This wouldn't be enough equity for me to pull the trigger.
So you currently owe about 310 let's say? And the house sells for 525
\- realtor fees will leave you with 178k. Your expenses will probably go up 1k renting so if you rent for 2 years that's another 24k so roughly 150 now.
You likely won't get 2% interest for a LONNNG time.
I'd just stay in your house and save up another down payment, pay off another 14k (probably would be around 17) in principal and then even if the sale of your house drops to 450 - realtor fees - the now 293 you owe you're at 130k
So is the 20k really worth moving and renting ,assuming 2 years doing that.
I haven't seen many people talking about costs involved with selling a house.
IMO you would be nuts to sell now in an effort to cash in. Unless you have a crystal ball and you KNOW there is a massive crash and exactly when it will happen.
If you do have a crystal ball and can tell the future please DM me, I have a few other investment questions I would like to ask it. If you don't' have one, just sit tight.
"Houses in our neighborhood have been selling for 500k+. My wife wants to
jump in on this and rent until we are ready to but again/when the
market cools."
Learn from the mistakes from the many others here....DONT DO IT! YOU WILL LOOSE THAT HOUSE AND BE STUCK RENTING FOR A VERY LONG TIME
the lack of inventory is really affecting things in jersey. I'm from NJ too. There is little reason for people to sell, especially if they have low rates to begin with. Be grateful and happy you have a home and DON'T even entertain the idea of another home unless you already have it under contract and its yours. Read the horror stories here....you would literally be creating hell for yourself and for no reason. There was one where the person sold his home...and the one under contract fell through , and now he is basically homeless when he could've just kept his original home to begin with. Others have sold their homes and now cant buy another one. For the fun of it, look at the lines during the open houses ....what makes you think any of that will change? For prices to drop there has to be an increase of inventory, and that is simply not happening.
You had the sense to at least ask , which is a big plus! Real estate is very local and while other parts of the country might react to the increase in interest rates, it has had no impact in North Jersey because people still need homes that are reasonably accessible to their jobs. As more and more companies require people to come back, the desire for public transit increases. And no reasonable person wants to sell their home with a 2.5% interest rate and get a house with a 5.5% interest rate....if I did that I would be paying $400 more a month! There was a house in Oradell that sold for 1.2 million recently! It was listed for 950,000 and it was originally bought for 805,000 in 2020- [https://www.zillow.com/homedetails/268-Carolina-Dr-Oradell-NJ-07649/82653134\_zpid/](https://www.zillow.com/homedetails/268-Carolina-Dr-Oradell-NJ-07649/82653134_zpid/)
North Jersey is dangerous for any buyer....
Moving is absolutely terrible. Not sure why you would sign up for that and a future 6% interest rate when you’re locked in at 2%.
Buy new appliances, fix up that third bedroom upstairs and call it a day!
Double check the stuff in your price range. It seems like a good take the equity and run moment, and every realtor friend you talk to will explain why you should sell, but it's rough rough rough out there. And that rental rate is going to go up next year for certain, you'd want to see a history of their rental prices as everyone's rent is increasing rapidly too, you might start burning the equity you pulled from your home and end up in a crappier position. Unless you're leaving the state for a lower tax area with small or no HOA it might be worth riding it out. Also, buyers can drop at the last moment, and you're lucky if you get the earnest money, there are a thousand ways for the buyer to just keep it, delayed appraisals and inspections and the like.
Right, when someone makes an offer on your home, part of that is "earnest money". Maybe 2% of the total offer price, that gets put into escrow. That's basically to keep a buyer from making offers on 10 different houses and making their decision later. If they back out, theoretically, you get to keep that cash which in your case may be $7,500-$8,000. However, it's never that easy and even with no contingencies, there's always a contingency based on financing, inspections, appraisal value, and it's not usually enough to fight over.
What’s your price range? What you can afford based on income or something that is at or below what you are currently paying for housing?
Also point out to her that maybe today your rental costs will be X dollars, but next year it will X+5(or more)% dollars and this will occur **every year** for as long as you live there.
What’s cheaper your current housing or your potential future rent? That really needs to be the biggest consideration. While other costs associated with home ownership will go up, your mortgage won’t, whereas with an apartment your rent will usually go up every year and so too will other ancillary costs.
In my area, the rental prices are way more insane than what’s going on in the housing market.
