OT: Opinions on housing market

[steveoz]

Sooo I've been floating this idea in my head - sell the condo (it's paid off) rent for a while, wait till the housing market drops and use the proceeds to pick up a deal on single family home. Don't have any other dependents/ s.o. to worry about..and maybe I'm romanticizing the idea of an actual house with a yard but....the condo life is getting old and I'd like to relocate..
The idea is contingent on selling high (within the next 6 months) and waiting another 6-12 for a drop in market - which I feel is inevitable - what do you think? (be gentle...)

[AngryScientist]

which housing market are we talking about? and what price range?

i do not believe there is an inevitable drop in the US real estate market completely across the board looming. some areas and sectors yes, some...no.

i'm not an expert, but we're casually in the market for a house and the pandemic situation has certainly not effected the market the way i guessed it would have - which i suppose is why i am not an expert, haha.

[Hellgate]

It depends on where you are. Some areas are very hot right now. As the saying goes, "Location, location, location."

[fignon's barber]

I think it's a pretty sound strategy if you're in an area that is likely to drop. One thing I'd add is that when you go to buy again, try to keep little or no mortgage because part of the equation is that interest rates will probably be high.

[p nut]

Trying to time the housing market is a big gamble. My guess is, best case scenario, you’ll come out a few grand ahead. Immaterial, looking long term.

Since your condo is paid for, just start saving and buy when you’ve got a good chunk of down payment on a new house. Maybe even think about keeping the condo and renting it out, which will offset the mortgage on the new home.

[oldpotatoe]

Sooo I've been floating this idea in my head - sell the condo (it's paid off) rent for a while, wait till the housing market drops and use the proceeds to pick up a deal on single family home. Don't have any other dependents/ s.o. to worry about..and maybe I'm romanticizing the idea of an actual house with a yard but....the condo life is getting old and I'd like to relocate..
The idea is contingent on selling high (within the next 6 months) and waiting another 6-12 for a drop in market - which I feel is inevitable - what do you think? (be gentle...)

NOT a real estate anything, and when getting transferred every 3 years or so in the USN, and participating in the 'buy hi-sell low' market more than once:eek:,
I wouldn't do anything until next year. The 'market' is being influenced by a lot right now, the Virus, BLM, politics...so, I'd wait until about a year from now..the 'market', whether high or low or whatever, is being "influenced" by a lot of hopefully temporary forces..so I'd wait.

IMHO, YMMV and all that.

[cyat.es]

Also looking to move, in our case to another state. Not seeing an significant demand or pricing shifts. It still comes down to location and right pricing as it always has. We’re looking to move Boston —> Pittsburgh and things are selling too quickly out there for us to be able to do anything (and not feeling comfortable buying totally remotely).

[EDS]

Definitely a sellers market where I live (NYC metropolitan region). Single family homes in burbs around here with good schools and that are in move in condition are going above ask, typically receiving multiple offers within a week of listing.

The above is definitely true of the towns we looked at. As a buyer, it has been a painful experience. Only upside for buyers right now are the very low interest rates.

[prototoast]

In the short-term, there seems to be a small drop in the price of urban center condos, and a little bit of a boost in suburban single-family homes. It's possible that if I unemployment lingers, foreclosures on single-family homes will drive their prices down, but this is probably going to be a location-specific phenomenon.

All that is to say that it's not clear to me at all that your plan would allow you to take advantage of the best relative pricing for selling your condo and buying a single-family home. This doesn't mean that you shouldn't make the move, but I would try to focus more on the consumption value of housing, and less on the investment value.

[Blue Jays]

Also take chronological age into account plus years of investment horizon.
Standalone homes have repair costs, landscaping, and snow removal factors.
Condos have maintenance fees and board requirements to which to adhere.
Definitely build a spreadsheet to compare and contrast what works for you.

