Market News

“A rising tide lifts all boats.” Is that how the proverb goes? By the same token, speaking of the current housing market, a falling tide lowers all boats.

In practice, what’s happening is that sellers who also buy don’t fare so badly. Let’s say they’re selling their starter home for $175,000 and they end up taking a hit, and sell for $160,000. In general terms, sellers are having to come down off their price — the price they strongly feel they should get — by about 10%. So if they are selling for around $200,000, they end up “losing” $20,000. But let’s say they then move up, and purchase a home for $300,000. That seller is also going to give up 10%, or $30,000. So the move-up buyers recoup their loss on the purchase side.

The loss is truly a loss, however, for sellers who don’t buy. Last year I sold the home of a young couple who were divorcing. They planned to sell their home and move into apartments, which is what they did. The loss they took was a real one.