PS, your analysis puts the cart ahead of the horse…your first two points automatically assume that the overvaluation estimates in the article are 100% certain and even underestimated for many of the markets.
Statements like:
“and then buy back in when your house is worth half. Heck, you could pay cash for the house in 5 years!”
“you would lose all that paper profit. It won’t be there in 5 years.”
assume that this housing bubble deflation is going to behave very similarly to the last. That’s still a big assumption. So, far everything looks like it’s on track to behave the same way…But, what if it just drops 20%, plateaus for 5 years, and then goes up again. Suddenly your advice is not prudent decision for a much larger percentage of folks.
The big-money cash out your talking about doesn’t exist for many of these markets. Sure, it works in SF, SD, and LA, since our homes were fairly expensive to start out with, but the guy in Duluth who bought at 65K isn’t going to bring in “the biggest payoff that you may have in your life.” Futhermore, the couple that bought at the top in Duluth for 140K and faces a potential 30% decline is far from committing financial suicide.
So, to summarize…there are a lot more factors to this decision than the little red number by your hometown. I’ve pointed out 2 of them, but there are many more (quality and location of the property being another big one that’s never considered in your sweeping analyses).
BTW, your SVP friend was likely chasing some very sweet relocation packages and made some very serious coin at each stop along the way. The kind of coin that rivals your once in a lifetime payout.
