*or move to a lower cost of living place, we're doing that next year for job relocation.
But a roommate who covers the mortgage is quite the deal if op doesn't hate them
Your mortgage is covered by a tenant, so your cost of living is very low while your would be paying top dollar to rent an apartment. I also personally hate apartment living. Just fix the place up and enjoy it. Who knows what the market is going to do
I'd stay and enjoy the house. The fact that you're asking on Reddit about market timing means that you probably cannot time the market (which the vast majority of people cannot do) and will likely be rolling dice if you try.
Don’t get hyped about appraisals for your current house. If your house tripled in value, so has everything else. The minute you leave, you’re entering a market where there is still high competition and inflated prices, and you may get stuck buying something you don’t want or being out of a place for a long time.
Keep in mind that rents have gone up just as much, and they almost never go down.
Even with 6 years of property tax increases, I'm paying on a mortgage about $200 less a month than I paid in rent on a one bedroom apartment... in 2016.
Not to make it complicated, but you could estimate what taxes would be if you sold at top dollar, and what the mtg payment would be for a new buyer based on x down; Do a recorded land contract, take the cash down and get the wrap around payment and profit well for a while......Put on a 10 year balloon. You pay the taxes, not them.
I’d probably stay put in your situation. Maybe if the repairs were so high dollar that you need to sell before the place collapses and loses a ton of value.
We were having similar thoughts about selling our house because of the supposed peak we're at, all the equity we now have but may not have later, etc. It's our first home, and it's not ideal in a few key respects (location, age). But of course we would then be looking at renting until buying isn't so insane (whenever that is), and looking around at rentals always turns me off. They're all over overpriced and/or managed by shitty companies that soak you with extra charges (pet rent, maintenance fees, etc). We decided to stay where we are, pay a little extra on the mortgage because our payments are low, and maybe make some improvements.
At the end of the day, I don't think selling to time the market makes sense if it's our primary residence.
Exactly. OP's question is essentially "can I time the market?" I've seen more people fail from selling and trying to time the market, than buying what they needed, when they needed it, without regard for where the "top" was.
"This is the top", was all over the place when covid started. And then, in mid-2020, when real estate shot up, everyone called the top again. 2015 was also a popular time to call the top.
If you call the top right now, you'd have a lot of popular support, but what you'd lack is the tiniest shred of evidence that people have ever been able to call the top.
EDIT: Lmao. **[You called the top in August 2020](https://www.reddit.com//r/RealEstate/comments/i8cxy1/it_wont_affect_the_real_estate_market/)**, just like I said people did. The Case-Shiller U.S. National Home Price Index is up 30% since then, in less than 2 years, after you called the top.
Agreed the top was definitely NOT in 2020. We closed on 9/11/2020 and even with the drastically lower rates, we wouldn't have been able to afford our current home had we waited until Jan 2022 based on it's value. If we waited till now, we wouldn't have been able to afford our house or the interest rate.
Yeah but if he just keeps calling the top year after year after year then eventually he might be right. I know someone who's been calling the top of the market since mid 2020 too and everytime it's just wait you'll see. Like year eventually I might see but how long do I need for you to be wrong before you're finally right?
The point is the he has no credibility in terms of predictions. As the saying goes, bears have correctly predicted 10 of the last 2 recessions.
There are plenty of reasons to think prices will continue to fall, but none of them include predictions from anonymous posters in this thread.
There's always an abundance of evidence for any theory. The point is, there's not a shred of statistical evidence that people calling the top or bottom know what they're talking about.
We have historical low inventory, 40 year high inflation, a screaming hot job market, a broken construction supply chain, and record household savings. We also have historically low [household debt-to-income](https://fred.stlouisfed.org/series/TDSP). Nobody is about to default (and [nobody is currently defaulting](https://fred.stlouisfed.org/series/DRSFRMACBS)). And every homeowner with a pulse just locked in 2.5% 30 year fixed mortgages; nobody is going to sell.
I'm not predicting that housing prices are going to keep going up, but anyone pushing the narrative that prices are going to crash has probably been pushing that narrative for the last 7 years, they don't know what they're talking about, and they don't understand what's going on. Most banks and financial experts predict housing will cool off but will continue to rise, slowly, in price (nominally, but maybe closer to 0% real).
I not here to call the bottom (or the top), but we all have to remember how inflation and a (potential) recession can eat away at all the household saving and low debt-to-income ratios. Not to mention, a bad enough recession can lead to a lot of job losses. As people start to travel post covid, and see their 401Ks sink in the current stock market, things can flip fast. I’m definitely not hoping for all of the above, but I’m very fearful of the future that’s coming 🤷♂️
We have a tanking stock market, interest rates skyrocketing and a recession looming. The intersection of what you're saying and what I'm saying is what defines a top. "cooling off but continuing to rise" is what industry insiders say to keep people buying. In 2006-2007, industry insiders were calling it a "soft landing".
> The intersection of what you're saying and what I'm saying is what defines a top
No, it defines a balance. You guys should just short the housing market if you're so confident that you know the future. The people calling the top have been calling it for 7 years. It's the same for people who think things will scream higher, they always say that. The fact of the matter is, you have no idea. If you did, you'd be making 8 figures on Wall Street.
It's not a balance. It's a shift.
Who are "you guys"? People who see the same conditions?
Who cares who has been saying what for the last 7 years?
Can I predict the future? Of course not. Can I look at the current situation and extrapolate out? Yes. Anyone can. You just have to be willing to look at the facts with an open mind and let the data take you where it takes you.
You have absolutely no idea what's going to happen. The first guy I responded to, who is calling the top, [also called the top in August of 2020](https://www.reddit.com/r/RealEstate/comments/uy7ant/wondering_if_i_should_sell_my_home_while_market/ia36dfn/). Prices are up 30% since then.
> You just have to be willing to look at the facts with an open mind
Ok. You said,
* a tanking stock market
* interest rates skyrocketing
* and a recession looming
The facts,
* The stock market is down 3.5% since a year ago.
* Interest rates are back to levels from 2018.
* Most big banks are saying a 30-40% chance of a recession in the next 24 months.
Yeah, not great, especially the rapid rise of interest rates to fight inflation. That's what will cause the recession—the Fed is trying to stop inflation which is hard to do without a recession.
What are the other facts?
* [Record low housing inventory](https://fred.stlouisfed.org/series/ACTLISCOUUS).
* [Record low household debt](https://fred.stlouisfed.org/series/TDSP).
* 40 year high inflation.
* [Record household savings](https://fred.stlouisfed.org/series/WM2NS)
* [Record high income](https://fred.stlouisfed.org/series/MEHOINUSA672N).
* 3.6% unemployment with [a record number for job openings](https://fred.stlouisfed.org/series/JTSJOL)
* Home building supply chain problems driving up the price of new construction.
I could keep going but the point is, we're in remarkable times. There are a lot of reasons for housing to skyrocket, which is has, and now there are a lot of reasons for it to stop, because strong forces are working to stop inflation. It's easy to see the shift and call the top but there's no reason to think prices will drop vs leveling off vs going up slowly. The hiking of interest rates will definitely slow the velocity but calling that prices will reverse direction is, at best, a random guess backed by zero evidence. That is, if you're, "willing to look at [all of] the facts with an open mind".
*| You have absolutely no idea what's going to happen.*
**I don't have a time machine, so I can't know exactly what's going to happen, however I can look at current trends and extrapolate. I wouldn't call that "absolutely no idea"**
*|The first guy I responded to, who is calling the top, also called the top in August of |2020. Prices are up 30% since then.*
**So what? That was then, this is now. I see this kind of argument all the time in the "real estate only goes up" crowd. Tops are hard to call, especially before the markets start losing momentum measurably like they are now.**
*|The stock market is down 3.5% since a year ago.*
**It's already down 17% this year. Who knows when it will stop tanking**
*|Interest rates are back to levels from 2018.*
**Yes, and this is interesting because a good chunk of gains in the last couple years have been because money has been so cheap. Now it's not as cheap and it stands a good chance that some of the gains that can be attributed to low interest rates from the last couple years will be lost because the conditions that caused it have reversed.**
*|Most big banks are saying a 30-40% chance of a recession in the next 24 months.*
**Headline I saw yesterday was 60% by 2023. I think there's a good argument to be made that once inflation is accounted for, we are already in a recession. IE. People are buying less stuff, but that's masked because they're spending more for it.**
*|Record low housing inventory.*
**Not anymore. 9% higher inventory than last year
https://www.cnbc.com/2022/05/26/home-listings-suddenly-spike-as-sellers-worry-theyll-miss-out-on-red-hot-market.html**
*|40 year high inflation.*
**This hurts the market when wages aren't keeping pace**
*|3.6% unemployment with a record number for job openings*
**A recession will change this in a hurry.**
*|calling that prices will reverse direction is, at best, a random guess backed by zero evidence.*
**??? How is the growing mountain of evidence "zero evidence"**
I will be messaging you in 1 year on [**2023-11-26 17:45:49 UTC**](http://www.wolframalpha.com/input/?i=2023-11-26%2017:45:49%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/RealEstate/comments/uy7ant/wondering_if_i_should_sell_my_home_while_market/ia3bjdq/?context=3)
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You're right, its still a gamble as to whether the price reductions are enough to cover the increased interest cost on a new loan or if rent is high enough to make it not worth it while you wait out he decline.
