Relocating from SD to OC

[sd2oc]

hello all,

this is a great forum! i just discovered it today, and already it’s been a wealth of information. my husband and i currently live in carmel valley, but he recently started working in orange county and now we’re grappling with a few real estate questions. we’d love some input from the folks on this forum–thanks in advance!

here’s the deal: we purchased our home two years ago, and thinking we’d be staying for quite some time (great schools, lovely neighborhood, 5 minute drive to my husband’s then-office), made a large downpayment, got a 15 year fixed at 5.25% for the rest, and didn’t worry too much about the state of the market. as fate would have it, my husband was then offered a career opportunity too good to pass up–but in OC! he loves his new job, but the commute is tiring and we now need to decide whether to:

1) sell our current home in SD and buy in OC,
2) sell in SD and rent in OC,
3) rent out our SD home and rent in OC, or
4) stay in SD and commute to OC for the time being (and if so, for how long?).

although of course SD has been hit hard by the housing bust (or “readjustment” as some like to call it ;), our specific area has been cushioned somewhat thus far, and if we listed our home now, we would likely break even on the deal after commissions and closing costs. of course, i have no idea whether this will the case 6 months from now, 1 year from now, etc. given our situation, do you have any advice for us?

thanks again!

[SD Realtor]

sd2oc I believe the two events are independent and may be treated as so.

Let’s start with your home in CV.

What you decide to do with it depends on your outlook for San Diego housing.

– If you believe the market is going to bottom out soon and then appreciate then you may want to wait and hold on to your home and then sell when the market comes back up. (Personally I do not believe this is the case) If you do hold on to your home you can rent it out. Turning the home into a rental is an outstanding way to help shelter some tax expense. Note that once you do NOT live in the home 3 out of the last 5 years, you will lose the capital gains exemption once you do sell the home. Yet to be honest, I would not worry to much about that at this point. The real question is, given your mortgage payment, mello roos (if you pay them) and HOA (if you pay them) and any additional expenses like prop tax and insurance will stack up against rent. More then likely you will have a negative cash flow but how negative is something you would need to calculate.

– If you believe the market is going to go down and continue to go down for the next several years then it would be best to sell now. Personally my opinion for CV is that the market will go down there and it will then be flat for awhile and then start go rise slowly. I think that CV detached homes have held up quite well and the lions share of depreciation is ahead for these homes, not behind. I think that the area is susceptible to problems if we see disruptions in employment and/or interest rate hikes. Yet I don’t think it is something that will happen in the short run. However in the next 2 years it will be interesting to see where CV is at.

6 months from now? Well I don’t think things will be radically different but we will definitely be in a period where seasonally there are fewer buyers.

**************

As far as buying goes my advice, and I cannot stress it enough) would be to rent for awhile if you can. I think the OC is going to get hammered and it is perhaps even more stretched then SD is in the high priced home areas. I also think the OC is a year or two behind SD in the depreciation cycle.

**************

As far as staying home and commuting goes? Well… Does your husband take the train? I know it is kind of a chore but I think it is not nearly as taxing sitting on the train as it is sitting in traffic.

**************

Anyways not sure if I gave any definitive advice. My personal choice would be to sell CV, even if it means a loss, and rent in the OC… pocket cash and in a few years buy a nice big foreclosure or distressed property in Laguna.

SD Realtor

[SD Realtor]

sd2oc I believe the two events are independent and may be treated as so.

Let’s start with your home in CV.

What you decide to do with it depends on your outlook for San Diego housing.

– If you believe the market is going to bottom out soon and then appreciate then you may want to wait and hold on to your home and then sell when the market comes back up. (Personally I do not believe this is the case) If you do hold on to your home you can rent it out. Turning the home into a rental is an outstanding way to help shelter some tax expense. Note that once you do NOT live in the home 3 out of the last 5 years, you will lose the capital gains exemption once you do sell the home. Yet to be honest, I would not worry to much about that at this point. The real question is, given your mortgage payment, mello roos (if you pay them) and HOA (if you pay them) and any additional expenses like prop tax and insurance will stack up against rent. More then likely you will have a negative cash flow but how negative is something you would need to calculate.