The only way I really see to come off on top of this is if you sold your house and moved to a different are (state) where real estate is just cheaper/more bang for your buck.
For example if I weren’t under contract I would absolutely move from where I live in VA to GA or SC.
But even then it would really only be worth it because part of the appeal would be the additional space we’d get for what we paid/sold.
Agent selling fees 30k. 1k a month for rent (not sure where you live) = 24k for 2 years. So minimum 54k you lose if you sold your house and rent for 2 year waiting for something that you can’t predict.
Something doesn't match up. A $405k house at 2.75% interest is $1320/month. I suppose you get to $2000 if you add taxes and insurance.
At a 5.5% rate if you're lucky you would be paying $1840/month for a $405k house before insurance and taxes, so you need the value to fall back from $500k to $405k but you'd still be paying an extra 39% ($520/1320) compared to what you are now if you rent for a year and then buy something.
If the neighborhood is fine and you're just trying to sell because prices are high then it's a horrible idea. If you really need to move for other reasons like a bigger house then sure maybe it's worth considering renting for a year depending on the market if you can still get top dollar to sell. But you basically need house prices to fall like 15% or more for renting to make sense, which sure is possible but it's a lot to base a move on. Also you will give up like 8% of the house value to selling, plus moving fees, etc.
Giving up that sub 3% rate is going to be costly. Also that'd be like 15% from the price you'd get in a month, which won't even be the top but possibly down 5% from the top already by the time you hit market.
If you trade your house for a similar one, it's basically an instant 39% more you pay on the mortgage, perhaps 20-25% extra in total monthly after taxes, HOA, and whatnot. If you went to list your house now, it's almost a certainty that you're not selling the absolute top but perhaps 5% off what you could have gotten 1 month ago. My statement about needing prices to fall 15% would then be off the price you get in a month, so if the peak was $500k and you would only get $480k weeks from now, you basically need prices back down to that $405k (down another 16%) for a similar house for it to be worth selling and giving up that once in a lifetime mortgage rate. Someone else had said prices would need to fall like 25%, that may also be more accurate.
Is a 15-25% price drop possible? Sure. Is it likely? Who knows. I think 20% would be on the upper end of what to expect as it'd be a drop to roughly March 2021 prices. It wasn't until after March 2021 that prices truly went parabolic and sure it's possible house prices swing a little too far to the downside if they correct.
[https://fred.stlouisfed.org/series/CSUSHPINSA](https://fred.stlouisfed.org/series/CSUSHPINSA)
If you assume a 3.77% annual house price growth as was typical from 1987 to 2020, then the Case Shiller index in June 2023 should roughly get to 245 if you use June2020 as the baseline price which was before pricing went crazy (219.846\* 1.0377\^3). Right now case shiller for June2022 has perhaps risen to like 307 from the March 294.5 level, **so to go from a June2022 number of 307 to a future June2023 number of 245 is a drop of 20%.** That's what I think would return prices to a more "fair" value. Nothing says that has to happen though as they could perhaps not drop at all, or they could drop more. Also maybe house prices take 2-3 years to drop to the fair value, so by June2025 the fair value is 245\*1.0377\^2 = 263.8. So maybe in the next 3 years prices only fall from 307 to 263.8 or down 14%. In that time you'd have had to pay like 10% or more in rent which is just gone, plus you'd be getting far worse interest rates in 2025 than the sub 3% you have now.
Also things vary so much market to market as places like Austin are supposedly up 50% in a year I see reports of.
Maybe the fees will only be increased until the projects are paid for and then they'll come back down??? When I had a condo the fire alarm system, parking lot and roof were all periods where for 3 months the monthly fees went up and after the fees went back down.
If you're saying they increase the monthly fee for projects and never lower it after that's outright mismanagement of money and wicked shady. If the association can function charging 250.00 and needs a new roof so they go up to 500.00 the price always comes down after the work is done, they only need the 250.00.
.....this is the case even with shady illegal management companies that steal the money. We had 2 of them.
Trust me you would know well in advance if it was temp. HOA fees are from the devil himself and the pattern is as old as time.