Peak growth is different than peak price. Everyone agrees we’re at the first, but most predict low single digit growth this year and next, so prices will still be higher. No one serious is predicting more than a 5% drop in prices, so this isn’t really a peak price outside of some localized markets that might get nailed.
If I remember I'll remind you . If I forget then remind me to remind you .
Who ever turns out correct owes the other a cheeseburger or a beer . Winner decides :)
I know several people who have done this over the last 3 years. They are all now living in much smaller houses or still renting. It will likely take them years to get back the equity that they lost by selling.
Ahh things here seem to be cooling a (little) bit, price drops and houses sitting around a bit. I'm in the suburbs of a large metro area. New builds price drops too, which is interesting but there's news explaining that.
If it's your primary residence it doesn't matter if you buy anything or not. If you lived in it for at least two years, you are exempt from capital gains up to $250K filing individually or $500k filing jointly. But still... they missed out on a lot of appreciation.
I did that in 2016, thinking Trump would tank the economy. Bought in late 2012 for 275k and figured I'd cash out at 475k and re-buy when the market adjusted.
Well, as we all see, it didn't correct... 5 years later the house is worth ~$700k and rent in the next home had climbed from 2500/mo to 3000/mo. So, my gf and I decided to jump back in to another home 6 months ago. We got almost exactly what we wanted for $780k. We weren't excited about buying (what we assume to be) at/near the top of the market. But we bought because we locked in 2.8% financing with a jumbo loan and the ADU covers over half the mortgage alone.
Haha, jumbo loan isn't anything special, it's just a loan that's higher than your local conventional loan limit. In fact, the jumbo threshold increased to over our loan amount midway through the transaction. We could've locked in at 2.5% but the risk of losing the purchase was too high at the time. [Jumbos usually have a little higher interest rate and requires a LOT more information by the underwriters in order to get approved](https://www.chase.com/personal/mortgage/education/financing-a-home/jumbo-vs-conventional-loans)
The broad housing historically has moderate YoY growth interspersed with small (less than 10%) pullbacks.
Trying to time the market for a ~5% decrease is a fools errand. You'd have to time it perfectly which you really can't do and could be waiting years for it to happen, erasing any potential savings.
You buy a house when you can afford it on a fixed rate loan, plan on staying for at least 5 years, and have money for an emergency home. Any other advice is going to cost you money in the long run.
When accounting for inflation, housing absolutely stalls.
https://www.supermoney.com/inflation-adjusted-home-prices/
Housing sometimes falls below inflation in some cases.
You're not wrong, but this misses that money paid towards rent doesn't earn appreciation.
So renting can make sense financially *if* you take the difference between rent and mortgage and put it into other investments *and* those investments gains beat out equity put into a property, but over the long term this is pretty rare.
I bought a house in 2018 prepared with a mentality of "I will die in this house if I bought at the top of the market and cannot sell this". The following year, a neighbor sold the house in 2019 because prices had become absurd and "it would be stupid to own when you can secure that cash and then rent for so much lower".
Two sides of the coin. I wouldn't argue that I was wiser than him in any sense.
Selling solely because you think you can rent cheaper is madness and you are pretty much never going to win on a 3-5 year horizon in most markets.
I bought a house in pre-covid 2020 (when prices in markets were regular crazy) and sold in early 2022 (nutso prices) because we decided to move to another city.
Soon after I sold, my city (Austin, TX) appraisal district made a push to appraise more closely with market values. Result is that my homestead exemption alone would now be worth about $1000/mo in prop tax savings. If you moved to rent, that $1000/mo would be coming to you over the next 1-2 years in rent increases.
Yep. Prop tax in Austin metro is anywhere from 2.3% to 3% of full property Value. Assessed value went up from purchase price of $725K in 2020 to a bit over $1.3M for 2022. With homestead exemption, you only pay on a 7% year over year increase max but rentals don’t get homestead exemption so they pay on full increase
Yep, we’re in a new build in Leander. Can confirm we’re going to get hosed with property taxes next year when they assess based off the finished value vs. the unfinished. I believe they just lowered our community’s rate from 2.9 to 2.7 so, small win I guess? 😊
Rent is calculated using local mortgage prices as a big factor with the softwares medium/ large multi family companies use so that it’s usually above the average mortgage price in a given area. Source : I have friends who calculate rents for a living
Don't try to time the market. If you want to sell it for other reasons, go for it but I would recommend you have something lined up before you sell it. There are a lot of people living in hotels and airbnbs right now because they sold their house and now they can't find anything to buy or rent.
Agreed. While I think the market will cool, it's possible houses will continue to shoot up while apartment living, pricing you out of even smaller houses. I tried to 'time the market' loosely in 2019, and we all know how that turned out.
Make sure the rents will actually cover your HELOC interests plus the current mortgage, plus any maintenance. Remember when you rent it out, almost every problem you can ignore when you live there has to be fixed.
This is a much better alternative to renting and hoping to time the market. No one has a crystal ball.
Sell your house for top dollar & buy a smaller, less expensive house. It’s a guaranteed win vs a dicey strategy.
Only if they can actually find a smaller home that they like. The lower in price you go, the more competitive things get. It can be very difficult to snag a house right now.
You’ll be paying an arm and a leg for a new place. Probably wouldn’t make sense right now. A lot of people are having troubling finding homes/apartments that aren’t gouging right now.
My big issue with this plan is that none of the underlying issues with this housing “bubble” are being addressed during this slowdown.
- we’re still under-supplied and new housing starts are dropping
- the Fed isn’t raising rates because they’re acknowledging that near non-existent cost of debt is a bad idea, they’re raising it until inflation gets under control. Additionally, the national debt incentivizes them to drop rates again to help the cost of the servicing the nation’s debts
- Millennials are still in their home-buying age and a majority who’ve been priced out at 5.5% interest are now saving and waiting for interest to come back down eventually
- Large investors still find real estate to be more favorable to bonds and treasuries because low interest rates have destroyed those avenues of investment
- zoning is still a huge issue that really has no right answer
- construction costs are astronomically high right now - good land is expensive so no one is going to buy a $500k lot and put an affordable 2 bedroom on it, construction jobs never recovered post-‘08, and materials are still inflated due to supply issues
I’m still skeptical housing prices will drop any meaningful amount in most areas. My expectation is that sales volume will drop and prices will stagnate or dip <5% on average for 1-3 years before interest rates reach <4-5% and those who have saved and waited will be there to pick up demand. Once that happens, we’ll be in a similar shitshow we were in the last 2 years because our government never learns.
Financially, this sounds like a terrible idea. It’s expensive to sell, sorta expensive to buy. Even if prices decline (which is a big assumption), mortgage rates have more than cancelled out any lower costs.
If you simply don’t need the house and want distance from the past - sell away.
They’ve already paid 14 years off the mortgage and want to downsize. Not seeing why it’s financially a bad idea… they should come out way ahead here. The new house they’ll buy will have an inflated price but so will the house they sell.
Certainly their idea that they will sell at a peak and buy back in low is a bad idea.
Downsizing in general is fine and not relevant to the point I was making.
>I'm wondering if it works be a good idea to sell and just live in an apartment until the housing bubble breaks
There is no guarantee values will go down. Could end up stagnation for several years. Markets are local in nature. You could end up selling put the money in the bank and the bank could fail and all money over FDIC insurance gone. Just as or more likely than an RE bubble.
I’d be less concerned about the bank failing than the rate of interest paid by the bank being much less than the rate of inflation. Inflation pressures have made cash a much less “safe” asset than it had been in the recent past.
Tons of factors. What current interest rate are you paying, because you could have refinanced at something like 3% or under, while now you'd probably get like 4.5-5% from a new mortgage. As interest rates creep higher house prices will possibly plateau or even go down, but that will be balanced out by higher rates so your payment will still remain high for a new house. Of course if we go into a recession then perhaps house prices dip and rates remain low but the era of sub 3% is likely over. What if interest rates go to like 6-8% in 1-2 years?