– If you believe the market is going to go down and continue to go down for the next several years then it would be best to sell now. Personally my opinion for CV is that the market will go down there and it will then be flat for awhile and then start go rise slowly. I think that CV detached homes have held up quite well and the lions share of depreciation is ahead for these homes, not behind. I think that the area is susceptible to problems if we see disruptions in employment and/or interest rate hikes. Yet I don’t think it is something that will happen in the short run. However in the next 2 years it will be interesting to see where CV is at.

6 months from now? Well I don’t think things will be radically different but we will definitely be in a period where seasonally there are fewer buyers.

**************

As far as buying goes my advice, and I cannot stress it enough) would be to rent for awhile if you can. I think the OC is going to get hammered and it is perhaps even more stretched then SD is in the high priced home areas. I also think the OC is a year or two behind SD in the depreciation cycle.

**************

As far as staying home and commuting goes? Well… Does your husband take the train? I know it is kind of a chore but I think it is not nearly as taxing sitting on the train as it is sitting in traffic.

**************

Anyways not sure if I gave any definitive advice. My personal choice would be to sell CV, even if it means a loss, and rent in the OC… pocket cash and in a few years buy a nice big foreclosure or distressed property in Laguna.

SD Realtor

[SD Realtor]

sd2oc I believe the two events are independent and may be treated as so.

Let’s start with your home in CV.

What you decide to do with it depends on your outlook for San Diego housing.

– If you believe the market is going to bottom out soon and then appreciate then you may want to wait and hold on to your home and then sell when the market comes back up. (Personally I do not believe this is the case) If you do hold on to your home you can rent it out. Turning the home into a rental is an outstanding way to help shelter some tax expense. Note that once you do NOT live in the home 3 out of the last 5 years, you will lose the capital gains exemption once you do sell the home. Yet to be honest, I would not worry to much about that at this point. The real question is, given your mortgage payment, mello roos (if you pay them) and HOA (if you pay them) and any additional expenses like prop tax and insurance will stack up against rent. More then likely you will have a negative cash flow but how negative is something you would need to calculate.

– If you believe the market is going to go down and continue to go down for the next several years then it would be best to sell now. Personally my opinion for CV is that the market will go down there and it will then be flat for awhile and then start go rise slowly. I think that CV detached homes have held up quite well and the lions share of depreciation is ahead for these homes, not behind. I think that the area is susceptible to problems if we see disruptions in employment and/or interest rate hikes. Yet I don’t think it is something that will happen in the short run. However in the next 2 years it will be interesting to see where CV is at.

6 months from now? Well I don’t think things will be radically different but we will definitely be in a period where seasonally there are fewer buyers.

**************

As far as buying goes my advice, and I cannot stress it enough) would be to rent for awhile if you can. I think the OC is going to get hammered and it is perhaps even more stretched then SD is in the high priced home areas. I also think the OC is a year or two behind SD in the depreciation cycle.

**************

As far as staying home and commuting goes? Well… Does your husband take the train? I know it is kind of a chore but I think it is not nearly as taxing sitting on the train as it is sitting in traffic.

**************

Anyways not sure if I gave any definitive advice. My personal choice would be to sell CV, even if it means a loss, and rent in the OC… pocket cash and in a few years buy a nice big foreclosure or distressed property in Laguna.

SD Realtor

[SD Realtor]

sd2oc I believe the two events are independent and may be treated as so.

Let’s start with your home in CV.

What you decide to do with it depends on your outlook for San Diego housing.