[verticaldoug]

If you live in an area which is dominated by investment properties and second home buyers, you can have significant price volatility. But if you live in an area which is dominated by true residential needs, you just don't see that kind of volatility. Outside of 2007-2011, we never really had a full blown housing recession. Everything is local.

If you want a single family home, start looking. If you find something you like, try to buy it. You just need to realistically understand the value of the condo you plan to sell.

There is all this talk about people selling their NY apartments and moving to Westchester. I think a few nervous nellies do this, but for the most part, the expectations of Wall Street bonuses is what will drive home prices in this region.

If you are in Vegas, the destruction of the strip short term, probably really weighs on real estate.

If you are in Los Angeles, I have no idea. And San Francisco , the same old same old, lack of supply from nimbyism keeps prices high, plus performance of the stock market, makes it worse.

YMMV

[kppolich]

Sooo I've been floating this idea in my head - sell the condo (it's paid off) rent for a while, wait till the housing market drops and use the proceeds to pick up a deal on single family home. Don't have any other dependents/ s.o. to worry about..and maybe I'm romanticizing the idea of an actual house with a yard but....the condo life is getting old and I'd like to relocate..
The idea is contingent on selling high (within the next 6 months) and waiting another 6-12 for a drop in market - which I feel is inevitable - what do you think? (be gentle...)

Don't sell if it's paid for, rent it out and get that cash flow to cover a majority if not all of your next housing payment. That could be a mortgage on a house or monthly rent in another place. Use your incoming rent to pay your outgoing rent.

If it was paid for I wouldn't sell unless you are in a metro area like SF, NYC, or Seattle where the gain would be huge. People will always need a place to live so I'd rent it out for the time being if you are looking for a change

[Ozz]

Don't sell if it's paid for, rent it out and get that cash flow to cover a majority if not all of your next housing payment. That could be a mortgage on a house or monthly rent in another place. Use your incoming rent to pay your outgoing rent.

If it was paid for I wouldn't sell unless you are in a metro area like SF, NYC, or Seattle where the gain would be huge. People will always need a place to live so I'd rent it out for the time being if you are looking for a change
Good idea if in a good rental market.....and if HOA allows. No mortgage is great, but that is also a lot of equity to be tied up in one asset.

Another idea, put it into an LLC, do a cash out refi, rent out condo to cover new mortgage, taxes, insurance, HOA, etc.

Use cash out equity to buy your new place...

FYI - this is risky, check with your lawyer and accountant on structure and tax implications....YMMV

[hoj]

As others have mentioned, timing the market is anyone's guess. IMO the financial gains you're going to make by trying to time the market (let's just assume you're lucky and time it right) are probably largely going to be offset by the money you're going to be paying for rent, so it probably doesn't make sense to sell the condo in that regard.

Like others have said, since your condo is paid off it seems the easiest solution would be to stay in the condo and continue to save your money until you find a home you are ready to buy.

IMO keeping the condo to rent out, just so you can rent a place yourself in the meantime until you purchase doesn't make much sense either since then you're dealing with the hassle of being a landlord and the money you're probably going to use for a down payment on a house is still tied up in the equity on your condo. And who's to say you'll find good tenants to rent the condo within a month of listing? Not sure how easy it is to rent out properties where you're located, but what happens if your condo sits vacant for 5-6 months because you can't find a reliable tenant to rent it out? Just a few things to think about.

[johnmdesigner]

I know nothing about you but if you have no dependents or debt perhaps you should widen your horizons.
Perhaps sell or rent the property and spend some time living in other countries (when the virus restrictions are lifted).
We were planning to do this this year but will probably wait until next to see if things die down and people want to shop for property in person.
If we can get the price for our place we will sell.
If not, we will rent.
And then we are off to explore the world. Without a visa you can travel in the EU for 90 days and Airbnb"s are cheap.
Then you can think about where to buy the next home.