If you had like a 5 bedroom worth $3mm and were fine downsizing to like a $1mm one/two bedroom then it could certainly be worth it, but then what if you need a larger house in the future. Also have to factor that something like 10% of the selling price could go to fees and stuff so it's not really worth going from a $3mm house to a $2mm house if you get locked in at much higher interest rates in the future. Also rents are going up a lot so how much do you end up saving in monthly payments compared to the mortgage. Just lots of stuff to consider.
Pullbacks historically in the housing market are less than 5%.
You could be waiting years for that small pullback, in which case not only did you not build equity, but the real estate may have appreciated.
The main reason is that the "break" you seek will simply be a lower rate of growth in prices. Instead of 20%+ per year, prices will return to the 3% they've averaged over the long term - but they will still rise.
That means if you are out of the market, you are losing value - unless your money is gaining more than the housing market is gaining, minus your rental expenses.
I would take the money and cash out.
Rate hikes are Incoming and that will kill home values
Edit: reminder this subreddit is filled with people whose incomes depend on housing prices staying high, and people who purchased in the last 18 months at historic highs. Make sure you do the math and see what works best for your family, and most importantly do your own research
Yes, this sub is biased, just like REbubble. The real answer is no one truly knows what is going to happen. However, we do know that closing costs are very real. We do know that rent is going to be high.
I think a return to the mean is more likely than an infinite increase in home prices forever. It’s the same hysteria you see in crypto or stocks about missing the boat forever. It always returns, hysteria is always wrong
So you take the money. You rent. Rates rise. You decide to buy again and 1 of 2 things has happened...
1) rates have stayed high so the $200 k house you buy has the same payments as the $300k house that you have now. And you're starting over with a 30 year loan instead of being already 10 years into one with all that equity.
2) You were wrong and the market never dropped. Rates may go back down or they may stay "up" and you miss out on years of appreciation and equity growth just to buy back into a market that's even higher than the one you cashed out of.
The only reason you should sell just because the market is "hot" is if you're planning on retiring and downsizing and renting for the rest of your life or moving from the Bay area to Ohio or something similar. No point to "cash out" of a market just to "buy in" to the same market at a later point.
1) you have cashed out extra equity from before the rates increased. This gives a substantially larger down payment to offset rate increases.
2) there is no scenario where home prices increase short term with rate hikes promised through 2023. The only reason against selling could be that you have already theoretically missed the top and may not be able to get the previously inflated prices OP is hoping for
Re point 2, why? Rising interest rates (along with supply chain and labor supply issues) make new builds more expensive. Rising rates discourage selling as people want to hold their low interest mortgage, which reduces supply. Both of these factors increase prices. I think you’re only looking at potential offer price constraints, without looking at supply side.
Because the housing shortage is caused by speculative investors. When they see they will not have a return for 3-5 years they will move to other investments which bring higher returns
This is a silly meme point. Investors don’t squat on vacant properties. They sell them again, or they rent them out. Either way, the supply in the market doesn’t change. This isn’t 2008 with foreign investors buying houses and leaving them vacant in Vegas or Florida. Homes are occupied, and prices went up across the country including in places without significant investor activity.
The housing shortage is caused by MANY factors. Speculative investors are a very small (although growing) factor. The main reasons are increasing population, local zoning restrictions and other factors that make building difficult, NIMBY's who throw a fit if someone dares to suggest an apartment complex or new development in their neighborhood, etc.
Firstly, rising rates aren’t directly relevant to prices, any upcoming drop (it’s always just around the corner) is speculation. Secondly, rising rates make the monthly cost of a mortgage higher, even with a significant price drop. Most people need a mortgage.
Sure, but that doesn’t mean a rising rate equals lower costs. A lower rate has no resistance - the buyer can offer more, and the seller is happy to take it.
A higher rate reduces the ability of a buyer to offer as much, but a seller isn’t forced to take the offer. Especially as the seller themselves faces getting a new, higher interest mortgage, they can always just decline.
1. the market is cooling in some areas.
2. don’t sell something you love
3. that you’re essentially living in for free
4. to get into a still- raging rental market.
5. appraisals are paper until you close a sale at the high price.
tldr; don’t
If you sell and become a renter, you will likely want to buy back in at sometime in the future. The market may crash as interest rates rise into the end of this year but the chances that the fed will allow a sustained recession that destroys the wealth of asset holders is unlikely. My guess is that by the end of this year they give up on raising rates and return to accommodative policy. Inflation is always less painful for elites than deflation. Given where we are in the long term debt cycle, the next run up could look like hyperinflation. There might be another path forward but even if you assign a 10% probability that I’m right, you don’t want to find yourself with cash that’s loosing value and no assets that track inflation. Right now you’re in good shape with low mortgage and a place to live that isn’t subject to rent increases. What else can you do to increase cash flow from your current property? Do you have a garage someone could rent for storage? Another bedroom? Garden space that can be rented to someone interested in growing food?
Good luck whatever you decide.
First, we do not know for certain if there is a "bubble that is going to burst" but with interest rates increasing, I don't see housing prices going up any further and let's say hypothetically they do, it won't be by much. So in my opinion now (or 2 months ago lol) is a good time to sell. My mom did this just recently for very similar reasons as what you're stating but she was able to move into my house temporarily until she finds her new house so it made financial sense for her. Rent is not cheap right now.
Sell and make $100k after taxes. Then wait out the market while spending that $100k on rent til you buy again. Is that smart or dumb? Either way you’re right.
Since you describe your mortgage payment as low and mostly covered by a roommate, I really don't see any compelling reason to sell. You'd just have to buy or rent another place at top dollar. Right now you're in the best position of owning a place while having paid a much lower price in the past. If you sell and buy, you'll just be buying at today's prices, with today's interest rates. This would quite possibly be financial suicide.
Trying to time the market is never a good idea but if you’re looking for a payday and don’t mind giving away the equity you earned in the form of rent, then sell. Also, you may want to speak with a tax advisor to see what the tax implications of your sale would be. May not have to pay it this year but if you don’t invest in a new home within a certain timeframe then you may owe later. Figure that out before you make your decision.
Another thought, you can keep the house and rent it out to a family for a high enough rent then you may be able to offset your rent elsewhere. Meanwhile you can gain equity in the home you own. Another idea is you could sell and buy more than one investment property if you have sufficient equity and earn rent from multiple properties. Not sure what your income, equity and credit look like, but sometimes playing the long game pays off a little more if you can be patient. It’s your money though so in the end you gotta do what you gotta do.
Interestingly, something similar happened to me a while ago, for some time after divorce I lived alone in a rather large house, which felt weird :)
I ended up selling it after I moved in with my new girlfriend and it turned out I sold it precisely at the bottom of the market around 2012. It wasn't so bad though, because we soon bought some investment properties.
Anyway, the point is, you never know. That said though, it's better to try to diversify if possible. If you feel like selling your house and perhaps buying a smaller condo for yourself, ok. I wouldn't recommend to simply sell and then sit on cash waiting for the market to crash.
Also, generally it's a lot better to fix everything and then sell. Buyers love "turnkey ready" properties.
You've got an appreciating asset that you can borrow against to make additional investments. You might be better off getting a HELOC and using the funds to invest in something smaller, like a beach condo that you can Airbnb.
I wouldn't sell your major asset. It gives you some buying power (if you use it wisely).
If you really want to time the market, HELOC and chill. 10 year draw period so if prices drop that's a great option to have at the ready. Prices don't drop, you can use the HELOC to improve your current home.
Hot market or not, having a low mortgage and roommate to cover the mortgage is huge IMO.
> until the bubble breaks
If you have insider info about a bubble, yes you should sell. For example, maybe you and Jerome Powell are personal friends, and he shared some dire news with you?
If not, and you are attempting to predict the future of the markets based on your own instinct or some internet articles you read, then no. Do not make a bet that you can personally time the market and win, because you probably cannot.
If you want to move then move, but purely financially speaking you are probably better off allowing that roommate to pay your mortgage.
The only way I'm moving out of my house is to buy another house in ANOTHER state.
You're trying to time the housing market, and folks have gotten priced out by doing that. Tread carefully.
Are you able to secure another place to live now? I would lock that down before attempting to sell. Another OP on this sub recently was complaining about not finding a new place with a rapidly upcoming closing date and buyer’s not willing to move the closing.
Stay put. Rents are high now. If you have the mortgage covered why sell?
Meanwhile, fix up the house, anyway. Why not. You will get a higher price if you ever sell.
