Thinking of selling my house. Opinions?

[nostatic]

if you can find a rental/lease, I think it is fine. I think the market is high, especially for condos. Given the recent Fed talk about interest rates, I think the seller's market is going to change soon.

[LeeH]

You may be able to save the commission. In a hot market selling yourself can be the way to go.

[Sonic dB]

I think it comes down to whether you are happy with your current place or not. Obviously with the new baby, its probably a bit tight.

If its North Redondo, Id sell it... if its South Redondo/Riveria Village etc. Id think hard about selling it as those values will only go up eventually meeting up with HB and MB values.

South Redondo is still a pretty well kept secret at this point, but not in a few years...

Renting has other advantages: less to no maintanance time and costs being the largest one. If you were going to buy a new place... where would it be?

[jyl]

And SoCal real estate in the late 80s / early 90s was crazy - people had the same belief that houses never decline in value - by '93 there were foreclosures everywhere, houses had fallen 30% in some areas, and condos were worse.

Here's a source for historical housing prices by metropolitan area. http://www.ofheo.gov/HPI.asp

Originally posted by SoCal911SC
"rent for a few years"
Craziness always results in a crash. Nasdaq 5000 was crazy. Ferrari prices in the late 80s were crazy (at one point at its peak, I remember even old 308s were appreciating at 15% PER MONTH and were closing in on being $100,000 cars. I saw a beater 246 sell for $300,000).

What drives those things? The same thing that is driving the housing market now: The irrational belief that the appreciation will never stop or that housing prices will never go down again. That somehow, this cycle is different from the other cycles that have historically happened.

[Sonic dB]

True, it will always be behind MB and HB...but its a great place to live and the values of housing between Prospect and down to the ocean will never crash too hard. Just my opinon, though I could be wrong.

I remember selling my house a couple of years ago. It was a pain in the butt dealing with people coming over to see it all the time, often when I wasnt home. Also, the realtor gets a big cut of the profits... However I dont regret selling it and I learned a lot.

Getting back to your situation, it would be great if you could find that perfect house that would really work out for your family. PV looks like a cool place, but thats way too far from the freeway too.

[island911]

IMO, Stay w/ your original plan.

"Housing" has too many stabilizing factors to crash . ..unlike Ferraris and stocks.

Also, I'm not sure how long you could coast on renting before the capital gains (not being re-invested into a house) would bite ya.

[Moneyguy1]

Island makes a valid point. There is a limit to the amount of time the feds give you for reinvesting in R.E.

[VaSteve]

I'm selling my townhouse and moving in < month to a bigger house built for us (but further out). We are glad we're doing it before kids, because they require a lot of stuff and we are DIY people (paint, decorating, etc.) We wanted to get out (of our current house) while the market was still so pumped up. I think we're making the right choice - we're outside DC BTW.

Couple points:
- Being a landlord is a pain (did it, diff house) If you're renting property you don't care about it's one thing - but to have people nickle and dime your on rent and trash your FORMER HOME, it's not alway worth it. BUy a slum and rent it out. BTW, rule is 100x rent. If you want to rent for $1000/month, don't spend more that $100,000. I considered that factor when selling - nobody would pay in rent what that house was worth as a sale. Rent market is also soft right now.
- A realtor can help negotiate with nutty, PITA buyers. Then again in a hot market, you may not need them. Ask yourself what you wnat to deal with as a Small Businee Owner.

Good luck!

[mikester]

LA Area rentals are in huge demand, there is currently a shortage of spaces for rent which inflates the good ones of course.

That means two things, you could probably get some good money for your current place on the rental market. You'll also pay highly to rent a place yourself.

[dmcummins]

Wow, I don't know how you guys can afford to live in California. Property values have risen around here also in the last few years. I live in a small town outside of St. Louis. I bought a 4 1/2 acre lot on the edge of town and had a 3000 sq ft home built two years ago. This year I divided the lot so I could sell two 1 acre lots. I sold the first one for 50% more than I paid for the 4 1/2. I have a builder who is suppose to sign a contract on the other acre on monday. Same price, 50% more than I paid for the 4 1/2 acres two years ago.

I have to believe low interest rates are driving Real Estate prices everywhere and I too am just trying to take some money off the table.

In hindsite I should have situated my house on about 3/4 of an acre and subdivided the rest into 1/2 and 1/3 acre lots.

The bad part is since I subdivided I'll have to pay 15% capital gains instead of a house sale.

[dmcummins]

I also rented a house I had owned before. It looks like an OK investment on paper but it was like a part time job. Not worth it to me. All it takes is one bad renter and your screwed.

Good luck.

[turbo6bar]

I read ARMs are starting to hike upwards. Around 35% of mortgages are ARMs, so as these rates start to increase towards fixed rates, your pool of buyers will decrease. That assumes buyers cannot qualify for a fixed rate mortgage.

The main driver for a correction, in my opinion, is mortgage rates. If rates continue upwards, more buyers will be squeezed from action. Fewer buyers = Less demand = Stagnant or lower prices. I'm not sure if that will hold true for California. You might have enough buyers to support high prices-or maybe not.

Rental properties require a special personality. It takes a lot of patience and sacrifice, but the payoff at the end is absolutely marvelous.