[buddybikes]

Think long term. My suggestion - don't "over buy" because of all your wants. Last night wife and I compared situation we are in versus close friends. We bought a small house in a decent town and lived there for 34 years. Paid off in 1999. We bought our "retirement' house (still working) with 140 ft of water (Narragansett Bay estuary frontage, another small house (920sq ft, 1/2 acre) (yes we do have storage sheds for bikes, boats etc). Our friends bought larger, then remortgaged multiple times, they are retired now, and said to me if the market tanks they are in the sh*ter. Do "you" really NEED that 4th bedroom, 2 car garage. (we've never garaged and far as I know cars still run.

[Blue Jays]

"...(we've never garaged and far as I know cars still run.)..."
That is a toss-up for financial calculations. I guess depends on price.
Garaged vehicles typically look far better and hold more of their value.
Concur on all other points, especially with stretching budgets to overbuy.

[54ny77]

Do not sell. Rent it out. Your low tax basis will pay off in the long term re: cashflow. And you can always borrow money against the asset to purchase something else if that is in the cards.

Of course make sure there aren't any restrictions on renting.

That's my $0.02.

[zetroc]

Don't be a landlord. Sell it to someone who will live in it.

[Ken Robb]

I was a RE broker for 36 years in San Diego. I never told clients what to do but when asked I would suggest not making potential financial gains more important than buying a home that makes them happy.

There is almost always the question of should we sell first and hope to find a suitable replacement before closing our sale or should we buy the replacement and hope to sell/close our existing home before we have to close on the replacement. We all feel different pressures in these scenarios so the clients have to decide which plan is easier for them to live with.

The OP said he's in a condo. That is a legal definition that might mean and apartment, townhouse with one or more common walls, or, rarely, a freestanding house on a piece of land that is part of common area but dedicated to its owner's exclusive use.

If a person is in an apartment style condo he might find a townhouse condo to be a good compromise instead of taking on the responsibilities of a fee-simple house.

[IJWS]

I know nothing about you but if you have no dependents or debt perhaps you should widen your horizons.
Perhaps sell or rent the property and spend some time living in other countries (when the virus restrictions are lifted).
We were planning to do this this year but will probably wait until next to see if things die down and people want to shop for property in person.
If we can get the price for our place we will sell.
If not, we will rent.
And then we are off to explore the world. Without a visa you can travel in the EU for 90 days and Airbnb"s are cheap.
Then you can think about where to buy the next home.

This is my blanket response to every thread for today.

[sparky33]

Will you be homeless between selling your house now and whenever that dip occurs and you find a new house?

Or will you have to rent for the interim?
Add to that the cost of seller brokerage fees and the timing risk of an uncertain dip...the upside might be slim.


Trying to time the housing market is a big gamble. My guess is, best case scenario, you’ll come out a few grand ahead. Immaterial, looking long term.

[ColonelJLloyd]

Do not sell. Rent it out. Your low tax basis will pay off in the long term re: cashflow. And you can always borrow money against the asset to purchase something else if that is in the cards.

Of course make sure there aren't any restrictions on renting.

That's my $0.02.

$500,000 (for married couple) exclusion of gain on the sale of a primary residence is nothing to sneeze at. OP should be cognizant of the timing.

[Ralph]

As a retired investor.....I have never found the markets to accommodate the wishes of the majority view. One of my personal rules for how to think about investing in anything. Stocks, interest rate securities, or housing.

[steveoz]

A little background -I'm in S Fl, the condos in my building are listing between 150-180 (that's not a lot of money -I know..) they are in some demand from investors that buy them for rentals (one of the reasons I'd like to bail out - too many renters and no restrictions) I would looove to relocate to Venice Fl (just visited a sister that lives there) The homes in that area are 180-250 that's why I was thinking a drop in the market would put them square in my range to buy outright (assuming sale of my unit). Not looking for a giant home - would like a big lot (love gardening) and just to be able to grill outside (can't do that on my second floor balcony). I know it's a bit of a stretch - but I've been in this unit for 20yrs and visiting family with big yards and gardens makes me itchy to leave. I DO NOT want to be a landlord!! Lol... I know "predicting" markets is less accurate that predicting the weather - but I don't wanna get too old and look back wishing I'd done something....

