In these crazy times, it's possible to "beat the market" and yet still be hurting financially...



The blue line above shows the trend in single family home prices over the past five years in Harrisonburg and Rockingham County.  As you can see, prices have declined, though only a total of 12% over the past five years.

The red line shows the purchase and sale of a single home in Harrisonburg, as experienced by some of my clients. 

You'll note that while the red line declines, it's not by anywhere near as much as the blue line.  Thus, my client's home outperformed the market --- they beat the market, and experienced a smaller decline that perhaps they should have.  How exciting, right??

But no, actually, it wasn't too exciting.  The heroic act of selling the house at a higher price than the market suggested would be possible was still painful.  My clients had financed most of their home purchase in 2007, so they actually had to bring thousands of dollars to closing in 2010 in order for the sale to proceed.

You see, it's not as simple as the purchase price minus the sales price --- you also have to factor in the closing costs on the buying side (2007) and the closing costs on the selling side (2010).

So....when the market is declining, even if it is declining slowly, it can be difficult to purchase and then sell within a short time period.  Thus, buyers and sellers should note that:

• If you're thinking about buying now, and only staying for a few years, and financing most of your purchase price -- you might find yourself in the situation described above.
• If you bought a few years ago, and financed most of your purchase price, your house's value might have performed well, and yet you'll still have trouble selling without bringing money to the closing table.

Hopefully, we'll soon return to predictable, rosier times, when home values are steadily increasing by 3% to 6% per year.  Soon, I hope, on behalf of all of my clients!