– If you believe the market is going to bottom out soon and then appreciate then you may want to wait and hold on to your home and then sell when the market comes back up. (Personally I do not believe this is the case) If you do hold on to your home you can rent it out. Turning the home into a rental is an outstanding way to help shelter some tax expense. Note that once you do NOT live in the home 3 out of the last 5 years, you will lose the capital gains exemption once you do sell the home. Yet to be honest, I would not worry to much about that at this point. The real question is, given your mortgage payment, mello roos (if you pay them) and HOA (if you pay them) and any additional expenses like prop tax and insurance will stack up against rent. More then likely you will have a negative cash flow but how negative is something you would need to calculate.

– If you believe the market is going to go down and continue to go down for the next several years then it would be best to sell now. Personally my opinion for CV is that the market will go down there and it will then be flat for awhile and then start go rise slowly. I think that CV detached homes have held up quite well and the lions share of depreciation is ahead for these homes, not behind. I think that the area is susceptible to problems if we see disruptions in employment and/or interest rate hikes. Yet I don’t think it is something that will happen in the short run. However in the next 2 years it will be interesting to see where CV is at.

6 months from now? Well I don’t think things will be radically different but we will definitely be in a period where seasonally there are fewer buyers.

**************

As far as buying goes my advice, and I cannot stress it enough) would be to rent for awhile if you can. I think the OC is going to get hammered and it is perhaps even more stretched then SD is in the high priced home areas. I also think the OC is a year or two behind SD in the depreciation cycle.

**************

As far as staying home and commuting goes? Well… Does your husband take the train? I know it is kind of a chore but I think it is not nearly as taxing sitting on the train as it is sitting in traffic.

**************

Anyways not sure if I gave any definitive advice. My personal choice would be to sell CV, even if it means a loss, and rent in the OC… pocket cash and in a few years buy a nice big foreclosure or distressed property in Laguna.

SD Realtor

[SD Realtor]

sd2oc I believe the two events are independent and may be treated as so.

Let’s start with your home in CV.

What you decide to do with it depends on your outlook for San Diego housing.

– If you believe the market is going to bottom out soon and then appreciate then you may want to wait and hold on to your home and then sell when the market comes back up. (Personally I do not believe this is the case) If you do hold on to your home you can rent it out. Turning the home into a rental is an outstanding way to help shelter some tax expense. Note that once you do NOT live in the home 3 out of the last 5 years, you will lose the capital gains exemption once you do sell the home. Yet to be honest, I would not worry to much about that at this point. The real question is, given your mortgage payment, mello roos (if you pay them) and HOA (if you pay them) and any additional expenses like prop tax and insurance will stack up against rent. More then likely you will have a negative cash flow but how negative is something you would need to calculate.

– If you believe the market is going to go down and continue to go down for the next several years then it would be best to sell now. Personally my opinion for CV is that the market will go down there and it will then be flat for awhile and then start go rise slowly. I think that CV detached homes have held up quite well and the lions share of depreciation is ahead for these homes, not behind. I think that the area is susceptible to problems if we see disruptions in employment and/or interest rate hikes. Yet I don’t think it is something that will happen in the short run. However in the next 2 years it will be interesting to see where CV is at.

6 months from now? Well I don’t think things will be radically different but we will definitely be in a period where seasonally there are fewer buyers.

**************

As far as buying goes my advice, and I cannot stress it enough) would be to rent for awhile if you can. I think the OC is going to get hammered and it is perhaps even more stretched then SD is in the high priced home areas. I also think the OC is a year or two behind SD in the depreciation cycle.

**************

As far as staying home and commuting goes? Well… Does your husband take the train? I know it is kind of a chore but I think it is not nearly as taxing sitting on the train as it is sitting in traffic.

**************

Anyways not sure if I gave any definitive advice. My personal choice would be to sell CV, even if it means a loss, and rent in the OC… pocket cash and in a few years buy a nice big foreclosure or distressed property in Laguna.