[OtayBW]

I was a RE broker for 36 years in San Diego. I never told clients what to do but when asked I would suggest not making potential financial gains more important than buying a home that makes them happy.
Good advice right there. I may soon be in the uncomfortable position of having to have to make a similar decision in a potential move myself.....

[Ralph]

A little background -I'm in S Fl, the condos in my building are listing between 150-180 (that's not a lot of money -I know..) they are in some demand from investors that buy them for rentals (one of the reasons I'd like to bail out - too many renters and no restrictions) I would looove to relocate to Venice Fl (just visited a sister that lives there) The homes in that area are 180-250 that's why I was thinking a drop in the market would put them square in my range to buy outright (assuming sale of my unit). Not looking for a giant home - would like a big lot (love gardening) and just to be able to grill outside (can't do that on my second floor balcony). I know it's a bit of a stretch - but I've been in this unit for 20yrs and visiting family with big yards and gardens makes me itchy to leave. I DO NOT want to be a landlord!! Lol... I know "predicting" markets is less accurate that predicting the weather - but I don't wanna get too old and look back wishing I'd done something....

I have visited Venice quite a bit. Don't recall seeing anything as low as you mention....where you might want to live. I figure $300-400,000 for a small house.

[verticaldoug]

A little background -I'm in S Fl, the condos in my building are listing between 150-180 (that's not a lot of money -I know..) they are in some demand from investors that buy them for rentals (one of the reasons I'd like to bail out - too many renters and no restrictions) I would looove to relocate to Venice Fl (just visited a sister that lives there) The homes in that area are 180-250 that's why I was thinking a drop in the market would put them square in my range to buy outright (assuming sale of my unit). Not looking for a giant home - would like a big lot (love gardening) and just to be able to grill outside (can't do that on my second floor balcony). I know it's a bit of a stretch - but I've been in this unit for 20yrs and visiting family with big yards and gardens makes me itchy to leave. I DO NOT want to be a landlord!! Lol... I know "predicting" markets is less accurate that predicting the weather - but I don't wanna get too old and look back wishing I'd done something....

If you look at everything in net after tax dollars, the rent + buy may be super attractive.. Do the math...

[reuben]

Regarding renting out your current place -

I was the landlord of a freestanding house for about 15 years. As any landlord will tell you, it's not all it's cracked up to be.

Right off the bat you have to deduct property tax and insurance. Then you may need to figure on collecting rent 10 months out of 12, on average. Some people come and go quickly, some stay for years, some pay, some don't, etc., etc.

If you decide to rent out your current place I would suggest that you plan your budget so that you get 50% of the rent. That accounts for property tax, insurance, renters who move out quickly or don't pay, repairs, etc.

You'll probably take in more than that on average, but it's best not to overestimate income.

One other thing a good landlord will tell you - when you get a good renter, keep them there. Don't raise the rent, or raise it very slowly. Be sure to take care of the house. Good renters are hard to find. A good renter at 2,000/month for 3 years is a LOT better than a 2,500 renter for one year (or less).

And get a good lawyer to inspect the lease.

[Peter P.]

No one can accurately predict the future, so don't bank on what you THINK the market is going to do in 6-12 months.

Just sell the condo and and buy a house.

P.S. You sure your sister wants you so close?! :)

[steveoz]

No one can accurately predict the future, so don't bank on what you THINK the market is going to do in 6-12 months.

Just sell the condo and and buy a house.

P.S. You sure your sister wants you so close?! :)

P.S. No I'm not sure! But I live near my other two sisters so I'd be -1 net..:p

[Ralph]

I think Venice is somewhat more expensive than you say. I also think it is one very nice place to live. If you can pull this off, bet you will enjoy living there. Get as close to the beach as you can afford. Can't beat the yoga class on the beach. Beach, nice trail (Legacy), laid back life style, side walk cafe's, and when you get old....play checker with the old guys on Venice Ave in winter. Terrific life!