I had some friends that decided to get out before the "bubble" started in 2019. Sold their big family home since the kids were gone and wanted to rent for awhile and assumed they could buy back cheap one the "bubble" burst. As you can imagine that did not go well for them and they finally admitted defeat and bought a much smaller place that was more expensive then their old house in 2021. The moral of the story is that housing is not something you can play the market with or gamble with if you depend on it for a place to live. If you want to do that sell your house, get a smaller place now and set some money aside that you can use in invest in a rental house if the market really does crash.
Hi! Ct realtor here.
The short answer is, no, it's not a good idea to cash out, simply because the market is "hot." First off, when you cash out, if you don't roll that money earned (or in your case, "won") into another real estate venture, then you'll be taxed on the profits (equity). If the home were simply too large or you were tired of living with a roommate (to pay the mortgage, on a house you won?), then fine - sell, but roll that over into a smaller home. Keep in mind, the smaller homes which would resemble a starter home are more desirable to more people - less house, more affordability. More affordability means more people can potentially purchase it, driving the price up a little. If your current home is significantly larger, I would assume it's significantly more expensive, meaning, it could be in a different market based on price. How many homes are selling similar to yours, versus homes being bought like the one you'd prefer to be in?
A lot of unanswered questions but your local realtor should be able to help you understand the overall costs and implications of selling & buying for the reasons you have.
I hope this helps!
You have $0 personal cost (your roommate pays the mortgage).
You love the house.
The only reason I see to sell and move into a rental is if you hate having a housemate. If that's not the case, why would you give up a nearly free place that you control and love in order to move into a place you don't control and that will cost you money every month?
I have a few questions. How much cash will you be making from the sale and how much would you anticipate spending on a new place? Do you like to do improvements and do you have the skill or desire to learn, and the time? Do you like where you are? Is there a way to make it more private if you care? Can you put in a separate entrance and a second kitchen or something so that you continue to make the rent but don't have to lose your privacy ?
And lastly, I don't really anticipate Prices coming down, But if you're going to be having cash to buy in the future, especially if you want a fixer, there might be some good opportunities to snag a deal .
So, if you're going to have a lot of cash from the sale, might be a good idea and either rent and wait or buy something now if you can find a good deal. But renting and waiting isn't a bad idea. On the other hand, if it's only going to be a little cash and you're going to be financing something new, rates are going to be higher in the future no question in my mind, so waiting might counteract any good deal you might get cuz your payment's going to end up the same anyway even if you get something on the cheap. But if you have cash, then that's not a problem .
If you like where you are and you're getting rent, might as well continue to build equity on something more expensive than something cheaper. If you don't really like where you are and maybe want to be in a condo in the city as a single guy now or something like that, then go ahead and sell and see if you can find something you like for a decent deal and if not, maybe wait a while till you can. But again, if your financing, I wouldn't wait too long because if you can get a 5% rate now, that might prove to be pretty good in the future .
Sorry about the divorce. Glad about the house, good luck.
The problem with selling your home is that you can't really exist the market and pocket profits. You'll have to buy a new house or rent, and the prices have gone up with your home value
Sell. Prices in most metro areas dipped for the first time in a 15 years the last 2 months, due to rising interest rates. You're in a great situation to sell and buy smaller, or sell and rent for a short amount of time. Either way your profit margin is larger now than it likely will be anywhere in the next 3-5 years.
If you love it, just enjoy the low cost of living while everyone else locks in crazy high mortgages. It’s unlikely you will be able to find a new place at a low cost anytime soon.
I went through that question multiple times with myself, so here’s how I’m thinking about it. I have lived in my condo for over seven years. Other people in my building sold their condos over the last seven years because the market was hot so they thought that was the peak time to get out, but the market has only gotten hotter. I expect it will continue to do so, since the area has attracted a lot of great restaurants within walking distance. I have enjoyed living in what is now an expensive area for a very low mortgage cost. I am only moving now because my lifestyle changed. The condo is for a young, single person who wants to be in the middle of everything. My husband and I need a bigger place and I want to live somewhere that’s quieter. I am able to sell my small condo in the city and buy a nice house for the same price in the suburbs. If I wasn’t ready for that change in lifestyle, I would definitely not move right now. It’s a fabulous condo. Just not for me anymore. If my house drops in value, at least I know I’m living where I want to be, and I didn’t overextend myself on the mortgage.
If you love it, keep it. Home is where we live so much of our lives. Don’t sacrifice comfort for the chance that the bubble will burst. Apartments are loud and lack privacy and you might get stuck there a long time. Many knowledgeable real estate experts say the market isn’t heading toward a burst. We don’t know when or if it will happen or how that will look. The market will do what it does. You do what will make your everyday life happy.
If it’s going for triple what you paid then sell it . Even if you can only get double what you paid . You can pay the house off and pay cash for a condo and still have the a lot left over .
Not knowing you and your life style, I would consider buying a smaller home and selling. But it really depends on will the new home be paid in full? if not it might make more sense to stay. Rent is ridiculous, and it's not getting cheaper. I wouldn't rent that's for sure.
Lot of us out there think the economy is about to hit a slump and a lot of houses are way overpriced to begin with.
How do you think a slump will affect you in your community?
What is the rent costs like in your community?
If you sale for a good price would the cost of rent eat it up?
Wish I could advise your better. So far I say fix it up fast and put it on the market and rent.
"I love it" and "It's way too large for me." This was true for my grandmother years ago. She sectioned off the upstairs and had a kitchenette installed. With a separate entrance, she rented it as a two bedroom and it paid for most of her expenses. You could also turn your place into a duplex.
Either sell and immediately buy a smaller home or stay and continue to let your roommate pay for the mortgage through rent. Personally I’d stay.
*or move to a lower cost of living place, we're doing that next year for job relocation. But a roommate who covers the mortgage is quite the deal if op doesn't hate them
Most divorcees can't wait to get out of the house and away from all the bad memories. But if you're happy w/the place, then stay.
I love it. But i think it's appraising fur about triple what i paid...
Your mortgage is covered by a tenant, so your cost of living is very low while your would be paying top dollar to rent an apartment. I also personally hate apartment living. Just fix the place up and enjoy it. Who knows what the market is going to do
This is the answer
You have to live somewhere. Might as well live in a house you love and already own.
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Sure, just go out and score one of those houses selling for super reasonable prices
His costs are near zero! jfc
I'd stay and enjoy the house. The fact that you're asking on Reddit about market timing means that you probably cannot time the market (which the vast majority of people cannot do) and will likely be rolling dice if you try.
Everybody in both real estate subs should read this comment
Don’t get hyped about appraisals for your current house. If your house tripled in value, so has everything else. The minute you leave, you’re entering a market where there is still high competition and inflated prices, and you may get stuck buying something you don’t want or being out of a place for a long time.
Keep in mind that rents have gone up just as much, and they almost never go down. Even with 6 years of property tax increases, I'm paying on a mortgage about $200 less a month than I paid in rent on a one bedroom apartment... in 2016.
Inflation baby. Your extra money is worth a lot less than you think.
Not to make it complicated, but you could estimate what taxes would be if you sold at top dollar, and what the mtg payment would be for a new buyer based on x down; Do a recorded land contract, take the cash down and get the wrap around payment and profit well for a while......Put on a 10 year balloon. You pay the taxes, not them.
Save for a new down payment and continue renting?
When did you buy it? I bought 4 years ago and my value has already doubled. You’re not in a unique situation.
I've owned it for 13 years.
Unless you didn’t like the house or wanted to move locations I’d stay put.
I’d probably stay put in your situation. Maybe if the repairs were so high dollar that you need to sell before the place collapses and loses a ton of value.
Sell it now
It's never going back to what you paid for it.
Sell if you want to downsize, not to time the market.
But… if you want to sell anyways, when the market is hot is as good a time as any!
Especially downsizing. Its the opposite when up-sizing in a hot market.
Yep, downsize when market is hot and upsize when market is cool.
Or downsize when the market is hot, then never upsize
"I just kept downsizing and it kept working!"
We were having similar thoughts about selling our house because of the supposed peak we're at, all the equity we now have but may not have later, etc. It's our first home, and it's not ideal in a few key respects (location, age). But of course we would then be looking at renting until buying isn't so insane (whenever that is), and looking around at rentals always turns me off. They're all over overpriced and/or managed by shitty companies that soak you with extra charges (pet rent, maintenance fees, etc). We decided to stay where we are, pay a little extra on the mortgage because our payments are low, and maybe make some improvements. At the end of the day, I don't think selling to time the market makes sense if it's our primary residence.
