Mira Mesa Monitor

[an]

Not everyone owns a home and not everyone who lost their job owns a home.  Also, if you did lose your job and own a home with a sub 4% interest rate that you bought 2-3 years ago, more likely than not, you can rent it out for more than your mortgage.  So, why sell?  Where would you live?

[sdrealtor]

Im gonna address this on a micro level.

MM is in the shadows of one of the top research universities in the world, the medical center of one of the largest cities in the US, down the street from QCOM and every major tech companies SD office, the US militaries tech center and a few large bases, a major life sciences research core and perhaps the nicest city in America to reside. And more. A lot more. How could you be at a loss? Dont be such a Debbie Downer

[JPJones]

All of those things are constants and have little to do with why their prices fluctuate.  They were not immune to the ’07/’08 crash and all of those things were true then as well.

[JPJones]

Sorry, to clarify, I’m at a loss as to why unemployment is staying so low, not why housing prices are staying put or rising.  I said at the start of the year that if unemployment stayed this low, housing prices probably wouldn’t drop, and it looks like that’s what’s happening.

[sdrealtor]

Gotcha on the unemployment but that rhetoric about things being the same in 08 are not really true. The university has grown incredibly. Almost double what it was. Major tech companies have a presence here in a way they didn’t back then. The medical center has expanded greatly. WFH is now a major force.  There is now a trolley that opened less than 2 years ago. So much has changed so fast here.

[Rich Toscano]

Also, if you did lose your job and own a home with a sub 4% interest rate that you bought 2-3 years ago, more likely than not, you can rent it out for more than your mortgage.  So, why sell?

Because you’d get a giant pile of money.

Where would you live?

In a rental paid for from your giant pile of money.

[XBoxBoy]

JPJones – Why shouldn’t unemployment be low? It seems to me that what has been going on over the last decade is a steady drum beat of how horrible things are. The news makes more money by printing stories about how bad things are then about good things. Last consumer sentiment was terrible.  But things aren’t terrible. People just listen to what they’ve been told, and they’ve been told the world is heading for disaster. The economy is doing very nicely. People are working and spending. Yeah, fed rate is up to 5%.  That’s not a huge deal, it only seems so because we got used to ZIRP. There’s some inflation but hey this ain’t Zimbabwe. The stock market has been in the doldrums for a while now, but so what. Maybe we do get a recession in the near future, maybe not. But you should stop listening to whomever is convincing you that things are bad and collapse is just around the corner.

[an]

Rich, you’re assuming that you’d get a pile of money.  If you bought 2-5 years ago, you wouldn’t.  You’re also assuming you can find a rental for less than the interest of your mortgage at 2.x% – 3.x%.  You’re also assuming you’d want to uproot your family and kids to move into a rental.  You’re also assuming that you want to run the risk of rent not rising and/or home price not crashing.

That giant pile of cash will get eaten up really quick if inflation keeps on running at this transitory rate for the next 10 years.  Rent for a small 3/2 in MM is now $3600/month, that’s $42k/year.  In 10 years, that’s over $400k in cash gone, assuming rent doesn’t increase over the next 10 years while inflation runs high.

[Rich Toscano]

SD home prices are up 27% from 2 years ago. They’re up 60% from 5 years ago. In addition to the appreciation, you also get back your down payment and all the principal you put it. Minus commission, but still: a giant pile of money.

Regarding your other points: the question you asked was, why would you sell? The answer is that if you sell, you get a giant pile of liquid money, which is valuable (especially if you’ve lost your job).

Whether this is the right choice for you or anyone completely depends on the situation; I was just rejecting your premise that there is no reason to sell. There’s a very good one, that may in some cases offset the issues you raised.

(BTW your inflation math is flawed… eg it assumes no return on the pile of money, and also fails to account for all the cash going out the door if you own.)

[sdrealtor]

Just the same there is also future appreciation potential. Lots of moving parts there

[JPJones]

JPJones – Why shouldn’t unemployment be low? It seems to me that what has been going on over the last decade is a steady drum beat of how horrible things are. The news makes more money by printing stories about how bad things are then about good things. Last consumer sentiment was terrible.  But things aren’t terrible. People just listen to what they’ve been told, and they’ve been told the world is heading for disaster. The economy is doing very nicely. People are working and spending. Yeah, fed rate is up to 5%.  That’s not a huge deal, it only seems so because we got used to ZIRP. There’s some inflation but hey this ain’t Zimbabwe. The stock market has been in the doldrums for a while now, but so what. Maybe we do get a recession in the near future, maybe not. But you should stop listening to whomever is convincing you that things are bad and collapse is just around the corner.

I wasn’t trying to say things were bad.  Things aren’t bad, which is pretty sweet, but I thought they might be based on what I was seeing in the numbers.  5-6% interest rates on a mortgage is considered ideal, so yeah, that’s not bad, either.  3.4% unemployment?  That’s too low and is one big reason inflation is still uncomfortably high (4.3%).  It’s also what I see as the biggest reason housing prices are steady or moving up both locally and nationally.

[an]

True, you’re right, there’s a pile a cash if you sell.  You then give up a lower monthly living expense, a lower interest rate for 30 years, a low tax based (prop 13), the home you’re happy living in, the ability to do what you want to with it (rent out all the room and make a profit while living in the garage), etc.  Again, you’re right that you do gain a pile of cash.  But you’re losing a bunch of stuff for that pile of cash.  It’s not as black and white as you stated.

This is not even talking about the emotional side of that decision.  The memories you and your family built in the house over the last few years, the moving of your kids to potentially different schools, the hassle/cost of moving (maybe even storage), the risk of dealing w/ a jackass landlord, etc.

Bottomline is, looking at the supply right now, most people rather not move than selling for the pile of cash.  So, obviously, for most, the cons of selling outweigh the pros, that’s why supply is not increasing.

[an]

BTW, I said “So, why sell? ” not “there is no reason to sell”.  It might sound the same to you, but not to me.  One is black/white while the other is not.

[an]

BTW, there’s always reasons to sell and a pile of cash is not the only one.  Your spouse died and the house remind you of them.  Your kid died in the house and everything about the house remind you of them.  You moved for another job in a different city. The neighborhood has gotten worse and there’s gun fights in front of your house.  There is constant drug dealing in front of your door.  Your kid(s) got bullied so badly that you want to move to a different city.  I can go on and on and on.

[Rich Toscano]

BTW, I said “So, why sell? ” not “there is no reason to sell”.  It might sound the same to you, but not to me.  One is black/white while the other is not.

Yes, I was interpreting those as largely the same statement, sorry if I misunderstood.

[Author]

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