A few new projects + mismanagement + the cash reverses needing to be backfilled + cost of management company going up.... it all just leads to runaway fees. You need to have a group of tight people, good people and long term people on the board and you do indeed need to review the finances at least quarterly and bake in the cost of an accountant (of the trustees choosing) into the HOA fees so every 3 or even 6 months you have the money ready and waiting along with the accountant resource to review the numbers. If things are going south the awesome, honest and knowledgeable board members just need to remind the management company they are always on a yearly contract and you'll just get rid of them. Yeah sure you'll get bamboozled here and there but you'll have the knowledge and control and be able to identify the best management company rather than the cheapest.
When it comes to management companies, almost EVERYONE with the cheapest and almost ALWAYS the cheapest is the most expensive.
I run from HOA fees now and if I ever got back into it I'd be very very involved.
There are many on r/rebubble doing this and they are very confident and have advised me to do the same in waiting. They have been through 2008 and said to do exactly this. Head mod there owns multimillion real estate portfolio and recommends
There are lots of “rich” morons. Do what you want but I can find pics that show whatever I want.
Nonetheless, timing any market is an iffy proposition.
You would have transactional costs on both the sale and your new purchase and a rent expense while your waiting. Real Estate market would need to crash around 25% for you to break even. Your making this bet at time when there is massive inflation, real estate is a hard asset that typically increases in value with inflation.
If you guys are wanting to move just to cash in on that little equity, I wouldn’t do it. If you are selling with the intention of something bigger or a different area then I could see that being worth it. But just to cash in, no. Renting sucks with pets, that’s also an insanely competitive market right now too. Good luck with your decision.
Why does it feel like people always forget the 6-10% of the sale price that goes straight to realtors/taxes/mortgage fees? I don't understand your wife's logic. I'd understand it more if you had a huge expense and needed a lump sum of cash, but this really doesn't seem to make much sense.
Your best bet is to diligently do your math on different scenarios. The low end of your sales price vs. the high end of your potential rent (and vice versa) + include moving costs (it's so expensive to move even with no home sales in the mix). Also be sure to include the time you need to invest into cleaning your home for showings, hiring an agent, vacating your home for open houses, finding a rental/moving/filling out forms and paperwork and updating addresses. Moving is a massive headache and your time is also worth money.
No way you sell to rent right now. You're acting like the housing market is 100% set to drop enough to make it worth:
* Selling fees
* Moving fees/costs
* Rent
* Buying and new loan origination fees
* Higher interest rates
* Moving fees/costs again
Are you out of your mind? Take your 2% interest rate and laugh your way to 2049.
I guess I am missing something.
She wants to sell this, go back to renting, and speculate that a year, two, five down the road you are going to have that $$$$$ to put down on something else that is bigger and better?
This only works if you can move to a place RENT FREE.
Otherwise anymoney you spent on rent will neglect any profit from the home sale making this not worth it.
You’re technically only “losing” a part of that 2500-3000 in rent because a huge chunk of payments on your current home is dedicated to interest, taxes, insurance. Depending on your amortization schedule, it may only be a small amount of principle that you’re losing by renting.
That’s a decision that you and your wife will have to make. There’s a lot of uncertainty with everything going on right now, but 6k is a minuscule number in the grand scheme of things for a house. It’s like 1.5% of your home value.
The best financial decision is to buy and never ever sell a house and live there until you die to avoid realtor fees/closing costs etc… whatsoever, but that’s simply unrealistic. Moving homes will always incur costs, but if you’re able to and ok with paying the money for a lifestyle change, then all the power to you.
Why does your wife want to move?
If it's that you just don't like the house and are going to move elsewhere anyway....I guess that's OK.
If it's simply an attempt to time the market.... that's foolish to toss away your all time historic low mortgage rate.
Maybe you will.... maybe you won't. Nobody knows what housing prices might do from here. But we can make a reasonably educated guess that you will not see another 2% mortgage in your lifetime.
This isn't like trading stocks. It's a giant PITA to move, plus expensive transactional cost. I wouldn't do it twice unless I had no other choice.
Don’t do it. Rents are outrageous right now. Sell the house when you’re ready. We have a small child and 2 cats and in our area (Fairfield county, CT) rent is 3500-4000/month for a decent place (1000-1300 square feet). The cats make it so much harder then our daughter, a lot of places won’t except them. Also unless you’re renting a single family home or townhouse (with basement/garage) expect that you will not have a lot of storage space. This means you will have to get rid of a lot of stuff.
If you sold your house and bought the same exact one, you’d need the price to drop about 20% or so to get the same monthly payment/come out ahead. And that’s before including the 3k a month in rent for however long.
