My post shows I 100% would have more money renting than buying even if the market goes up 3% a year for 7 years. I would still lose $36,000 in that 7 year span. If the new home did not go up in value I would have lost $110,000 in that same 7 years. Depens on how much aof a risk taker you are. If it was me (being married with no kids and 0 debts) I would sell 100%, but thats just me. Have the equity and run is well worth it. I just sold my (unwanted) California City property dirt lot without electricity on it for $35,000. Everyone involed said “take it and run”, thank god I did. Lot now in same tract is selling for $25,000 list price.

I recommend that anyone who either wants to take profits, or who still has a mortgage, Sells Now.

I am puzzled by the people who say renting is not advisable. I wrote a long post about the advantages of renting. I have 3 children, and my entire family loves our rental house. We live in a great neighborhood, they attend the same schools as before the move, the house is cozy and at 2100 sq ft big enough for us. We are painting this summer, and going 50/50 with the landlord on installing an A/C. We plan to be here 4-5 years.

I know this might make some people mad at me, but I’m used to that, so here it goes: women who prefer losing $200K-$500K equity just because they want to “own” rather than “rent” are fools. Usually it comes down to wanting to be able to paint. Go ahead, paint your rental. Geez…. Put in a garden. I just had some curtains made for my rental.

Anyway, it’s obvious to anyone with a slight knowledge of economics and commons sense (all excesses correct), that housing will revert to the mean.

The only reason to stay in a house in San Diego, would be if it’s paid off, and you cannot afford the rent, or you like having no rent/mortgage. Taking profits is always a great alternative.

Bob,

I’d be a little leery of any statements of certainty regarding the future of the housing market. To me, such certainty indicates a basic misunderstanding of the fact that the housing market is incredibly complex and dynamic. Thousands of factors are in play, and nobody can say with certainty what’s going to happen. Besides, if you interpret the phrase “housing will revert to the mean” to mean that the ratio of prices to income will revert to the mean, then that doesn’t necessarily mean that nominal prices will come down. As has been discussed on this site many times, if prices stay level and inflation really takes off, the price/income ratio could revert to the mean without nominal prices dropping.

That said, I think there’s a good chance nominal prices will come down. Will they come down enough for it to be worth it for you to rent? That, obviously, is the question. And the only thing you can do, it seems to me, is decide how much you think they’ll come down, and then decide whether you think that’s worth it or not. For instance, if you think there’s a 30% chance that prices will either come down less than 10% or go up, a 40% chance prices will come down 10-30% and a 30% chance prices will come down more than 30%, where does that leave you? Keep in mind that you’re taking a chance either way. If you sell and prices come down a total of 5%, you’ll probably wish you hadn’t gone through the hassle of moving, renting, etc. If you don’t sell and prices come down 40%, you’ll wish you sold.

If you’re going to rent until you buy your new house, then it really doesn’t matter if you lose your low property tax basis. Your property tax basis on your OC house will be the same regardless of what you do in the meantime. The comparison to make to determine costs for the next 5 years is between the costs of renting and the costs of owning your current house, property tax and all. And, of course, you have to factor in any appreciation or depreciation of your house.

If you’re going to sell one house and buy one house and the only variable is when you’re going to sell, then you really don’t have to take into account the costs and inconvenience of buying and selling, either. It adds up the same either way.

You do, of course, have to figure in the inconvenience of moving an extra time (or more than one extra time) and the inconvenience of renting. If you rent an apartment, you don’t usually have to worry about the landlord deciding he wants to sell or move in or otherwise kick you out (although a conversion to condos can usually not be ruled out). But you have to live in an apartment. If you rent a house, you’ll generally have to concern yourself with the landlord’s intentions. And you have to keep in mind that if the house you’re renting is an investment property for your landlord (which, of course, it usually is) then there’s an increased chance he’ll want to sell if prices really start to come down.

Only you and your wife can put a value on such intangibles such as “pride of ownership,” freedom from worry about being forced to move, etc. What’s important to you might not be important to someone else, and vice versa. So don’t let anybody tell you what’s foolish and what’s not.

And only you can put a (obviously negative) value on any tension that may arise from “convincing” your wife to move if that’s not really what she wants.

Good luck, I hope it works out for you.

You raise some valid counterpoints. If wages go up, then house prices wouldn’t have as far to fall to revert to the mean. However, wages in this country have been stagnant for over 10 years. Outsourcing and illegal immigration have put downward pressure on wages. Ex: wages for Computer Engineers are down over 10% in the last few years. And this is happening despite high inflation (I know, CPI is low, but I don’t buy it).

So I respectfully disagree, and maintain that housing prices will fall, and wages will continue to stay stagnant or fall in real terms.

Try to seperate your excellent financial situation (e.g. that you are essentially living well below your means) from your overall asset portfolio.

Add up all your assets, including your house, figure out what percentage you are into RE. If you are uncomfortable with this allocation, you should sell.

A lot of people have no investments other than RE…which happened by default when they kept paying their mortgage but didn’t put a dime into savings.

Outsourcing is putting downward pressure on white collar jobs, while illegal immigration is putting downard pressue on blue collar jobs. The “jobs Americans won’t do” cliche is totally bogus. What happened is that the illegals have depressed wages so much, that Americans are not willing to work for that wage. If you pay someone the market wage, you will get plenty of applicants. Econ101. The point is that wages are stagnant or declining, and there is no reason to think they will go up. Real hourly wages are the leading indicator of consumer spending, and I assume, for home purchases as well. Until wages go up, people can’t pay more for housing, regardless of how loose the lenders want to get.

You, undoubtedly need a good spreadsheet for this and should take into consideration all of the factors involved:

Appreciation/Depreciation of the asset.

Your taxable basis in the property and any capital gains taxes you may pay when selling.

Real Estate Transaction Costs – for selling, then buying again.

What portion of those Real Estate Costs are tax-deductible.

Change in Property Tax Base and how much your property taxes will increase (or decrease).

The amount of tax you will save due to interest write-offs.

The cost of moving.

The cost of maybe moving a couple of times if your new rental gets sold out from under you.

The value of your time and the state of your career. Doing this stuff (selling houses, moving, buying houses) just sucks time from your life. If you have a serious enough career to be putting $4K into housing each month, you may be able to get better use of your time by hunkering down and earning money at work rather than monkeying with real-estate.

The quality of your investments – what will you do with the cash you take out of the house? Put it under a mattress or invest in a CD, or play the stock market?

My intuition tells me that if I were in your shoes I would be more content staying put, but you really need to do some serious number crunching. If you are younger and have more energy than me, maybe the moving/shifting would be less of a pain.

Also, as the rates on CDs grows higher than the interest rate on your mortgage, you might consider making that extra payment into investments which pay better than 4.85% with no risk.