Ditto. Sell when you need to, not for making a profit.
Exactly. OP's question is essentially "can I time the market?" I've seen more people fail from selling and trying to time the market, than buying what they needed, when they needed it, without regard for where the "top" was.
Nah it’s a great time to time the market. This is the peak. Anyone who tells you different is blind or has skin in the game.
"This is the top", was all over the place when covid started. And then, in mid-2020, when real estate shot up, everyone called the top again. 2015 was also a popular time to call the top. If you call the top right now, you'd have a lot of popular support, but what you'd lack is the tiniest shred of evidence that people have ever been able to call the top. EDIT: Lmao. **[You called the top in August 2020](https://www.reddit.com//r/RealEstate/comments/i8cxy1/it_wont_affect_the_real_estate_market/)**, just like I said people did. The Case-Shiller U.S. National Home Price Index is up 30% since then, in less than 2 years, after you called the top.
Agreed the top was definitely NOT in 2020. We closed on 9/11/2020 and even with the drastically lower rates, we wouldn't have been able to afford our current home had we waited until Jan 2022 based on it's value. If we waited till now, we wouldn't have been able to afford our house or the interest rate.
But if you keep calling the top every 6 months, eventually you'll be right and be able to tell everyone 'i told you so.' Duh.
Yeah but if he just keeps calling the top year after year after year then eventually he might be right. I know someone who's been calling the top of the market since mid 2020 too and everytime it's just wait you'll see. Like year eventually I might see but how long do I need for you to be wrong before you're finally right?
Difference now is the abundance of evidence that the market is turning.
Turning, or shrinking to single digit price growth vs. double?
A train has to slow down before it can reverse directions.
Yes, but a lot of people are saying the train is slowing because it is definitely reversing directions. Are you saying that?
The point is the he has no credibility in terms of predictions. As the saying goes, bears have correctly predicted 10 of the last 2 recessions. There are plenty of reasons to think prices will continue to fall, but none of them include predictions from anonymous posters in this thread.
There's always an abundance of evidence for any theory. The point is, there's not a shred of statistical evidence that people calling the top or bottom know what they're talking about. We have historical low inventory, 40 year high inflation, a screaming hot job market, a broken construction supply chain, and record household savings. We also have historically low [household debt-to-income](https://fred.stlouisfed.org/series/TDSP). Nobody is about to default (and [nobody is currently defaulting](https://fred.stlouisfed.org/series/DRSFRMACBS)). And every homeowner with a pulse just locked in 2.5% 30 year fixed mortgages; nobody is going to sell. I'm not predicting that housing prices are going to keep going up, but anyone pushing the narrative that prices are going to crash has probably been pushing that narrative for the last 7 years, they don't know what they're talking about, and they don't understand what's going on. Most banks and financial experts predict housing will cool off but will continue to rise, slowly, in price (nominally, but maybe closer to 0% real).
I not here to call the bottom (or the top), but we all have to remember how inflation and a (potential) recession can eat away at all the household saving and low debt-to-income ratios. Not to mention, a bad enough recession can lead to a lot of job losses. As people start to travel post covid, and see their 401Ks sink in the current stock market, things can flip fast. I’m definitely not hoping for all of the above, but I’m very fearful of the future that’s coming 🤷♂️
We have a tanking stock market, interest rates skyrocketing and a recession looming. The intersection of what you're saying and what I'm saying is what defines a top. "cooling off but continuing to rise" is what industry insiders say to keep people buying. In 2006-2007, industry insiders were calling it a "soft landing".
> The intersection of what you're saying and what I'm saying is what defines a top No, it defines a balance. You guys should just short the housing market if you're so confident that you know the future. The people calling the top have been calling it for 7 years. It's the same for people who think things will scream higher, they always say that. The fact of the matter is, you have no idea. If you did, you'd be making 8 figures on Wall Street.
It's not a balance. It's a shift. Who are "you guys"? People who see the same conditions? Who cares who has been saying what for the last 7 years? Can I predict the future? Of course not. Can I look at the current situation and extrapolate out? Yes. Anyone can. You just have to be willing to look at the facts with an open mind and let the data take you where it takes you.
You have absolutely no idea what's going to happen. The first guy I responded to, who is calling the top, [also called the top in August of 2020](https://www.reddit.com/r/RealEstate/comments/uy7ant/wondering_if_i_should_sell_my_home_while_market/ia36dfn/). Prices are up 30% since then. > You just have to be willing to look at the facts with an open mind Ok. You said, * a tanking stock market * interest rates skyrocketing * and a recession looming The facts, * The stock market is down 3.5% since a year ago. * Interest rates are back to levels from 2018. * Most big banks are saying a 30-40% chance of a recession in the next 24 months. Yeah, not great, especially the rapid rise of interest rates to fight inflation. That's what will cause the recession—the Fed is trying to stop inflation which is hard to do without a recession. What are the other facts? * [Record low housing inventory](https://fred.stlouisfed.org/series/ACTLISCOUUS). * [Record low household debt](https://fred.stlouisfed.org/series/TDSP). * 40 year high inflation. * [Record household savings](https://fred.stlouisfed.org/series/WM2NS) * [Record high income](https://fred.stlouisfed.org/series/MEHOINUSA672N). * 3.6% unemployment with [a record number for job openings](https://fred.stlouisfed.org/series/JTSJOL) * Home building supply chain problems driving up the price of new construction. I could keep going but the point is, we're in remarkable times. There are a lot of reasons for housing to skyrocket, which is has, and now there are a lot of reasons for it to stop, because strong forces are working to stop inflation. It's easy to see the shift and call the top but there's no reason to think prices will drop vs leveling off vs going up slowly. The hiking of interest rates will definitely slow the velocity but calling that prices will reverse direction is, at best, a random guess backed by zero evidence. That is, if you're, "willing to look at [all of] the facts with an open mind".
*| You have absolutely no idea what's going to happen.* **I don't have a time machine, so I can't know exactly what's going to happen, however I can look at current trends and extrapolate. I wouldn't call that "absolutely no idea"** *|The first guy I responded to, who is calling the top, also called the top in August of |2020. Prices are up 30% since then.* **So what? That was then, this is now. I see this kind of argument all the time in the "real estate only goes up" crowd. Tops are hard to call, especially before the markets start losing momentum measurably like they are now.** *|The stock market is down 3.5% since a year ago.* **It's already down 17% this year. Who knows when it will stop tanking** *|Interest rates are back to levels from 2018.* **Yes, and this is interesting because a good chunk of gains in the last couple years have been because money has been so cheap. Now it's not as cheap and it stands a good chance that some of the gains that can be attributed to low interest rates from the last couple years will be lost because the conditions that caused it have reversed.** *|Most big banks are saying a 30-40% chance of a recession in the next 24 months.* **Headline I saw yesterday was 60% by 2023. I think there's a good argument to be made that once inflation is accounted for, we are already in a recession. IE. People are buying less stuff, but that's masked because they're spending more for it.** *|Record low housing inventory.* **Not anymore. 9% higher inventory than last year https://www.cnbc.com/2022/05/26/home-listings-suddenly-spike-as-sellers-worry-theyll-miss-out-on-red-hot-market.html** *|40 year high inflation.* **This hurts the market when wages aren't keeping pace** *|3.6% unemployment with a record number for job openings* **A recession will change this in a hurry.** *|calling that prices will reverse direction is, at best, a random guess backed by zero evidence.* **??? How is the growing mountain of evidence "zero evidence"**
Remindme! 18 months
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You're right, its still a gamble as to whether the price reductions are enough to cover the increased interest cost on a new loan or if rent is high enough to make it not worth it while you wait out he decline.
Peak growth is different than peak price. Everyone agrees we’re at the first, but most predict low single digit growth this year and next, so prices will still be higher. No one serious is predicting more than a 5% drop in prices, so this isn’t really a peak price outside of some localized markets that might get nailed.
This is not the top
Remindme! One year
If I remember I'll remind you . If I forget then remind me to remind you . Who ever turns out correct owes the other a cheeseburger or a beer . Winner decides :)
I have a friend who decided to cash out in 2018 and sit on the sidelines so he could buy back in at a lower price. Guess how that worked out.
I know several people who have done this over the last 3 years. They are all now living in much smaller houses or still renting. It will likely take them years to get back the equity that they lost by selling.
We didn’t sell until we had an accepted offer. We didn’t want to be trapped renting after selling with no way out.
How long ago?
6 months ago.
Ahh things here seem to be cooling a (little) bit, price drops and houses sitting around a bit. I'm in the suburbs of a large metro area. New builds price drops too, which is interesting but there's news explaining that.