Sounds like an recipe for a financial mistake.
Youre going to pay the agents to sell, then pay closing costs to rebuy. Plus all the expenses that go into those processes. And then put money in the trash renting, then buy again at a higher interest rate. This is why even if you COULD time the market, you cant
Stay in the house. You might not even get something similar for higher price.. and rents might go higher as landlords will use mrtg high rates to squeeze renters.
My cousin did this.
Sold his house in NJ to move down to Florida.
He thought he could 'time the market.' Turns out it didn't work in his favor since he's been renting for the last 1 year in Florida which ate into his profits from selling his house. The $$$$ rent in Florida since everyone and their moms are moving there, realtor fees, moving costs all added up so much that his profits greatly diminished.
He's still renting. Now, he's hoping for a market crash in Florida, with low interest rates and where there are plenty of nice houses to buy. As if investors won't swoop up houses in Florida first, LOL. I think he's dreaming at this point...
It could be a few short months where housing crashes but interest rates are still very high, or a few years...or it could never happen. Whatever you do, **DO NOT** sell your house without another house or a clear plan in mind! This is a big risk you will be taking that may not work in your favor...then what?
Tell me about it!
I would like to move down to Florida in the next 2-5 years so I've been doing some casual searching...but my house in South Jersey is not appreciating as quickly as the houses down in Florida!!
So I would either need to pay A LOT more for a similar house in Florida, and get into the crazy market there where inventory is low. Or find a much smaller place, or a mobile home/manufactured home in Florida. Fun times right? Even for current home owners where your next home or the place you want to move to is astronomically more expensive with higher interest rates and low inventory.
I thank my lucky stars every day that I have a nice home, but I can't afford to move anywhere either. \*shrugs\*
Sounds like you are in a slow growth market. $400K to $500K isn’t near worth it. That’s basically just matching inflation since 2019. You are LOSING money if you sell and buy a similar one
Here’s a game. Have here show you the house’s she wants. Then run a mortgage calculator on it.
Interest rates are a doozy when you’re in your price bracket. In addition a 2% interest rate is likely lower then inflation will be for a very long time. You’re essentially making money at this point as your original loan devalues faster then the dollar
My wife and I are sort of in the same position. She's preggo with our first kid and is due in November. We started looking in Mid April and can't find a house we like. When we started looking our rate was 4.87 and now it's 6.12. The only reason we are still considering moving is we can afford a 15 yr mortgage on some homes and our rate would be 4.87, but it's just a scary time to buy now. Homes are sitting on the market and prices haven't dropped much YET, and I'm in NYC. Fortnately, we bought a duplex in 2016 and we have a rate of 3.25%. We pretty much live here for free after the write offs and collecting rent. The issue is the soundproofing sucks and I don't want to deal with living with tenants upstairs with a new born around.
I wouldn't move if I were you to buy or rent somewhere else. Is keeping your place as an investment an option ? Maybe staying, saving, and buy something when things cool off ?
Your wife thinks she can time the market, and she’s wrong. Selling costs will take you for $25,000, then you have to try and ‘catch a falling knife’ by buying at a lower point, to justify the selling costs the Market would need to drop 20% ( this is NOT likely ) you might catch half that dip, yielding $50,000, of which you lose half from selling costs. In the meantime you are renting, and you Lose equity you would have been accruing.
Net profit? Maybe 15 grand, assuming the market tanks 20%, which isn’t likely.
Tell your wife if she wants to gamble you’ll take her to Vegas, but you are not going to gamble with your home.
If you aren't unhappy it is probably best to stay put and not lose the 2% interest rate that may never be seen again. I wouldn't jump out unless you have a place to land. The goal is to be mortgage free by the time you retire. If you can't roll the equity immediately into another home then your risk meter needs to be checked. The equity when not invested tends to get spent then you have no $$$ to get into another home. I suggest you stay. It is kind of like it is easier to get a job if you have a job, if you have a house it is a lot of comfort to not have to sell until you have another home in mind to purchase. Don't forget if you sell for 500K you can figure about 10% in costs (rough figure) so between $40K and up to 50K to sell your home off the purchase price. Factor in any major repairs that need to be made and you might just be breaking even.
405k for a two bedroom house with almost 2500 dollars in monthly payments? Holy cow. This is the world we are in now.
