Tempted to Equity Up?

Dear aspiring move-up buyers,

I am addressing those who, as a result of their property's appreciation, have an enviable amount of home equity and are now thinking of using it to finally make a move for the better. Would you be among this cohort?

Perhaps you have been at it for a while, attempting to make your next step up the property ladder. You are probably trying to find a place you can love, not only as much as your current home but even more. It can be quite the challenge, can't it?

No doubt you love many things about your current home. Maybe it's the location, the extra high ceilings, the private rooftop deck, or the new kitchen you renovated to your personal specs - all things you probably don't want to give up. Understood. 

You may also be concerned about becoming house poor at this age and stage, am I right? Maybe you'd prefer to have cash, for the family to travel, to work less, and perhaps even retire early?

Hence the challenge of a move-up buy that is based on home equity as opposed to improved income. It is the dream of having a home that suits your current life better than your current house does, while also not spending much more to get it. With such opposing interests at play it's no wonder your search may feel as though it's against all odds.

When I meet would-be move-up buyers it's obvious they've been feeling pretty stuck. When I question what they are willing to let go of to make their search more successful, I'm first hit with a 'this needs to be a serious improvement or I'm not moving!' look.

So how do you clarify how you might use your home equity wealth to fund a move? Your search can actually be distilled to just four equations, no matter where you live, what kind of market is at play, or whether you're thinking of a move this year or five years from now.

Which equation best reflects your options?


Better Location + Better House = Higher Price

Better Location + Lesser House = Higher or Same Price

Lesser Location + Better House = Same or Lesser Price (higher if wayyyyy better)

Lesser Location + Lesser House = Lesser Price


If the problem you're looking to solve is location based, it makes sense that you should be prepared to pay up or buy a lesser house. If it's a combination better house while also saving for retirement that you're after, then it follows that you'll be moving to a neighbourhood that is considerably cheaper. If a straight cashing out is what you seek, then downsizing or moving out of town altogether will be the foundation of your search.

Awareness of the equation you're working within, based on the primary problem you're looking to solve, will go a long way to making your home search more successful. You're much more likely to be ready at the next opportunity, having already considered and accepted the compromises you're willing to make to move.

Now, If you look at these equations and can accept none of the above, that's okay too. At least then you'll be clear on why you've chosen instead to suck it up and stay put. Acceptance of your home without attempting to change it or protest it, can have its own obvious merits too. :-)