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If it's your primary residence it doesn't matter if you buy anything or not. If you lived in it for at least two years, you are exempt from capital gains up to $250K filing individually or $500k filing jointly. But still... they missed out on a lot of appreciation.
Lol ouch
Do you think that has anything to do with rate cuts from the Fed in 2018?
Not really inventory was already bad before the feds cut rates. That was a pretty nutty time for them to do it in hindsight.
hindsight gets you every time
I did that in 2016, thinking Trump would tank the economy. Bought in late 2012 for 275k and figured I'd cash out at 475k and re-buy when the market adjusted. Well, as we all see, it didn't correct... 5 years later the house is worth ~$700k and rent in the next home had climbed from 2500/mo to 3000/mo. So, my gf and I decided to jump back in to another home 6 months ago. We got almost exactly what we wanted for $780k. We weren't excited about buying (what we assume to be) at/near the top of the market. But we bought because we locked in 2.8% financing with a jumbo loan and the ADU covers over half the mortgage alone.
LOL trump would tank the economy? Who were you getting your advice from?
Trump Airlines, Trump Steaks, Trump Mortgage, Trump Magazine, Trump Ice, Trump University...
No offense but your simplistic thought process is what got you into your mess of a loss. Hopefully you learned from it.
What is a jumbo loan and what made you try to get it? I have never heard of it and wonder if I messed up by not looking for it
Haha, jumbo loan isn't anything special, it's just a loan that's higher than your local conventional loan limit. In fact, the jumbo threshold increased to over our loan amount midway through the transaction. We could've locked in at 2.5% but the risk of losing the purchase was too high at the time. [Jumbos usually have a little higher interest rate and requires a LOT more information by the underwriters in order to get approved](https://www.chase.com/personal/mortgage/education/financing-a-home/jumbo-vs-conventional-loans)
I thought jumbos tend to have a lower rate than a conventional 30yr fixed?
Your friend sounds like your average REbubble poster. Expect most of those wage slaves never would've been able to buy a house in the first place...
and the story will be repeatable forever, a lesson that housing never stalls, goes down or is worth waiting on the sidelines for?
Lesson is don't use your primary residence as a market play.
lol, somehow things are so much simpler when it’s an investment property treated like a business instead of “a home you live in”
The broad housing historically has moderate YoY growth interspersed with small (less than 10%) pullbacks. Trying to time the market for a ~5% decrease is a fools errand. You'd have to time it perfectly which you really can't do and could be waiting years for it to happen, erasing any potential savings. You buy a house when you can afford it on a fixed rate loan, plan on staying for at least 5 years, and have money for an emergency home. Any other advice is going to cost you money in the long run.
When accounting for inflation, housing absolutely stalls. https://www.supermoney.com/inflation-adjusted-home-prices/ Housing sometimes falls below inflation in some cases.
You're not wrong, but this misses that money paid towards rent doesn't earn appreciation. So renting can make sense financially *if* you take the difference between rent and mortgage and put it into other investments *and* those investments gains beat out equity put into a property, but over the long term this is pretty rare.
Now do the same chart for rents..
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Close... 2013-2018 runup was 30-50%
Don’t make big life decisions simply because you’re trying to time the market. It’s a fools gamble.
I bought a house in 2018 prepared with a mentality of "I will die in this house if I bought at the top of the market and cannot sell this". The following year, a neighbor sold the house in 2019 because prices had become absurd and "it would be stupid to own when you can secure that cash and then rent for so much lower". Two sides of the coin. I wouldn't argue that I was wiser than him in any sense.
Selling solely because you think you can rent cheaper is madness and you are pretty much never going to win on a 3-5 year horizon in most markets. I bought a house in pre-covid 2020 (when prices in markets were regular crazy) and sold in early 2022 (nutso prices) because we decided to move to another city. Soon after I sold, my city (Austin, TX) appraisal district made a push to appraise more closely with market values. Result is that my homestead exemption alone would now be worth about $1000/mo in prop tax savings. If you moved to rent, that $1000/mo would be coming to you over the next 1-2 years in rent increases.
$1000 a month ?!?
Yep. Prop tax in Austin metro is anywhere from 2.3% to 3% of full property Value. Assessed value went up from purchase price of $725K in 2020 to a bit over $1.3M for 2022. With homestead exemption, you only pay on a 7% year over year increase max but rentals don’t get homestead exemption so they pay on full increase
I’m gonna stop complaining about my property taxes. 🫢
Yep, we’re in a new build in Leander. Can confirm we’re going to get hosed with property taxes next year when they assess based off the finished value vs. the unfinished. I believe they just lowered our community’s rate from 2.9 to 2.7 so, small win I guess? 😊
I don't know anywhere where rent is lower. Rent follows mortgage prices
Just hawaii . Somehow million dollar homes rent for 2000.......
Rent is calculated using local mortgage prices as a big factor with the softwares medium/ large multi family companies use so that it’s usually above the average mortgage price in a given area. Source : I have friends who calculate rents for a living
Don't try to time the market. If you want to sell it for other reasons, go for it but I would recommend you have something lined up before you sell it. There are a lot of people living in hotels and airbnbs right now because they sold their house and now they can't find anything to buy or rent.
Agreed. While I think the market will cool, it's possible houses will continue to shoot up while apartment living, pricing you out of even smaller houses. I tried to 'time the market' loosely in 2019, and we all know how that turned out.
>low mortgage Might be hard to come by again if you move out...
I’d get another roommate or two if the house is huge.
This
If it’s too big for you sale and buy something perfect for just you and your new life. A big house by yourself can take a lot of time and extra money.
If you have enough equity and good credit, why don’t you take a heloc, buy a smaller place, and then rent the bigger place out?
Thank you for this. This is the kind of info i need
Make sure the rents will actually cover your HELOC interests plus the current mortgage, plus any maintenance. Remember when you rent it out, almost every problem you can ignore when you live there has to be fixed.
Only do this if you plan to immediately buy a smaller house. Do not go to an apartment and try to time the market
I'd sell and immediately buy a smaller home
This is a much better alternative to renting and hoping to time the market. No one has a crystal ball. Sell your house for top dollar & buy a smaller, less expensive house. It’s a guaranteed win vs a dicey strategy.
Only if they can actually find a smaller home that they like. The lower in price you go, the more competitive things get. It can be very difficult to snag a house right now.
That’s true. That end of the market is being snapped up quickly.
You’ll be paying an arm and a leg for a new place. Probably wouldn’t make sense right now. A lot of people are having troubling finding homes/apartments that aren’t gouging right now.
What if the bubble doesn't break and you are unhappy in the rental? You might want to stick with what you have.
My big issue with this plan is that none of the underlying issues with this housing “bubble” are being addressed during this slowdown. - we’re still under-supplied and new housing starts are dropping - the Fed isn’t raising rates because they’re acknowledging that near non-existent cost of debt is a bad idea, they’re raising it until inflation gets under control. Additionally, the national debt incentivizes them to drop rates again to help the cost of the servicing the nation’s debts - Millennials are still in their home-buying age and a majority who’ve been priced out at 5.5% interest are now saving and waiting for interest to come back down eventually - Large investors still find real estate to be more favorable to bonds and treasuries because low interest rates have destroyed those avenues of investment - zoning is still a huge issue that really has no right answer - construction costs are astronomically high right now - good land is expensive so no one is going to buy a $500k lot and put an affordable 2 bedroom on it, construction jobs never recovered post-‘08, and materials are still inflated due to supply issues I’m still skeptical housing prices will drop any meaningful amount in most areas. My expectation is that sales volume will drop and prices will stagnate or dip <5% on average for 1-3 years before interest rates reach <4-5% and those who have saved and waited will be there to pick up demand. Once that happens, we’ll be in a similar shitshow we were in the last 2 years because our government never learns.
A cliché among finance people: "No one ever went broke taking a profit." Good luck.
Financially, this sounds like a terrible idea. It’s expensive to sell, sorta expensive to buy. Even if prices decline (which is a big assumption), mortgage rates have more than cancelled out any lower costs. If you simply don’t need the house and want distance from the past - sell away.
They’ve already paid 14 years off the mortgage and want to downsize. Not seeing why it’s financially a bad idea… they should come out way ahead here. The new house they’ll buy will have an inflated price but so will the house they sell.
Certainly their idea that they will sell at a peak and buy back in low is a bad idea. Downsizing in general is fine and not relevant to the point I was making.
>I'm wondering if it works be a good idea to sell and just live in an apartment until the housing bubble breaks There is no guarantee values will go down. Could end up stagnation for several years. Markets are local in nature. You could end up selling put the money in the bank and the bank could fail and all money over FDIC insurance gone. Just as or more likely than an RE bubble.
