thanks for causing the next big one Wayne...you and your house sale :p

You gotta live somewhere. As long as my wife and I have our jobs, we stay put. If that changes, then we likely would need to move. If the market is down at that point, we'll be bummed. But a 30% correction would put the house back to what we paid for it, so at least we'd get our down out of it. But there is no way we'd go through the hassle of moving and then renting just to cash out. We like our house too much, and the pain and suffering of moving has a price.

motion, if real estate is so predictable, why are you asking us if you should sell? ;)

I feel buying a home as an investment is a poor strategy. A home is a home. It does not generate income. It is a liability, but a liability we must all accept (need for shelter).

I agree with Wayne regarding mob mentality. If one friend warns of a market decline, you chalk it up to his bad batch o homebrew bier, but if a dozen friends express concern, you start to notice. It doesn't matter what the indicators say. Once the players have changed their minds, it's over. I live several thousand miles away, and even I'm starting to second guess myself. I'm rethinking some future investments, despite the fact I live in an area with no irrational exuberance (maybe 20% appreciation in the last 5 years). Despite all this hooplah, guys in CA need not worry unless you need to sell. Your gains and losses are all on paper. You don't capitalize or lose until you sell.

Moses, I think any historical charts will give you very little insight into future performance (which I believe reinforces the point behind your question). I am of the camp that believes the best time to buy real estate is any time in the past, within reason, of course.

BTW, motion, I think you have a great plan. Run with it.
jurgen

That's why I added the disclaimer "within reason."

It's not my fault some people must live in CA and pay extravagent prices for real estate. For the long-term, real estate shows great potential to appreciate. Sure, you could buy a nice home in 1974 and see it turn into a slum 15 years later, but then I would argue you weren't paying attention. You'll always have exceptions, but in general, I stand by my comment. Of course, I'm the type who buys distressed properties, and after careful rehab work creates instant equity. By default, I'm always buying at low tide, protecting my bottom line. ;)

I would never advocate buying a house in a particularly irrational marketplace, but if everyone was like me, I would have no foreclosures to buy. :D

Quote from Landlord forum regarding local RE conditions:
"Three months ago in Moorpark, CA where I live, there were 21 homes on the market in my zip code. A couple of weeks later there were about 50...and then more...and more. Last week there were 144 homes on the market."

Maybe this explains why my realtor friend says houses are selling for over asking price here in Phoenix. All the Californians are cashing out and buying over here.

Housing is a poor investment in the long run. To cash it in, leaves you with no place to live. And, given trends in prices, the probability is, unless one relocates to a less desirable area, all properties in the same area will have appreciated by a like percentage.

Your parents, in 1965, bought a house for $25k. It is now worth $500k. If they sell it and move to another house in the same neighborhood, the new house will have a price comparable in multiples as theirs. Where is the gain?

It is so confusing and I was in the business............

Moses: there's a great site called domania.com that will give you 10-15 years of sales records for a house or a neighborhood, so not only can you see trands, you can see actual sale prices for the same property.

You barely got to the line, Wayne. Congrats!

Here's another quote from mrlandlord.com Q&A forum. The thread is entitled,"It's Starting."
"It is starting to happen. We have a 3/1 apartment available. We got a call last night from a lady who has always rented, but decided to buy a house. Now she can't afford the $1200/month payment (probably PITI) and is interested in my $725/month apartment."

Another landlord in TX reported filling 6 long-term vacancies within the span of a couple weeks. I'm honestly very surprised the turn is so quick. It's almost overnight.

I feel the market is teetering. In some areas, the fallout will be nasty, while other areas see more stagnation. The potential downside is huge given the massive appreciation we've experienced the last 10 years. I fear for RE brokers/agents, builders, contractors, and mortgage companies. They've had it so good for so long.

motion, you listening?

Yeah, Jurgen... its a tough decision, though. I hate the thought of giving up my house, but I know this shouldn't be an emotional decision. On the positive side, maybe I'll have an easier time filling my Phoenix vacancies. The rental market is tough out there.

You're trying to separate your emotions from the raw numbers. It's YOUR home, so it's obvious your emotions come into the picture. If you cannot convince your emotions to follow the numbers, don't sell. It's as easy as that. Worst case scenario is losing all the appreciation, but your wallet won't know the difference. After all, it's all on paper.

I would not rush into this unless you have a very good plan, with plenty of contigencies for 'what-if' situations. If an investment goes south, it hurts for a little while, but you still live. If your Montana plan goes sour, you're reminded of it every time you open the front door. There's more at stake here than dollars...

Tread carefully, but make haste. Your window is closing.

