example.org