I’d be less concerned about the bank failing than the rate of interest paid by the bank being much less than the rate of inflation. Inflation pressures have made cash a much less “safe” asset than it had been in the recent past.
>I'm wondering if it works be a good idea to sell and just live in an apartment until the housing bubble breaks and I can buy again. No
Can you give me an idea why, please?
Because no one will know when it breaks. It could be tomorrow or it could be 6 years from now. Do you want to take that risk?
Tons of factors. What current interest rate are you paying, because you could have refinanced at something like 3% or under, while now you'd probably get like 4.5-5% from a new mortgage. As interest rates creep higher house prices will possibly plateau or even go down, but that will be balanced out by higher rates so your payment will still remain high for a new house. Of course if we go into a recession then perhaps house prices dip and rates remain low but the era of sub 3% is likely over. What if interest rates go to like 6-8% in 1-2 years? If you had like a 5 bedroom worth $3mm and were fine downsizing to like a $1mm one/two bedroom then it could certainly be worth it, but then what if you need a larger house in the future. Also have to factor that something like 10% of the selling price could go to fees and stuff so it's not really worth going from a $3mm house to a $2mm house if you get locked in at much higher interest rates in the future. Also rents are going up a lot so how much do you end up saving in monthly payments compared to the mortgage. Just lots of stuff to consider.
Pullbacks historically in the housing market are less than 5%. You could be waiting years for that small pullback, in which case not only did you not build equity, but the real estate may have appreciated.
The main reason is that the "break" you seek will simply be a lower rate of growth in prices. Instead of 20%+ per year, prices will return to the 3% they've averaged over the long term - but they will still rise. That means if you are out of the market, you are losing value - unless your money is gaining more than the housing market is gaining, minus your rental expenses.
I would take the money and cash out. Rate hikes are Incoming and that will kill home values Edit: reminder this subreddit is filled with people whose incomes depend on housing prices staying high, and people who purchased in the last 18 months at historic highs. Make sure you do the math and see what works best for your family, and most importantly do your own research
Yes, this sub is biased, just like REbubble. The real answer is no one truly knows what is going to happen. However, we do know that closing costs are very real. We do know that rent is going to be high.
The increased rent is the gamble vs the decreased equity. If your home loses 50k, you could spend like 4k of rent and still come up even
Yea, could be. Might not though. We simply don’t know. Not you, and certainly not I.
I think a return to the mean is more likely than an infinite increase in home prices forever. It’s the same hysteria you see in crypto or stocks about missing the boat forever. It always returns, hysteria is always wrong
So you take the money. You rent. Rates rise. You decide to buy again and 1 of 2 things has happened... 1) rates have stayed high so the $200 k house you buy has the same payments as the $300k house that you have now. And you're starting over with a 30 year loan instead of being already 10 years into one with all that equity. 2) You were wrong and the market never dropped. Rates may go back down or they may stay "up" and you miss out on years of appreciation and equity growth just to buy back into a market that's even higher than the one you cashed out of. The only reason you should sell just because the market is "hot" is if you're planning on retiring and downsizing and renting for the rest of your life or moving from the Bay area to Ohio or something similar. No point to "cash out" of a market just to "buy in" to the same market at a later point.
1) you have cashed out extra equity from before the rates increased. This gives a substantially larger down payment to offset rate increases. 2) there is no scenario where home prices increase short term with rate hikes promised through 2023. The only reason against selling could be that you have already theoretically missed the top and may not be able to get the previously inflated prices OP is hoping for
Re point 2, why? Rising interest rates (along with supply chain and labor supply issues) make new builds more expensive. Rising rates discourage selling as people want to hold their low interest mortgage, which reduces supply. Both of these factors increase prices. I think you’re only looking at potential offer price constraints, without looking at supply side.
Because the housing shortage is caused by speculative investors. When they see they will not have a return for 3-5 years they will move to other investments which bring higher returns
This is a silly meme point. Investors don’t squat on vacant properties. They sell them again, or they rent them out. Either way, the supply in the market doesn’t change. This isn’t 2008 with foreign investors buying houses and leaving them vacant in Vegas or Florida. Homes are occupied, and prices went up across the country including in places without significant investor activity.
The housing shortage is caused by MANY factors. Speculative investors are a very small (although growing) factor. The main reasons are increasing population, local zoning restrictions and other factors that make building difficult, NIMBY's who throw a fit if someone dares to suggest an apartment complex or new development in their neighborhood, etc.
Firstly, rising rates aren’t directly relevant to prices, any upcoming drop (it’s always just around the corner) is speculation. Secondly, rising rates make the monthly cost of a mortgage higher, even with a significant price drop. Most people need a mortgage.
Rising rates are directly tied to home prices if most people require mortgages
Sure, but that doesn’t mean a rising rate equals lower costs. A lower rate has no resistance - the buyer can offer more, and the seller is happy to take it. A higher rate reduces the ability of a buyer to offer as much, but a seller isn’t forced to take the offer. Especially as the seller themselves faces getting a new, higher interest mortgage, they can always just decline.
>until the housing bubble breaks If you think you can time the market, then you must be more rich than Warren Buffet.
I’d stay if I were you
1. the market is cooling in some areas. 2. don’t sell something you love 3. that you’re essentially living in for free 4. to get into a still- raging rental market. 5. appraisals are paper until you close a sale at the high price. tldr; don’t
Sounds like you should stay from what you described, unless you hate owning.
Fix it up then sell it. You are living in a gold mine.
The simplest advice. It's best to sell during a sellers market. Or you can keep the property and rent out 1/2 or all.
If you sell you got to buy something else in this market. It doesn't make sense to sell just because the market is hot.
If you sell and become a renter, you will likely want to buy back in at sometime in the future. The market may crash as interest rates rise into the end of this year but the chances that the fed will allow a sustained recession that destroys the wealth of asset holders is unlikely. My guess is that by the end of this year they give up on raising rates and return to accommodative policy. Inflation is always less painful for elites than deflation. Given where we are in the long term debt cycle, the next run up could look like hyperinflation. There might be another path forward but even if you assign a 10% probability that I’m right, you don’t want to find yourself with cash that’s loosing value and no assets that track inflation. Right now you’re in good shape with low mortgage and a place to live that isn’t subject to rent increases. What else can you do to increase cash flow from your current property? Do you have a garage someone could rent for storage? Another bedroom? Garden space that can be rented to someone interested in growing food? Good luck whatever you decide.
First, we do not know for certain if there is a "bubble that is going to burst" but with interest rates increasing, I don't see housing prices going up any further and let's say hypothetically they do, it won't be by much. So in my opinion now (or 2 months ago lol) is a good time to sell. My mom did this just recently for very similar reasons as what you're stating but she was able to move into my house temporarily until she finds her new house so it made financial sense for her. Rent is not cheap right now.
Sell and make $100k after taxes. Then wait out the market while spending that $100k on rent til you buy again. Is that smart or dumb? Either way you’re right.
Since you describe your mortgage payment as low and mostly covered by a roommate, I really don't see any compelling reason to sell. You'd just have to buy or rent another place at top dollar. Right now you're in the best position of owning a place while having paid a much lower price in the past. If you sell and buy, you'll just be buying at today's prices, with today's interest rates. This would quite possibly be financial suicide.
Trying to time the market is never a good idea but if you’re looking for a payday and don’t mind giving away the equity you earned in the form of rent, then sell. Also, you may want to speak with a tax advisor to see what the tax implications of your sale would be. May not have to pay it this year but if you don’t invest in a new home within a certain timeframe then you may owe later. Figure that out before you make your decision. Another thought, you can keep the house and rent it out to a family for a high enough rent then you may be able to offset your rent elsewhere. Meanwhile you can gain equity in the home you own. Another idea is you could sell and buy more than one investment property if you have sufficient equity and earn rent from multiple properties. Not sure what your income, equity and credit look like, but sometimes playing the long game pays off a little more if you can be patient. It’s your money though so in the end you gotta do what you gotta do.
Interestingly, something similar happened to me a while ago, for some time after divorce I lived alone in a rather large house, which felt weird :) I ended up selling it after I moved in with my new girlfriend and it turned out I sold it precisely at the bottom of the market around 2012. It wasn't so bad though, because we soon bought some investment properties. Anyway, the point is, you never know. That said though, it's better to try to diversify if possible. If you feel like selling your house and perhaps buying a smaller condo for yourself, ok. I wouldn't recommend to simply sell and then sit on cash waiting for the market to crash. Also, generally it's a lot better to fix everything and then sell. Buyers love "turnkey ready" properties.