Wayne, I doubt you could have timed it any better. I'd say you had a wee bit of luck on your side. Must be nice being lucky and good, eh? ;)

there's a term: "house poor",

they are more things to enjoy in life than just paying off a high mortgage and have no money left over for other fun things.

if you have a good profit, sell!

after the market "corrects", you can get back in and pat yourself on the back.

Don't know if this adds anything to the discussion but...

7 months ago my wife came to SoCal (Calabasas) for a new job. Her boss organized an apartment (1 bed) to get her going.

Our plan was for me and the kids to finish off the school year in Hong Kong then move to SoCal and buy a home around Calabasas in June 04. We expected to be able to find a home during the six months Christine was here!

We quickly learnt the high cost of the housing market was going to prevent this from happening. (By the way, she is a scientist and I am a teacher so our wages are fixed and not high).

In that six months we learnt that we would have to redirect our focus to renting instead, hopefully a 3 bedroom 2 bath, garaged, gardened property, in the $2300/mth range. This would give us some time to 'appreciate' the market. Agents we spoke to, had almost nothing on their listings and properties were being rented within days of being listed. Chris missed out on four houses that looked ok for us because she could not get to see the houses before they were off the listings. One agent told us some amazing figure about the shortage of houses for people in the rent market.

Two months ago (approx) I posted that we were looking for such a place and asked the 'family' here that if they had any leads to let me know. It was clear from various posters there was not much around and certainly Christine's experiences searching thru agents and privately, bore this out to be true.

Basically there was nothing about. Finally, a month ago, out of desperation, we settled on renting in a new apartment complex in Agoura Hills for $2400mth. This is for a 2 bed 2 bath place with club house, pool, no garage, no storage...

In the past three weeks we have seen a dramatic increase in the number of house now up for rent, just what we had been looking for not a few months earlier! Now instead of flicking thru a few houses on offer, we are taking a few hours to look thru the alternatives.

IT REALLY HAS, IN OUR EXPERIENCE, CHANGED IN A MATTER OF WEEKS!!!

Speaking to agents, rental prices are holding firm currently, but more properties are coming on the market. I wonder who are these people putting their houses up for rental and where are they going or what are they buying/renting themselves?

It sure is a fickled market.

It sure would be nice if property values fell as much as Wayne and some others suggest. Chris and I would hope then to keep renting for a few years (albeit something larger than we have now!) then buy-in when things are more affordable.

Like Wayne says, we shall be interested to see these posts in a few years time and see what has come to fruition. I predict Nostatic and Tabs will move into Motions new residence in the high hills of Montana and set up a comedy nightclub that offers extraordinary buffets, attached to a specialist m/c dealership that offers free entry and buffet to the 'club' with each bike purchased. Wayne will expand his empire and become a distance partner in the club which will of course be called 'Pelicans'. ;)

PS - Motion, if I were you, I'd sell and move. Montana is, I understand, a beautiful place. I have a few friends who live there and they are wonderful people. Your child/ren (?) would love the lifestyle there I'm sure.

Good luck!

Good job Wayne; I'd rather be lucky than good any day.

Too bad I don't have the financial or testicular fortitude for this kind of game; I'm just happy I bought when I did ('00). I have some money in the bank, maybe I can buy near the bottom.

Very interesting thread, I don't see the Orange County market loosing more then 15 to 20%, and then gain that back plus some.

Michael

To revive this thread, 30 year fixed rates are 5.77%, lowest in 5 months. Don't know about other areas but homes here are still moving, another 3 in my community sold within 2 weeks of being listed. Local realtor friend says the market is still very active, though homes now average 1 month on the active list vs. 1 week.

What about sales prices, David? Where are they compared to 3 months ago, when things cooled down?

I was just out in Phoenix yesterday scoping RE. Prices there have shot up another 7% in just the last 45 days.

I've been reading that here in Santa Monica's South Bay that homes are taking longer to sell and selling at less that asking more often. There are more homes on the market because those homes that are for sale aren't selling quickly. RE Brokers seem to think it's good because it is giving people more options and I don't think that's bad. The house across the street from me has been for sale for at least two months and it's a very nice (ordinary) small house. The one around the corner which is amazing and has a BARN where the owner used to build sand rails. It's 4Br and 3 Bath located in a great neighborhood with excellent schools. Of course the price is just over a million and it's been on the market for at least a month.

In my neighborhood prices are continuing to go up. If you look at the price difference from now to a year ago things are up nearly 20%. But the rate of increase has really slowed in the past few months. The real estate agents are still reaching for the sky though, and so they price the house $80K above the last one that sold, and then they have to lower the price a couple times, but it still ends up selling $30K over what a similar house did three months earlier.

My neighborhood is 25 years old, but 3 houses down is the end of the cul-de-sac. On the other side of the wall is a new development. The 2450 sq foot houses in the new development have gone up from $780K to $970K in price from March to August.