WILL SELLERS HAVE TO WAIT 10 YEARS TO GET THEIR PRICE?
Many sellers are under the mistaken impression that waiting a couple of years to list their property will enable them to get the price they could have gotten at the height of the market a few years ago. Historically, the average appreciation in most areas has been approximately 5%, but in today’s market it’s much more likely the seller may not realize this price in less than 10 years. Consider the following example:
Example A:
Price at height of market in 2006 $2.5 million
Price listed now $2.2 million
Actual Value per Comps at present $1.8 million
4-Year Loss of Value 2.5-1.8 = $700,000
Average Loss Per Year $700,000/4 = $175,000
FACTS:
Seller believes that the economy will get better in the next 2-3 years and they will get their $2.5 million. However, if there’s actually more depreciation for another year or two, and the market remains flat before it appreciates again, the chart below reflects just how long it could take before the seller realizes his price. Barbara Corcoran and other experts believe there will be a 7-10% drop in values for the next 2-3 years.
|
YEAR |
SALES PRICE |
EXPLANATION |
|
2010 |
$1.8 million |
Original selling price |
|
2011 |
$1.62 million |
10% loss |
|
2012 |
$1.458 million |
10% loss |
|
2013 |
$1.458 million |
Flat market – no appreciation |
|
2014 |
$1.458 million |
Flat market – no appreciation |
|
2015 |
$1.53 million |
5% appreciation |
|
2016 |
$1.607 million |
5% appreciation |
|
2017 |
$1.688 million |
5% appreciation |
|
2018 |
1.77 million |
5% appreciation |
|
2019 |
$1.86 million |
5% appreciation |
|
2020 |
1.95 million |
5% appreciation |
|
2021 |
2.05 million |
5% appreciation |
|
2022 |
2.15 million |
5% appreciation |
|
2023 |
$2.26 million |
5% appreciation |
|
2024 |
$2.37 million |
5% appreciation |
|
2025 |
$2.5 million |
5% appreciation |
Conclusion: Sellers won’t wait 15 years and risk selling later for less. For most sellers, it makes more sense to sell now and enjoy the benefits of moving on. In determining whether to wait or not, all sellers should ask themselves “what would it mean to me if I were to sell today?” The answer to that will be telling.