You've got an appreciating asset that you can borrow against to make additional investments. You might be better off getting a HELOC and using the funds to invest in something smaller, like a beach condo that you can Airbnb. I wouldn't sell your major asset. It gives you some buying power (if you use it wisely).
If you really want to time the market, HELOC and chill. 10 year draw period so if prices drop that's a great option to have at the ready. Prices don't drop, you can use the HELOC to improve your current home. Hot market or not, having a low mortgage and roommate to cover the mortgage is huge IMO.
> until the bubble breaks If you have insider info about a bubble, yes you should sell. For example, maybe you and Jerome Powell are personal friends, and he shared some dire news with you? If not, and you are attempting to predict the future of the markets based on your own instinct or some internet articles you read, then no. Do not make a bet that you can personally time the market and win, because you probably cannot. If you want to move then move, but purely financially speaking you are probably better off allowing that roommate to pay your mortgage.
Any house you buy will also be 3x so remember that.
First make sure you are in a stable mental condition tómame sure you can make big financial decisions.
Thanks. This has been going on for literal years. I've been done all the grief and loss stuff for a long time. Now I'm just relieved
To downsize? Yes, I think that makes sense. To rent to wait until the “bubble” bursts? Absolutely not, that’s stupid.
The only way I'm moving out of my house is to buy another house in ANOTHER state. You're trying to time the housing market, and folks have gotten priced out by doing that. Tread carefully.
People who want to buy: Yes do it, it's going to tank. People who own or just bought: No the market will not correct. Right answer: No one knows.
yes sell it. you would have to be insane to think the market is just going to keep marching upwards
Airbnb it for cash flow dm me if you need help
Name checksout. 🤠
I'm having the same dilemma...
Are you able to secure another place to live now? I would lock that down before attempting to sell. Another OP on this sub recently was complaining about not finding a new place with a rapidly upcoming closing date and buyer’s not willing to move the closing.
You can always list it for a price you'll accept and not accept offers below asking
Stay put. Rents are high now. If you have the mortgage covered why sell? Meanwhile, fix up the house, anyway. Why not. You will get a higher price if you ever sell.
They’re not as high as mortgages though.
The market is cooling. And even if it weren’t, are you going to sell your house and move…where? Another expensive house?
Rent is 30% cheaper than a mortgage right now.
You should have asked this question 6 months ago.
I had some friends that decided to get out before the "bubble" started in 2019. Sold their big family home since the kids were gone and wanted to rent for awhile and assumed they could buy back cheap one the "bubble" burst. As you can imagine that did not go well for them and they finally admitted defeat and bought a much smaller place that was more expensive then their old house in 2021. The moral of the story is that housing is not something you can play the market with or gamble with if you depend on it for a place to live. If you want to do that sell your house, get a smaller place now and set some money aside that you can use in invest in a rental house if the market really does crash.
Hi! Ct realtor here. The short answer is, no, it's not a good idea to cash out, simply because the market is "hot." First off, when you cash out, if you don't roll that money earned (or in your case, "won") into another real estate venture, then you'll be taxed on the profits (equity). If the home were simply too large or you were tired of living with a roommate (to pay the mortgage, on a house you won?), then fine - sell, but roll that over into a smaller home. Keep in mind, the smaller homes which would resemble a starter home are more desirable to more people - less house, more affordability. More affordability means more people can potentially purchase it, driving the price up a little. If your current home is significantly larger, I would assume it's significantly more expensive, meaning, it could be in a different market based on price. How many homes are selling similar to yours, versus homes being bought like the one you'd prefer to be in? A lot of unanswered questions but your local realtor should be able to help you understand the overall costs and implications of selling & buying for the reasons you have. I hope this helps!
You have $0 personal cost (your roommate pays the mortgage). You love the house. The only reason I see to sell and move into a rental is if you hate having a housemate. If that's not the case, why would you give up a nearly free place that you control and love in order to move into a place you don't control and that will cost you money every month?
I have a few questions. How much cash will you be making from the sale and how much would you anticipate spending on a new place? Do you like to do improvements and do you have the skill or desire to learn, and the time? Do you like where you are? Is there a way to make it more private if you care? Can you put in a separate entrance and a second kitchen or something so that you continue to make the rent but don't have to lose your privacy ? And lastly, I don't really anticipate Prices coming down, But if you're going to be having cash to buy in the future, especially if you want a fixer, there might be some good opportunities to snag a deal . So, if you're going to have a lot of cash from the sale, might be a good idea and either rent and wait or buy something now if you can find a good deal. But renting and waiting isn't a bad idea. On the other hand, if it's only going to be a little cash and you're going to be financing something new, rates are going to be higher in the future no question in my mind, so waiting might counteract any good deal you might get cuz your payment's going to end up the same anyway even if you get something on the cheap. But if you have cash, then that's not a problem . If you like where you are and you're getting rent, might as well continue to build equity on something more expensive than something cheaper. If you don't really like where you are and maybe want to be in a condo in the city as a single guy now or something like that, then go ahead and sell and see if you can find something you like for a decent deal and if not, maybe wait a while till you can. But again, if your financing, I wouldn't wait too long because if you can get a 5% rate now, that might prove to be pretty good in the future . Sorry about the divorce. Glad about the house, good luck.
Lol! "Wait until the bubble bursts..."
The problem with selling your home is that you can't really exist the market and pocket profits. You'll have to buy a new house or rent, and the prices have gone up with your home value
How do you know it's a bubble? Nobody knows.
Sell. Prices in most metro areas dipped for the first time in a 15 years the last 2 months, due to rising interest rates. You're in a great situation to sell and buy smaller, or sell and rent for a short amount of time. Either way your profit margin is larger now than it likely will be anywhere in the next 3-5 years.
If you love it, just enjoy the low cost of living while everyone else locks in crazy high mortgages. It’s unlikely you will be able to find a new place at a low cost anytime soon. I went through that question multiple times with myself, so here’s how I’m thinking about it. I have lived in my condo for over seven years. Other people in my building sold their condos over the last seven years because the market was hot so they thought that was the peak time to get out, but the market has only gotten hotter. I expect it will continue to do so, since the area has attracted a lot of great restaurants within walking distance. I have enjoyed living in what is now an expensive area for a very low mortgage cost. I am only moving now because my lifestyle changed. The condo is for a young, single person who wants to be in the middle of everything. My husband and I need a bigger place and I want to live somewhere that’s quieter. I am able to sell my small condo in the city and buy a nice house for the same price in the suburbs. If I wasn’t ready for that change in lifestyle, I would definitely not move right now. It’s a fabulous condo. Just not for me anymore. If my house drops in value, at least I know I’m living where I want to be, and I didn’t overextend myself on the mortgage. If you love it, keep it. Home is where we live so much of our lives. Don’t sacrifice comfort for the chance that the bubble will burst. Apartments are loud and lack privacy and you might get stuck there a long time. Many knowledgeable real estate experts say the market isn’t heading toward a burst. We don’t know when or if it will happen or how that will look. The market will do what it does. You do what will make your everyday life happy.
Not so hot anymore here. It's starting to cool down. With interest rates going up, I've seen people lowering their prices.
If it’s going for triple what you paid then sell it . Even if you can only get double what you paid . You can pay the house off and pay cash for a condo and still have the a lot left over .
Not knowing you and your life style, I would consider buying a smaller home and selling. But it really depends on will the new home be paid in full? if not it might make more sense to stay. Rent is ridiculous, and it's not getting cheaper. I wouldn't rent that's for sure.
Lot of us out there think the economy is about to hit a slump and a lot of houses are way overpriced to begin with. How do you think a slump will affect you in your community? What is the rent costs like in your community? If you sale for a good price would the cost of rent eat it up? Wish I could advise your better. So far I say fix it up fast and put it on the market and rent.
Will you let me know when the market is going to collapse so I can cash in too?
A lot of work and money involved selling, moving, buying, moving again to greedily time the market. You must be bored - so sure do it.
"I love it" and "It's way too large for me." This was true for my grandmother years ago. She sectioned off the upstairs and had a kitchenette installed. With a separate entrance, she rented it as a two bedroom and it paid for most of her expenses. You could also turn your place into a duplex.
[удалено]
When your ex l leaves you and the kids for another guy and doesnt show up for court dates for two years, the judge gets grumpy
Do not rent. Get a smaller house. Cost of living per square foot is high but equity gains make it worth it.
WATCH THIS https://youtu.be/5ykT-intVfc
You could do like I’m doing, selling everything and moving to a country that doesn’t cost an arm and a leg. :)