If you have been contemplating a move up – one to a more expensive neighborhood or a larger home, now might be the just the right time. Let’s look at why:

The $450,000 home which Happy Harry purchased in the late 90's was valued at 750,000 in 2004;
In 2009, it's worth 25% less - $562,000.  Happy is extremely unhappy with his (recent) $188,000 loss.

But wait….The larger home he was ogling in 2004 was $1,200,000.  It too has declined in value...  worth about 25% less and now selling for about $900,000.  A $300,000 discount from the 2004 price, which more than offsets his $188,000 loss.  AND (30 year) fixed interest rates are about ½% lower than they were in 2004.  Happy’s loss on the 2004 home is more than made up for by the decreased price of his new home and today's lower interest rates are a great bonus!


Happy decides that now is a great time for him to move to that larger home.  If prices continue to drop but interest rates increase, he still won’t be in better shape.  For approximately every 1% increase in mortgage interest rate, Happy will need a 10% drop in property values to afford the same monthly payment.  In Happy's circumstance now is the perfect storm.