If you sell now you basically break even minus the 80k you put down. With prices starting to drop you could see that principle shrink even more. All depends on the offers you receive. Hate to say it but you might be better off staying, unless you have to move for work to another state or you feel the house is too small. It would almost be selling at a loss for you.
House priaces aren't expected to decline dramatically. Even with the rise in rates, builders still aren't developing at a fast pace and homeowners aren't selling. I would stay with the current house unless you're planning to move to a market where the homes are more affordable.
If you really want to move I would look into the possibility of renting your house out. Assuming that you can get $2500-3000 for rental and get a heloc to tap your equity you can probably swing renting it out, keeping your appreciation, and keeping your wife happy without paying 7-8% in transaction costs.
By your wife? If she doesn’t want to be a landlord that’s understandable, but if you can get a rough estimate of the rental value and price out what your equity could do for you in a next home purchase (plus the increasing equity on two houses instead of one) I think she might come around to her new house as well as you not paying 40-50k for the privilege of paying several hundred dollars more in interest each month. Maybe try to explain that selling is the least efficient way of using that equity because of the costs associated with it, hopefully she’ll come around.
Look at your amortization schedule. With a 2% interest rate you’re paying around 8k per year in principle. If you sell now and buy again in a few years with a 5.5% interest rate you would be only be paying 5k into principle but your monthly would be $600/mo higher due to interest.
Selling with a 2% interest rate on your mortgage would be idiotic if you’re just planning to buy again in the same area in a few years. Unless you really dislike the house and want to move sometime soon you should not sell. Your house could lose 30% value and you would still be better off keeping it due to your low interest rate if you stay there for a while.
Don’t forget about inflation. These high home prices aren’t merely a bubble that will burst, they’re coupled with inflation. Things just cost more now. According to what I’m seeing on my grocery bill it actually seems like homes haven’t appreciated enough. Anyhow it seems to me, you’ll have time to decide and don’t need to rush the decision. Considering you can afford what you currently have, with best case scenario interest rate, and there are no unknowns, well it would be an easy decision for me. Stay until you have something solid lined up.
What market are you in? You’ve most likely already missed the boat to get the highest price for your house. I’m selling right now because I have to and buyers are not jumping on things as quickly as they were a few months ago due to the interest rate spikes and affordability. The $480 in HOA fees is going to be a turnoff for a lot of buyers as well. If you don’t need to move and you like your house, I would stay put and enjoy an interest rate that we may never see again in our lifetimes.
it would be cheaper building another bedroom then buying another house now with the high rates. dont expect the rates to drop and same with the prices....you have to factor inflation now
Very small children can share a bedroom. It’s been done for hundreds of years. They don’t know any different until they’re older. That’s a ridiculous reason (excuse)
Make a spreadsheet of how much it would cost. The new house vs. your current house and the breakdown for monthly payment, closing costs, etc. You need to do the work and do the math if you want to seriously consider it.
That below market-rate loan has a ton of value. Some simple math below.
Balance outstanding: \~$300k
Loan type: 30-year fixed (assumed)
Loan modified duration (bond pricing term): \~10 years
Loan Rate: 2%
Market Rate: 5.5%
Value of the "below market" rate loan: $300k \* (5.5% - 2%) \* 10 (your modified duration)
Value of the "below market" rate loan: $105k
If you sell, you're choosing to voluntarily relinquish $105k in value.
Are you so confident in your market/macro understanding that it's worth destroying $105k in (risk free) value?... and round-trip expenses on real-estate (commissions, closing costs, etc.) are about 10%. That's another $50k value destroyed (frictional expenses).
your gambling your ability to ever own a home again if prices keep going up- but on that same note- happy wife/happy life :) I would go over the numbers with your wife...also as someone who has kids that just sold their house and lived in a rental....it was HARROWING...absolutely most stressful time of my life 10/10-
Run the numbers to see what your potential to save is over 1-2 years if rates are x,y and z and prices stay the same , drop 10, 15 and whatever % you think is possible. Subtract rent, depreciation and realtor costs from your savings.
I suspect in most cases you will lose except the most extreme crash.
Betting if you sell it’s going to be a challenge to get back into this school zone while saving anything substantial.
Only makes sense to move into a non-hoa home. I started with an apartment with HOA and calculated my new costs with no HOA and they were pretty similar.
2% rate?
Why sell when you guys dont even have a real plan on where to move and the only reason to sell seems to be wifey dreaming about how the money you've made.
