According to the National Association of Realtors, the median duration of homeownership is 13 years. This increased by three years in 2008, most likely due to the market crash. Housing supply shortages and low affordability are two reasons people may stay longer in their homes. Low supply is currently an issue in Bozeman, however, there are a number of reasons people still need to upgrade. Here are the top reasons people consider upgrading their homes.
1. A GROWING FAMILY
Your 2-bedroom condo was perfect when you first moved in, there was even a whole extra bedroom! It might have felt fine when the first baby came home, but by the time baby #2 comes around, things may be getting too cozy. A growing family is the number one reason people upgrade their homes. It is also when some re-evaluate location. Suddenly being near parks and schools becomes a priority, as well as outdoor space.
2. THE NEED FOR A BONUS/EXTRA ROOM
Even if everyone has their own bedroom, there can still be a need for a bonus room that can be used as a guest room, office, or playroom. This has become more necessary because of Covid and the number of people staying home. A living room office works temporarily, but for many working remotely has become a permanent situation. A home office has become more of a necessity than ever before. And, we live in Montana…guest rooms are a must because everyone wants to visit!
First time home buyers are generally more limited on their options. Especially in a real estate market like Bozeman where homes in that price range are hard to come by. This means people take what they can to get their foot in the door of the real estate game, with hopes to upgrade in the future. After a few years, many start looking to move up from that starter home. Location is also a reason for people who are new to the area. They may buy a home and then realize another location or neighborhood is a better fit.
Life as we know it has certainly changed with Covid. Suddenly, people are working from home, living rooms have become classrooms and the bedroom is your gym. Even when things return to normal, there are some things that might never change, such as working remotely. You may have been fine with your small home or condo pre-Covid, but now might be the time to start thinking about upgrading. There’s something about everyone staying home that makes you realize; more space could be a good thing!
Is now the right time to upgrade? Here are things to consider.
1. INTEREST RATES
Upgrading when interest rates are low will be beneficial to you. You will pay less for your loan over the long run and have lower monthly payments. Buying any home is most likely the largest single purchase you'll make, so saving on interest is helpful.
For most, the longer you own your home the more equity you are building. Ideally, you want your equity to reach the 20% mark before considering an upgrade. Then you can take the equity from your current home to make the downpayment on your new home.
3. CURRENT MARKET CONDITIONS
Generally, people want to purchase a home when it's a buyer's market because you have more power to negotiate and get more for your money. However, if you are upgrading you get the advantage of the seller's market when you list your house. Meeting with an experienced real estate agent to find out what your current home is worth and what is available in your price range is a great place to start. Buying a home in Bozeman can be difficult right now, but if you understand our current market and have realistic expectations, it is possible.