SD Realtor

[sd2oc]

SD Realtor, thank you for your thoughtful reply! we only pay about $3K a month for all expenses associated with our home (and if we take into account the tax benefits, that number is even lower), so i don’t think we would have negative cash flow in renting it out. we’ve gotten quotes from a couple property management companies in the $3600-$4200/month range, minus 8%-12% for their fee). if i don’t have a rosy outlook as to the near future, however, does it make sense to rent out our home even if it generates positive cash flow for the time being? after all, rental rates could drop as well, right? and we might have a tougher time selling our home in the future, too.

on the other hand, selling our home now and then renting in OC (i agree with you about the market there, so i’d prefer not to buy for a couple years) means that we give up the tax benefits of home ownership. we already kick ourselves for not getting a bigger mortgage–i can’t imagine our tax liability if we had no home at all.

hence, our dilemma…

finally, yes, my husband does take the train, but he has to drive from our house to solana beach, take the train to irvine, and then drive to his office, so all together it takes about 2 hours each way. we would love to stay in san diego, but i worry that the commute will ultimately become unbearable (although my husband claims he’ll be okay if it means not having to leave–he loves sd so much!).

any additional thoughts? thank you again!

[sd2oc]

SD Realtor, thank you for your thoughtful reply! we only pay about $3K a month for all expenses associated with our home (and if we take into account the tax benefits, that number is even lower), so i don’t think we would have negative cash flow in renting it out. we’ve gotten quotes from a couple property management companies in the $3600-$4200/month range, minus 8%-12% for their fee). if i don’t have a rosy outlook as to the near future, however, does it make sense to rent out our home even if it generates positive cash flow for the time being? after all, rental rates could drop as well, right? and we might have a tougher time selling our home in the future, too.

on the other hand, selling our home now and then renting in OC (i agree with you about the market there, so i’d prefer not to buy for a couple years) means that we give up the tax benefits of home ownership. we already kick ourselves for not getting a bigger mortgage–i can’t imagine our tax liability if we had no home at all.

hence, our dilemma…

finally, yes, my husband does take the train, but he has to drive from our house to solana beach, take the train to irvine, and then drive to his office, so all together it takes about 2 hours each way. we would love to stay in san diego, but i worry that the commute will ultimately become unbearable (although my husband claims he’ll be okay if it means not having to leave–he loves sd so much!).

any additional thoughts? thank you again!

[sd2oc]

SD Realtor, thank you for your thoughtful reply! we only pay about $3K a month for all expenses associated with our home (and if we take into account the tax benefits, that number is even lower), so i don’t think we would have negative cash flow in renting it out. we’ve gotten quotes from a couple property management companies in the $3600-$4200/month range, minus 8%-12% for their fee). if i don’t have a rosy outlook as to the near future, however, does it make sense to rent out our home even if it generates positive cash flow for the time being? after all, rental rates could drop as well, right? and we might have a tougher time selling our home in the future, too.

on the other hand, selling our home now and then renting in OC (i agree with you about the market there, so i’d prefer not to buy for a couple years) means that we give up the tax benefits of home ownership. we already kick ourselves for not getting a bigger mortgage–i can’t imagine our tax liability if we had no home at all.

hence, our dilemma…

finally, yes, my husband does take the train, but he has to drive from our house to solana beach, take the train to irvine, and then drive to his office, so all together it takes about 2 hours each way. we would love to stay in san diego, but i worry that the commute will ultimately become unbearable (although my husband claims he’ll be okay if it means not having to leave–he loves sd so much!).

any additional thoughts? thank you again!

[sd2oc]

SD Realtor, thank you for your thoughtful reply! we only pay about $3K a month for all expenses associated with our home (and if we take into account the tax benefits, that number is even lower), so i don’t think we would have negative cash flow in renting it out. we’ve gotten quotes from a couple property management companies in the $3600-$4200/month range, minus 8%-12% for their fee). if i don’t have a rosy outlook as to the near future, however, does it make sense to rent out our home even if it generates positive cash flow for the time being? after all, rental rates could drop as well, right? and we might have a tougher time selling our home in the future, too.

on the other hand, selling our home now and then renting in OC (i agree with you about the market there, so i’d prefer not to buy for a couple years) means that we give up the tax benefits of home ownership. we already kick ourselves for not getting a bigger mortgage–i can’t imagine our tax liability if we had no home at all.

hence, our dilemma…

finally, yes, my husband does take the train, but he has to drive from our house to solana beach, take the train to irvine, and then drive to his office, so all together it takes about 2 hours each way. we would love to stay in san diego, but i worry that the commute will ultimately become unbearable (although my husband claims he’ll be okay if it means not having to leave–he loves sd so much!).

any additional thoughts? thank you again!

