the trade-up: a wise indulgence buy the best location, materials and amenities you can afford. you will come out ahead, now and when you sell.

by:Runcheng Chuangzhan     2019-10-01
(MONEY Magazine)
\"In the United States, age has two important flaws,\" said George steely, director of the city policy research center at Rutgers University.
\"One is from renting r to the owner.
The other is to trade better houses.
\"A quick look at the recent sales of the House will find that this is the second time to pass the ceremony ---
Trading larger, more expensive, and more luxurious homes in old homes ---
Driving the boom in real estate, which is as tight as stocks
Crazy buying on Wall Street. Consider: --Of the 4.
3 million houses sold last year-
The highest level of the decade-roughly two-
People in their thirties go to repeat home buyers, and most of them use their equity in their old house to buy a bigger and better house.
This marks a major shift from the 70 s housing boom, when the first
The timer accounts for almost half of U. S. home sales. S. --
In the early 80 s, the price increase has shown signs of disappearing, and now the price is already high.
The median national house price rose to $80,300 last year. -
Compared with the slow 6% in 1982, intelligence increased by 2%.
But performance in many regions easily exceeds the national average.
Nearly half of the 52 metropolitan areas surveyed by the National Association of Realtors last year exceeded the average.
Winner: Providence, up 37%;
Hartford, up 30%;
The metropolitan area of New York is up 20%. --
New house more and more big. -
Holding those growing babies, the better --
Family prosperity--
Another powerful sign of this move --up market.
Last year, there was a third set of new homes built in the United States. S.
Five years ago, all new homes were 2,000 square feet or larger.
To attract homeowners to buy new homes, builders offer them more options than imported sports cars.
Fireplace, 2 Jacuzzi
The story of the European Palladio window
Kitchen Cabinet style-
These and other facilities provide a unique look and the House today must win highincome, luxury-
Seeking and status
Conscious Buyers
Fortunately, if you\'re still sitting in a crowded apartment or a starter home in a small country bought five years ago, you don\'t have to worry that you\'re missing a great opportunity to make money in this craze. \'\'The trade-
The rising market will continue into the medium term.
1990, \"said Michael Carliner, economist at the National Association of Home Builders.
\"As a result, trade --
In the next five to ten years, up house will be more popular than starter house.
So if you have a starter house, it\'s time to move up.
The combination of financial and demographic factors stimulated the move. up mania.
The biggest driver comes from the mature baby boomers.
Gopal Ahluwalia, director of research at NAHB, estimates that about 76 million of the 1964 people born between 1946 and 40% have purchased their first home, most likely two
A bedroom apartment or townhouse with an area of less than 1,500 square feet.
But now that these buyers have begun to form families, eager for more space and a comfortable life, they are eager to use the equity in their original home as a down payment for the prototype American dream ---a single-
Family detached villa with four bedrooms, two bathrooms, a family room, a large courtyard and a white picketing fence.
Ahluvalia said: \"These people are trading.
But they are not the only ones.
William aponga, deputy director of Harvard University, said: \"We also see people in their 50 s spending their discretionary income on larger houses.
Joint Center for Urban Studies, Massachusetts Institute of Technology
These buyers are usually trading for the third or fourth time, and they are looking for status, not space.
Falling interest rates have also stimulated trade. up craze.
Mortgage interest rates have fallen from 15% to 9 in the past five years. 25%.
This 40% slide means buyers can pay more expensive houses for the same month.
For example, a couple earns $50,000 a year, lives in a $125,000 House, mortgages $75,000, and when the rate is 142,000, they can only use a house up to $ 15%. -
It\'s hardly worth the cost and inconvenience.
But the rate is 9.
25%. the couple can afford a house of $192,000.
As in the past, the charge of the bull market is the horn of a deal.
\"People think they are richer because of the rise in the stock market,\" said John tusilo, chief economist at NAR . \".
They are converting paper assets (
Their stock)
Real assets (a larger house).
But most homeowners, like 32-year-old carpenter Chris Pratt and 31-year-old housewife wife Karen, are counting on their equity reserves in their old home in Ocean Grove, New York. J.
Carry them to a more spacious place.
