Moving to The Carolinas:
Snooze and Lose
By Larry Gavrich, Founder & Editor,
Home On The Course, LLC
Here we go again. It is not quite the post-recession years of 2009 through 2013, but the real estate market has softened and, more than likely, your home is not worth what it was at the beginning of 2018. Yet you had a plan to throw away your Sherpa clothing and move South to a warmer climate and a life of golf and other outdoor activities that do not include snow shovels.
Should you put those plans on hold while you wait for the market to restore your home’s value – whatever that means? (A home’s “value,” after all, equals only what someone else is willing to pay for it, not what you think it is worth.)
The answer is simple: Wait, and you will put both your dreams and your assets at risk. Here’s why.
First, as your home’s market value drops, so too, in theory, do the prices of homes you might buy in, say, The Carolinas. I say “in theory” because real estate is based on the laws of supply and demand.
You may have read that inventories of available homes across the nation have been lower in the last year, and that includes in the Southeast U.S. Couple that with the fact that demand for homes in the South is as high as in most other regions, and certainly higher than the industrial areas of New England and parts of the upper Midwest. High demand meets low supply and you have higher prices, often sharply higher prices.
What this says for you, if your home up north is dropping in value, is that you are losing buying power every month you wait to get your price for your current primary home and defer purchasing that home in the South.
Let’s say you own a home in Connecticut or New York State that is currently worth $400,000 and, in 2019, it loses 5% of its market value, or $20,000 – not out of the realm given current predictions. You have had your eye, for example, on a cute home in Myrtle Beach, SC, that is 10 minutes from the beach and currently valued at $300,000. For the sake of argument, based on supply and demand, the Myrtle Beach house could gain a conservative 3% in value in 2019, or $9,000.
Sell and buy in the near future, and you might pocket as much as $100,000 after the two transactions. Wait until the end of 2019 and you could very well pocket $29,000 less. That $29,000 could pay for country club fees, a couple of cruises, flying the kids and grandkids down for part of the summer or just some bank account security. And the longer you wait, the wider the spread will become, assuming the real estate market continues to behave as it did in 2018. (Note: I am not an economist, and that is not a prediction.)
As compelling as those numbers may be, there may be an even more expensive cost of waiting to sell and buy, and that is in the cost-of-living differences between North and South.
CarolinaLiving.com posts a helpful comparison of annual cost differences between cities and towns in North and South Carolina and cities elsewhere. A couple of examples make the point.
Consider a move from Hartford, CT, to Myrtle Beach. Hartford cost-of-living expenses run 13 percentage points above the national average; Myrtle Beach expenses are just one percentage point below the national average. Let’s assume an annual budget of $70,000 for a couple currently living in Hartford; in that case, they would save 14% of their annual expenses, or nearly $10,000.
The numbers are more dramatic if, for example, a couple moves from the Boston area (146% of national average) to Anderson, SC (87% of national average), a spread of 57 percentage points and a savings of almost $40,000.
There is one other cost of waiting to sell and buy, and it may be the most “expensive” one of all, the cost of a dream deferred. You have worked hard most of your life to build the nest egg to make it possible to enjoy the retirement you have dreamed about, whether it involves a lot of golf or other hobbies you have been dying to pursue.
Your energies likely went into building both a career and a family with the reward, at the end of it all, a string of comfortable and happy golden years. If you could have afforded to make the move last year, you can likely afford it now (assuming you did not have every single dollar in the stock market).
Final advice: Don’t worry. Be happy. Get a move on.
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