On Oct. 2 of last year the Federal Reserve cut interest rates for the ninth time, bringing them down to historically low levels. Low rates have created enormous opportunities for all types of homebuyers and homeowners. One opportunity in particular that I would like to discuss is the chance that current homeowners have to “price jump.”

Price jumping, as the name suggests, is the act of selling one home for a new, higher-priced home. In other words, if you currently live in a $300,000 home, sold it and moved into a $400,000 home that would be considered “price jumping.” Home owners have a very unique opportunity right now to price jump, not only because of low interest rates, but also because of the market conditions in the Puget Sound area. I am referring to the fact that in the Puget Sound there is a shortage of “affordable” homes near the job centers, resulting in increased demand and rapidly rising values (affordable = homes priced below the median housing price in each geographic area). Furthermore, because of this high demand, homes in the more affordable price ranges tend to spend the least amount of time on the market.

On the flip side, our local housing market has experienced a slight price adjustment in the higher price ranges (those homes above the median price range). The reason for this is that when the dot-com bubble burst, premium priced housing came off the frenzy market it had been experiencing, making those homes more affordable. When you combine the high-demand for more affordable housing, the increased values in this market, and the price adjustment in the higher-end sector, the result is a very advantageous opportunity for homeowners who want to move up.

So here’s the unique opportunity that currently exists for home owners: if you currently own a home in the more affordable range (on average, $350,000 or under) near the job centers in the Puget Sound area, there is a strong demand for your home. As mentioned, there is a shortage of affordable homes in this market; therefore they tend to be in high demand when they are listed. Furthermore, we are seeing the median home price in this market going up, which means that home values are continuing to rise. Then, if you consider the price adjustment in the higher end market and the fact that interest rates are at near historic lows, you can see the opportunity that exists for homeowners — it’s a triple benefit.

When you combine all of aforementioned factors, the result is that homeowners currently have the opportunity to buy more home for their money. With interest rates so low, you could potentially purchase a more expensive home, yet make similar monthly payments to your current home — this is price jumping. Here is an example that illustrates price jumping:

$250,000 home @ 7 % = $1,956 monthly payment

$300,000 home @ 6 % = $2,106 monthly payment

The difference in the monthly payment between these two homes is $150, however the difference in value is $50,000. So, in other words, based on this scenario, for only $150 more a month, you could live in a home worth $50,000 more than your current home because of low interest rates. That represents a significant increase in the quality of housing in most markets, especially considering that prices have come down in the higher end. In light of this opportunity, if you have plans to move in the next couple of years, it could be in your best interest to consider price jumping now.

The current opportunity for homeowners to price jump is extremely unique and does not come along very often. Several factors within the market all have to exist simultaneously for this situation to subsist, including low interest rates, a high demand for affordable housing and a leveling out of prices in the higher end. All of these factors currently exist in our local market, creating a historic opportunity for homeowners in the Puget Sound.

(Editor’s Note: J. Lennox Scott is president of John L. Scott Real Estate. He may be reached at realnews@johnlscott.com, or visit his firm’s award-winning website at www.johnlscott.com.).