Why You May Want To Cash In on Your Second Home
When stay-at-home mandates were enforced, a lot of people realized that their homes are not quite fit for their new lifestyle needs. An office(in some cases two), a media room, space for children to learn, a gym, and a large yard are some examples of amenities that became highly desirable now.
Zelman & Associates reported that sales of primary residences grew by 9% in 2020. That increased in demand was met by the lowest supply of homes available in the market in history. This caused prices to skyrocket over the span of 12 months. Listed below are price indexes released recently that shows how the value of homes have risen:
- FHFA Agency House Price Index shows a 13.9% increase
- CoreLogic Home Price Insights Report shows an 11.3% increase
- S&P Case-Shiller U.S. National Home Price Index shows a 13.2% increase
We saw a double digit price increase in every region of the country and in 19 of 20 major metros with the only exception of Chicago, that still has a price increase of 9%.
What does this mean to those who purchased a second home during the pandemic?
A lot of people wanted to hold on to their home in the city or close to their office. What they did was purchase a larger second home farther away from the city to stay safe and have a lot more space. According to Zelman report, we saw a whopping 27% increase in second home sales in 2020.
That large second-home retreat on a lake or in the mountains would demand a higher price than the average house. Let’s assume a buyer purchased such a home for $500,000. Assuming the middle 13.2% appreciation shown above, that home would now be worth about $566,000!
We can definitely say that the people who bought their second home during the height of the pandemic really made a great investment.
What should these homeowners do now as the pandemic is receding, and the economy is reopening?
A tough decision awaits the buyers of those second homes. A lot of people will move back to their original home that they still own(closer to work, the city, and family). Will they keep the second home? The answer depends on what’s their take on the following questions:
- Now that you may have to go back to the office (at least a few days a week) and students are required to physically attend school, would you still use the second house enough to warrant the expenses of an additional home?
- Would you go to the second home on most weekends, or would you return to the movie theater, attend sporting events, eat out at fine restaurants, or spend your time traveling again?
If you purchased a larger second home during the pandemic, you were able to make day-to-day life much easier for those important to you. You also made it much safer. However, with those goals already accomplished, you now need to decide whether to continue paying the extra expenses or sell the house and cash in your profit. If you decide selling makes sense, let’s connect today to discuss the value of your second home.