Strong Equity Gain Prods Move-up Home Buying


SARASOTA, FLORIDA, August 16, 2017 – The ranks of move-up home buyers in the months ahead are likely to grow larger in Manatee and Sarasota, thus requiring the services of real estate agents well-versed on lending programs tailor-fit for these type of buyers.

Growth in home equity has been robust recently in the two counties, a sign that it’s an opportune time for homeowners to sell their residence and to buy a nicer replacement. It’s noteworthy too that other Florida metro areas have been experiencing robust home equity gains, raising the possibility of a wider playing field in the move-up market for Manatee-Sarasota homes for sale.

Record Average Price Gain

Record Price Gains

A study by ATTOM Data Solutions of residential sales during this year’s second quarter showed that home equity in the North Port‒Sarasota‒Bradenton metropolitan statistical area (MSA) rose by 34.2 percent for an average price gain of $61,150. The rate of increase that our MSA registered was the fifth fastest in South Florida where ATTOM noted that the overall percentage increase is the highest in 10 years and tops the 26 percent national average.

Easing competition from cash buyers in Manatee and Sarasota should also help stimulate move-up homeowners to engage the market. Home buyers paying in cash, which could pose stiff competition to loan-financed residential purchases, were mainly on a decline in the two-county region except for the 6 percent spurt registered in Sarasota in April.

Moreover, the recent gains in home equity puts homeowners in a better financial position to secure funding for their move-up choices amongst Manatee-Sarasota homes for sale. Basically, there are two financial instruments available to these buyers.

Bridge Loan Financing

Bridge Loan

In a tight or competitive market where sellers got the edge in pricing or cash-paying investors are a major factor, having a bridge loan is one track to go for move-up home buyers. Also called a swing loan, this type of financing enables the buyer to fill the difference of the sales price of the new home purchase and its mortgage.

This bridge financing is a temporary loan covering the time period between sales closings of the homeowners’ old residence and the new one they’re buying. Typically, this loan has a one-year term, and it also pays off the homeowners’ old house.

The HELOC Option

An alternative to a bridge loan is the home equity line of credit (HELOC). This type of financing enables move-up buyers to use as collateral their old homes’ equity which is the difference between their market worth and their remaining mortgage.

HELOCs are of two types, either closed end or open end. Regardless of which type, both are secured second mortgages. This financial product works as a revolving credit line, allowing the borrower not only a choice on how much to borrow but also how often.

Given the recent robust growth of home equity in our area, HELOCs appear to be the path to take for many move-up buyers of homes for sale in Sarasota and Manatee. This type of financing a move-up residential purchase typically comes out as quite less expensive than a bridge loan. This is so because its interest rate and term are usually fixed and far less fees are charged to the borrower.