When Karen was pregnant with a second child in last July, the couple knew they had to start with two children
They bought the bedroom bungalow for $25,000 in 1980.
So in last September Pratts sold the cabin for $144,000 and split the $119,000 profit into three parts
Bedroom, $187,000 Lenson colonial style, upper floor-middle-
A small town in New Jersey.
Their income. -
$35,000 a year-
Such a Leap will never be supported.
Karen said: \"If we can do the same thing again, we may move to a house with a larger property again in five or six years.
Tax reform has also intensified this desire.
Philip Waddington said: \"For most people, the deduction of mortgage interest, points and real estate tax is the last residence they have left under the new tax law, \"weichert real estate agent in Morristown, senior vice president of N. J.
Of course, the lower marginal tax rate on tax changes has reduced these deductions, but the most important tax benefits for those who trade are intact: you can sell your existing house, get a huge profit, as long as you buy another house worth at least equal value two years before or after the sale, you will delay the tax on your earnings.
Unless the IRS considers your moving job, you can only use an extension every two years --related.
Otherwise, you can continue rolling those proceeds indefinitely until you end up selling them at a lower price
House with price or move into apartment.
Even so, most sellers aged 55 or over can earn $125,000 from taxes. (
While you will not tax the proceeds when you trade a more expensive house, you will still have to report to the IRS on form 2119. )
Buying a more expensive house can also increase the interest you can deduct from the loan on the House
Equity credit line.
At present, unless the loan is for medical or educational expenses, the deduction is limited to the loan, up to no more than the original purchase price of the House plus the cost of the house decoration, not its market value.
Upward trading raises the purchase price, so the amount of the loan eligible for full deduction of interest.
Nevertheless, considering the cost of buying and selling ---
From a $125,000 house to a $250,000 deal.
Sales commission and closing price usually up $20,000-
This should not be the only reason for such a transaction.
For homeowners who want to make money in the deal, the biggest challenge is
Up craze is the time: you want the sale of your current house to fit as much as possible with the purchase of the house you are buying.
This way you can avoid having two homes at the same time and have to pay double the mortgage.
The strategy you use to complete this juggling action will vary depending on how quickly the house is sold in your market.
In areas like the Northeast, houses still appreciate at a rate of 1 per month. 5% to 2.
5% and sold within 45 days of listing with a broker, you can take a positive approach: buy your deal
Then put your current house on the market.
Ideally, you should buy in January before the price starts a traditional spring rise and try to postpone it until the close of 5, June.
Then list your current house on April or June and try to finish it.
\"So you can buy your house for the winter price and get the full benefit of appreciation in terms of sales,\" Waddington said . \". Even in a fast-
However, the risk in the mobile market is that you will end up buying a new house before you sell the old one.
So you should only take this positive approach if your budget is able to handle double mortgages for at least a few months.
If you live in a sluggish real estate market-
Where prices climb or even fall at less than 5% a year-
You must take a more conservative position.
\"We recommend you not to buy a new house until you sell another house,\" said Houston real estate agent Lynn Zal . \".
In Houston, for example, a house can easily be sold on the market 4 to 6 months before it is sold;
Some people have been languishing for two years.
If you find a house that you feel you can\'t give up, ask the seller to accept a contract that will trade depending on the sale of your current house.
If you can\'t sell your house within the prescribed time limit-
Usually 60 to 90 days-
The contract is due.
If you do provide an emergency sales contract, please be prepared for the seller\'s request for an emergency release.
Under this arrangement, the seller accepts the emergency contract but reserves the right to continue to display the premises.
If the seller receives a real offer about the house, you usually have 72 hours to buy the house at your original offer or to terminate his contract.
If you buy a new house before uninstalling the old one, you may have to resort to a bridge or swing loan to pay the down payment.
This type of loan allows you to borrow with your equity before selling your old house.
Lenders charge one to two percentage points more for such financing than the main interest rate.
You usually pay interest only before the entire principal balance expires, usually within 30 to 120 days.
Often, real estate agents can help you arrange this financing through local commercial banks or savings agencies.
When trading, try to choose a house that meets the needs of the family ---
A large enough to fit your style and taste ---
But there is also the best potential for appreciation.
