A million dollars… it always sounds like so much! But the reality is that in our area, owning a million-dollar home doesn’t get you as much as what people think. Yes, these million-dollar homes are in popular neighborhoods, close to plentiful job opportunities, public transportation, recreation, shopping, and dining (and within commuting distance of our nation’s capital). But guess what? They are small, often outdated, on tiny lots, and certainly not the typical “dream home” they may have envisioned. Most of these homes don’t have swimming pools or media rooms as you might think.
When our clients in these types of properties begin thinking about a move to a bigger or more modern house or one with a bigger yard, they are often very disappointed with the options they find.
Why is that?
The Dilemma of the Million Dollar Mover
The incomes of these “move up” buyers, while good and stable, rarely keep pace with the gains in the real estate market. This is especially true in the DC area, where the real estate market has performed incredibly well in recent years. Clients are dismayed to see what an extra $100,000 (or more) gets them. They end up looking at homes that are further away from their jobs and schools, public transportation, and their favorite establishments. Yes, the homes may be bigger, but oftentimes, they’re not much better than the ones they currently own. Once closing costs and moving expenses are factored in, they find it very difficult to upgrade and it may no longer make sense.
What can the move-up buyer do?
- First, talk to your lender. With historically low interest rates and the increased equity in your current home (and hopefully increased household income), you may be able to afford more than you realize. Have your lender and run the numbers and determine your real budget.
- Next, talk to your Realtor. Determine your list of wants vs. must-haves in a move-up home. Consider the tradeoffs you’re willing to make. For example, are you okay with less walkability to have more of a yard? Is less charm worth that one extra room? Are you willing to have your kids change schools to have dedicated parking? A good realtor will help navigate her clients through this dilemma.
- Consider what can — and cannot — change. Now it’s time to determine if you’re able to change your current home to suit these wants and needs. Remember, you’ll never be able to change your home’s location or parking situation — or your neighbors. You can change just about everything else about your home (trust us, we’ve seen it all!).
- Which leads to….considering a renovation vs. a move. While living through a renovation is no picnic, making improvements to your current home often solves the underlying issues without the stress — financial and otherwise – of a move.
The Bottom Line
Move up buyers often feel like they are in a no-win situation. They feel they either have to give up what’s important to them to get something in exchange. That’s not necessarily true! Talk to your team of advisors to see what makes the most sense for you. Oftentimes, renovating your current home makes far more sense than a move.
We’ve helped many clients in this exact situation and would love to help you too. Reach out today to talk it through!