Confidence is Key for Owners Selling Starter Homes

Seven of 10 millennial homeowners wish to sell and upgrade to a “forever home,” according to a study by ValueInsured that looked at millennial homeowners who were considering selling their starter homes for a bigger space.

According to the study, 70 percent of all millennial homeowners who were considering selling soon said they were waiting until prices to buy were better before making a move in the first quarter of 2018. This represented an 18 percentage point surplus compared to 52 percent of interested home sellers in the age-group of over 35 years who were also waiting until the prices to buy another home were better before they sold their old home for a new one.

The reasons for millennials to hold back on selling their starter homes are many. For instance, among millennial homeowners who were considering selling soon, the study said, 68 percent said they were trying to time the market but were worried about buying too high. Another 68 percent were also worried about losing flexibility if they sold now and upgraded to a bigger or more expensive home.

The findings of this study also highlighted that many starter homeowners were interested in selling to upgrade to a bigger home, but were concerned with what they would have to pay for it.

Profits and if they would earn enough by selling their starter home to upgrade to a new one also played on the minds of these homeowners. The study found that 73 percent of all millennial homeowners believed that people who would buy in their neighborhood during the quarter would be overpaying.

Even then, profits wouldn’t be much. The study said that if a starter-home owner believed that he or she could sell their $250,000 home for 10 percent over market value, after brokers’ commissions, closing costs, legal fees, and capital gains tax, there wouldn’t be much left to pay 10 percent over market value on a desirable, more expensive home in the same neighborhood.

The key to selling the home is therefore confidence, the study said, citing its finding that 80 percent of the respondents said they would sell and upgrade sooner if they had more confidence that they would not lose money on the next home they bought.