We visit there and have lunch at the Daiquiri Deck on Venice Ave. Love it!

[azrider]

Don't be a landlord. Sell it to someone who will live in it.

+1000

I absolutely detested being a landlord. If you do rent it, the best advice I could give is to hire property manager.

[MaraudingWalrus]

Market is flaming hot in a lot of places for some reason right now.

My wife and I are trying to buy our first home. We've just relocated for the first year of her residency training. We're looking at something that's a sort of starter home for us (<170,000) for our time period in this market - 4 years, essentially zero chance of us staying beyond that. Doesn't make a ton of sense to me to spend $1500 on rent in the area when we could have a mortgage, hazard insurance, prop taxes for <$950 for the same thing.

Extremely competitive price point here it seems - starter homes for all the freshly minted MDs moving to the area, and fairly "normal" price point for people in the region. Houses coming onto market and being under contract within the same day. We've offered on 12 houses, under contract for the third time, don't think it'll pan out this time around.

We keep getting beaten out by cash investors at this price point. I'd wager its somewhat similar for OP here wanting to buy a house in an area more expensive.

HUGE chance that right now (and might be even more likely that once/if the market begins to reflect the economic reality - IE lots of houses for sale as people run out of cash reserves from various current situations) that cash investors will be able to swoop in and buy without regard for appraised value, inspection, etc.

[George_H]

With the "work-from-home" movement in full swing right now, the working people in my area are looking to upgrade their homes.

[seanile]

.

[Mr. Pink]

I really don't get the mania in some parts of this RE market right now. To me, a very risky time to buy. Who knows where we'll be in a year, but, I'd say wait at least a year and decide then after we've experienced this event (which is still in its initial stage and growing), the real economy is exposed after UE and stimulus winds down, and, of course, we know who is President and who controls the political process. Didn't we learn anything in '08? There are still millions underwater or barely treading water from that bubble burst. I live in a condo that sold for almost 30% more in 03 than it's worth today, so, therefore, there are probably a few people in this complex who will never see their full equity return. And this is a very nice town.
Be patient and wait for the dust to settle. Don't buy at the peak of the market. Unless, of course, your wife is running this show. Good luck with that.

[Ken Robb]

Don't buy at the peak of the market. Unless, of course, your wife is running this show. Good luck with that.

How do you identify the peak or bottom of the market in advance? :)

[nickl]

I have visited Venice quite a bit. Don't recall seeing anything as low as you mention....where you might want to live. I figure $300-400,000 for a small house.

No need to spend that much for a detached house in a fairly good neighborhood in Venice. Spent lots of time there and found good areas (for coastal FL) to road ride. $180 to 200k will get you into something decent in a nice neighborhood.

Just search Zillow, Trulia, etc and you'll find some good options and many more in adjoining communities.

[metalheart]

Here's my recent house buying/selling experience. We bought a house in mid March and put our east of Sacramento California home on the market on March 18, the day the governor issued stay at home orders. We had one showing the first month. Late April into early May there were a few more showings, but not the traffic we expected if conditions were otherwise. No offers, just showings. Then in mid-May there were more showing and by late May we had an offer. It was a contingency but full price offer. Then another contingency offer at 25k less than asking. Then the second offers folks realized there was another offer and they made a full price no contingency offer and we are closing today.

Friends who are shopping for a home for one of their kids in Sacramento say that the market there is very hot: places listed go fast and often at more than asking price. One interpretation from realtors and financial folks is that Bay Area residents who work for companies that are now allowing/encouraging work from home options realize they can live anywhere they want and they are moving to less crowded, less expensive areas where there is still a good quality of life.

I think if we had held on for another few weeks we would have had more than asking offers, but hey we sold, we are moved, and life goes on....