Wayne, another con I would consider is what if the market doesn't go down? Or, what if the wife says we must buy a new home? Can you stick to your logical, rational plan when emotions and wants grow? At some point down the road you might want a stable, long-term residence to build a family, and you might not feel comfortable in a rental (waiting for that major correction). On the other hand, Pelican Parts and your BMW book might soar, and in 2 years you'll be cruising Bel-Air in your 360.... Taking profits now might be a great investment. So, does anyone have a reliable crystal ball?
jurgen

[1973911s]

Wayne,

I knew several people that sold there homes in 2001, 2002, and were going to wait tell the market crashed and rebuy. We one of them has lost 500K and the other closer to 1M. Not to mention the write of of the interest on the taxes.

I agree this market is crazy, but there is still a demand, and while it will slow when rates go up, people will still come to Cali. We will see prices drop a little, but I feel it is bad to get out and rent. You will still be ahead if you work with your smaller condo.

[Zeke]

This may sound crazy, maybe that's why no one mentioned it. You could hold on to your condo and rent it when you absolutely need more room. In turn, you would go out and rent at that time. People have done this and the numbers work. You preserve a tax shelter, and over the long run, the condo will appreciate more. May take years, but real estate ALWAYS comes back bigger. At the point that you think the market has 'adjusted,' you can pull out a down payment by refi'ing the condo if you haven't stuffed enough money away from your salary. Crunch the numbers and/or talk to a financial advisor.

Also, if you think you are really good at forecasting, at the end of the 'adjustment,' you can probably buy from a still desparate seller (not necessarily financially desparate) who will sell you with a carry back and small down. It will be a buyer's market during any downturn. There's even the lease option. With your nose to the ground, you can come out smelling like roses. It really helps to have someone in the real estate business. They might be vultures, but at times, vultures are good.

[on-ramp]

if you have a 5+ year horizon, i wouldn't sell.....so your house may dip 10-20%, so what, you still are ahead of the game from when you bought....i wouldn't "play" your house like it was the stock market. if you like where you live, and enjoy everything it has to offer, just stay there. why move?
from your list , it appears your CONS outweigh your PROs so you might have answered your own question.

[GrindingGears]

Originally posted by Zeke
You could hold on to your condo and rent it when you absolutely need more room.

I second that.

[Bob's Flat-Six]

It's hard to predict the future, Like you said you never thought the prices would get to where they are now 3 years ago. I didn't think they would either not this quick.
We seem to go from one frenzy to another anymore, probably because of the money they generate and our want it now additudes.

I too think the prices will ajust but probably not by as much as you think, Wayne.
In the early 90's real estate prices dropped about 30% give or take.
At that time we were loosing Areospace jobs right and left and the media really ran with the doom and gloom forecast for the southland/Ca.
Then we topped it off with the Northridge earthquake, Thing's were a mess in RE.
This time I'm hearing bubble but not to much doom and gloom from the media.
And the Earthquake, Well they are predicting one but we'll have to wait and see.

We bought this house in Simi Valley on Christmas break 95/96 and that was about the bottom of the last downturn, I thought it was.

But the future correction might not be so soft because of the demand for southland property. I think just about everybody on the planet that likes good weather would like to live here, So there's the demand.

If you do deside to stay you could make an office in the big garage, I'd put a couch down there too

Oh, and always buy a house that you can grow into instead of out of. Just do it even if you think you can't afford it. And be willing to pay extra for a special property, there are houses and then there are houses, But a good location and quality construction are money well spent.
And most of all, Good Luck

Edit: Just to ad, Good neigbors can be hard to come by, We have great neigbors now that I wouldn't trade for a bigger house. Ask me how I know.

[Schrup]

We recently did a house swap, but it was absolutely neccesary. Our old home was 768' not including the semi finished basement the teenager lived in, no garage. Our new home is 2200', with a nice garage. It was tough to give up a 4.25% 15 year morgage for a 6.25% 30 year. Sometimes you gotta do what you gotta do. Our home sold a week before it was even listed to the first person who looked at it (realitor's son), as is, for our asking price. We beat six other bidders on our new home. We closed 3 weeks after deciding we needed a bigger home, & the day after we closed on our old home. The market around here is crazy as well.

Is there any way you can downsize your office & move it into a corner? Sounds like you have an awful lot on your table right now Wayne!

[350HP930]

Perhaps you are using different math than I am wayne but doubling the cost of your home over a 3 year period only works out to a 33% yearly return on your investment.

Thats still pretty nice but its certainly not a 110% return per year on your 'investment'. If you use a realator to sell it your margins will only get worse since you will be losing a good chunk of the resale.

[island911]

Originally posted by Wayne at Pelican Parts
Nope, not true. The tax payer relief act of 1997 set out new rules that allow tax-free capital gains of up to 500,000 per couple. The only restrictions are that you had to live in your house for two of the past five years.
.. .

You are right. (Like I said, I wasn't sure about that exclusion. . .now I am.) -Thanks.

I will add, that when interest rates go up, the barrier to new buyers goes up . . . moving up competition for rentals.

Unless you think your area is likely to have a net loss of population in the coming years, I wouldn't worry about any crash.

Also, something tells me you will have plenty of other potential finacial opportunities .. . .ones that don't threaten your (more importantly your wifes) stress level, at a very crucial time.