[sd2oc]

SD Realtor, thank you for your thoughtful reply! we only pay about $3K a month for all expenses associated with our home (and if we take into account the tax benefits, that number is even lower), so i don’t think we would have negative cash flow in renting it out. we’ve gotten quotes from a couple property management companies in the $3600-$4200/month range, minus 8%-12% for their fee). if i don’t have a rosy outlook as to the near future, however, does it make sense to rent out our home even if it generates positive cash flow for the time being? after all, rental rates could drop as well, right? and we might have a tougher time selling our home in the future, too.

on the other hand, selling our home now and then renting in OC (i agree with you about the market there, so i’d prefer not to buy for a couple years) means that we give up the tax benefits of home ownership. we already kick ourselves for not getting a bigger mortgage–i can’t imagine our tax liability if we had no home at all.

hence, our dilemma…

finally, yes, my husband does take the train, but he has to drive from our house to solana beach, take the train to irvine, and then drive to his office, so all together it takes about 2 hours each way. we would love to stay in san diego, but i worry that the commute will ultimately become unbearable (although my husband claims he’ll be okay if it means not having to leave–he loves sd so much!).

any additional thoughts? thank you again!

[patientlywaiting]

This is a hard question to answer.

The problem with buying at the wrong time is that in today’s job market, most workers end up changing companies once every 5 years. Then intention to stay for the long haul doesn’t always equate the ability to stay for the long term.

If I were you, I’d sell and try to get my money back. Then I’d rent in OC. That’s because I’m pretty bearish about prices. I believe we’ll see 2000 prices again in SD. Your decision might be different if you think that prices will hold up.

Commuting such a long way is very costly in terms of transportation costs and wear and tear on the human body.

Best of luck to you and your family.

[patientlywaiting]

This is a hard question to answer.

The problem with buying at the wrong time is that in today’s job market, most workers end up changing companies once every 5 years. Then intention to stay for the long haul doesn’t always equate the ability to stay for the long term.

If I were you, I’d sell and try to get my money back. Then I’d rent in OC. That’s because I’m pretty bearish about prices. I believe we’ll see 2000 prices again in SD. Your decision might be different if you think that prices will hold up.

Commuting such a long way is very costly in terms of transportation costs and wear and tear on the human body.

Best of luck to you and your family.

[patientlywaiting]

This is a hard question to answer.

The problem with buying at the wrong time is that in today’s job market, most workers end up changing companies once every 5 years. Then intention to stay for the long haul doesn’t always equate the ability to stay for the long term.

If I were you, I’d sell and try to get my money back. Then I’d rent in OC. That’s because I’m pretty bearish about prices. I believe we’ll see 2000 prices again in SD. Your decision might be different if you think that prices will hold up.

Commuting such a long way is very costly in terms of transportation costs and wear and tear on the human body.

Best of luck to you and your family.

[patientlywaiting]

This is a hard question to answer.

The problem with buying at the wrong time is that in today’s job market, most workers end up changing companies once every 5 years. Then intention to stay for the long haul doesn’t always equate the ability to stay for the long term.

If I were you, I’d sell and try to get my money back. Then I’d rent in OC. That’s because I’m pretty bearish about prices. I believe we’ll see 2000 prices again in SD. Your decision might be different if you think that prices will hold up.

Commuting such a long way is very costly in terms of transportation costs and wear and tear on the human body.

Best of luck to you and your family.

[Author]

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