Not looking for a house at first, but for a prime location.
\"The best communities are always appreciated by the highest,\" Waddington said . \".
Realtors can tell you which communities are most prestigious, but you should also look for other features such as highly rated school systems and places close to shopping, employment, parks and other recreational facilities.
Once you have chosen a block, you can start looking for a house.
First of all, you have to decide whether to buy an existing house or a new one.
While this decision largely boils down to whether you prefer the charm and personality of the old house or the modern amenities of the new house, keep in mind that the new house is more dynamic --
High efficiency, less maintenance than old houses need, usually 5% to 20% more than old houses.
Hold on to the big house in order to get the best resale value ---
2,000 square feet or more with at least three bedrooms and two bathrooms. Move-
Up buyers also show a clear preference for the privacy of independent homes.
As important as space size is interior design-
How space is divided.
Here are the areas that buyers think are most important in trade.
Up house: Master-bedroom suite.
\"This is the most important moving room in the House --
\"Buyers,\" says William devlo, an architect in Washington, D. C. C.
Berkus Group\'s office, a company that designs houses for major builders.
\"It\'s a retreat, not just a place to sleep.
The master bedroom should have a study or niche with enough space for a table, library or fitness facility.
It should also have its own bathroom, preferably a Jacuzzi large enough, separate shower and double washbasin. Foyer.
The new house is more common than the old one, and the spacious entrance foyer usually has two floors high, both the appeal of the design and the attraction of snobbish.
Since indoor space is very expensive, spending money in an area that has not even lived means wealth.
It is the most popular
Look for elements in today\'s new house.
Formal restaurant.
Since smaller start-up houses often lack separate restaurants, this is one of the first things buyers look for when they trade.
In the new house, the trend is to increase privacy by closing it from the rest of the house with French doors.
The room should be large enough to accommodate at least 10 people comfortably. Kitchen.
Although many working couples today rarely spend their time there, the kitchen is still a showcase of luxury, convenience and conspicuous consumption.
What is popular today is the village kitchen with quarries --
Tile floor and high
Ceiling dining area with bare country beams.
Nirvana consists of a series of fashionable appliances such as Jenn-
Air or Gaggenau range, submarine
Zero or Traulsen for refrigerator and solid wood--oak or cherry --cabinetry.
Of course, just because a house doesn\'t contain these features doesn\'t mean you should reject it.
But you should pay special attention to the quality of the design and construction.
\"There is a tendency to return to elegance in trade --
\"Buyers have increased,\" said William Devero . \".
\"People want a house with quality materials, excellent structure and meticulous details ---
When they buy as many square feet as they can, it\'s impossible for them to have everything. \'\' Marble-
Cedar tile bathroom
Oak roof-
French door with floor-
These and other contacts separate mobile devices.
Above the starter-outer.
In the end, you may sell your deal. up house.
When you do this, remember that the buyer will do it with the same care --over you did.
Vereaux summary: \"Mobile-
Buyers are the most discerning and demanding.
After all, they don\'t need to move. \'\' BOX: TRADE-
The most basic bridge loan is also known as a swing loan, and if you have to buy a new house before you sell the old one, this financing will surprise you.
The bridge loan allows you to borrow with the equity of your current house, so that you can use the money as a down payment to finance the new house.
Interest rates are usually 1 to 2 percentage points higher than gold rates.
Unexpected terms a clause in the sales contract that states that if you cannot sell your current house within the specified time ---
Usually 60 to 90 days-
The deal to buy a new house was canceled.
The seller who agrees to the emergency arrangement may add the emergency release clause.
This makes it possible for the seller to accept your offer, but to keep his house on the market.
If the seller receives another offer about the house, you usually have 72 hours to buy the house at the price in the sales contract.
Otherwise, the seller is free to accept another transaction. CAPITAL-
A provision of the income extension tax law that allows you to sell your current house at a profit and to delay paying taxes on that income, as long as you buy another house of equal or greater value within two years before or after sale.
Before you sell at a lower price, you can scroll through the proceeds
Price or sell the house and stop buying it completely.
Even so, most 55-year-old sellers can still earn $125,000.
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