Sometimes what logic would seem to dictate and what reality shows don’t necessarily wind up leading to the same conclusion. That might well be the case when considering upsizing in today’s housing market. With prices on the rise, Milaca homeowners who would like to upsize to more spacious digs may be inclined to shelve plans for the time being.

It’s widely the case that this spring finds listing and sales prices on the rise throughout the nation—news which would encourage the first part of the plan, the selling part. But the same trend works to discourage the follow-through—since buying could likewise prove to be too expensive.

But that abstract reasoning against upsizing might not work out as expected in every marketplace— at least in some cases. The details have to do with what’s going on in different market segments. And there’s a second factor at play that could prove decisive.

The latest national sales figure confirm that, as CNBC states, “the supply shortage is the worst on the lower end of the market”—the selling side for would-be upsizers. Sure enough, there is further confirmation that price rises are steeper in that segment. The latest Trulia.com study finds median starter home prices are up a whopping 9.6%. That isn’t surprising, given that segment’s 19% drop in inventory from a year earlier. Although it’s also true that at the other end of the market “premium” inventories were down—they dropped by less than 6%. The disproportionate differences in supply explain the steeper price gains for more modest properties.

The second factor is in mortgage interest rates. When rates rise and monthly payments go up, buyers find it harder to qualify for the more expansive properties. With more buyers competing in the part of the market where inventories are shrinking fastest, sellers benefit. Especially if interest rates do continue to rise as predicted, the financial incentives for upsizing sooner rather than later are clear.

Of course, no matter how pronounced national trends might be, at best they can only provide a rationale for why some strategies might be more rewarding than others. When it comes to a major undertaking like upsizing, my clients can rely on the latest real market data to inform their ultimate buying and selling decisions.

  

 

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