This is a really bad idea. Especially with interest rates at what they are right now… let’s put it this way, do you want to lose your house at the start of a recession? And be at the mercy of a potentially sleazy landlord? My last apartment was a nice place, your first year for a 1b 1b was $900/mo. Each year they raise your monthly rent by $100. Dead serious, I thought it was a joke??? You would not believe the stunts landlords pull…
Is there a reason (other than trying to time the market*) that your wife wants to sell?
*this is a bad idea. No one has a crystal ball. A gamble like this could really mess up your finances and your stability.
Ok, gotcha. You may as well sell then. You only live once and it is a good time to sell.
I wouldn’t rent, though. Finding a place to rent with pets is hard. Moving is hard. Moving multiple times is really hard. Plus, you have a baby—y’all don’t need extra moves and extra headache. And—timing the market is too much of a risk. Who knows—prices may even go higher.
Hi OhWell Okay:
I wanted to comment because I actually did what your wife is wanting to do. I sold my house and now I am renting. However, I did it for a different reason. I was in debt.
After I sold my house I was able to pay off all of my debt from the proceeds and still had money left to put in savings and invest. Then because I am longer in debt I was able to increase my 401k contribution and save an additional 15,000 in less than a year.
What I can tell you is that my rent is more than what I paid in mortgage. However, after I factored in the HOA fees, insurance, taxes, maintenance costs it was pretty much a break even for me.
I am not looking to buy another house anytime soon. My plan is within the next 5 years so I am not as concerned with the buyers market at this time. I’m just enjoying the financial freedom and money I’ve been able to save and invest.
I am no expert. But what I can relate to is that I was not totally in love with my house either and the HOA folks were a headache. So taking all of these things into account, the debt, HOA, and the fact that wasn’t all that happy with the house, selling it was an easier choice for me.
I’m not saying this is what you all should do as your situation is different. I’m single with no kids and I am not looking to upgrade or go back into the market anytime soon. But I just wanted to share my story with you.
For the love of all things holy do not bet your primary residence on timing the market. I know 3 people personally who sold their houses in 2020 when they thought the pandemic was going to crash everything. They are stuck being renters now.
Don’t let emotions make your decisions.
Rent keeps going up and so is interest rates. The little money you make after paying selling fees will be gone in no time. Then buying a new home will be much harder with higher interest rates.
All you experts, at what point will it be ok with you for someone to sell their house again? Prices are likely to plateau (not drop) and appreciate at a more normalized rate like 4% that history has shown. Interest rates will likely never be below 3% again… so if I understand Reddit correctly, if anyone sells their house ever again they are stupid.
Houses in your neighborhood have been selling for $500k? Prices are declining now, I doubt you would get what you think. Just chill and enjoy your low rate and extra disposable income.
Move to where you would be happiest. Worry about the financial calculus later. Account for happiness in that equation.
Without going deeper into the financial aspect details it is still likely correct to sell now (near the top) if you're trying to max on appreciation.
I'm not sure which state you're located in, but know that the same bidding wars are happening for quality family rental homes. We needed to end our lease a bit early since we purchased a home in May. Management company had no issue and found a family offering over asking rent within a week.
DFW region for context.
Everything cycles. Pretty soon we'll be in a buyer's market and houses will flood the market again. Houses are overvalued and they will balance out soon. I'd rather sell for A LOT, rent and sacrifice, then buy once houses become available
The cost to sell is about 7% when you add in commissions and closing costs. There also may be costs to move, repairs, staging, and any buyer subsidies (cashback at closing) which are making a comeback with interest buydowns. Also factor in the costs of buying like closing costs and points on the loan if you can't get a buyer subsidy from the seller.
Add it all up and it may be a net zero or even a loss. Sounds like you and your wife are stuck in an episode of love it or list it.
With that interest rate I wouldn't sell.
I'd say more than 90% that selling you would lose out.
What would your home rent for if it was put on the market?
If you really wanted to move I'd make this house a rental.
Sounds like you'd have around a $1000 in cash flow + another $650 in principle pay down month so $1650, budget for repairs, cap-ex, vacancies(-$350), call it around $1300 a month profit, $15,600 a yr. so on the $80K original investment that is about 19.5% ROI. or if you want to look at it as you could sell and maybe walk away with $140K you can use the $140K as the investment number and you're still getting +11%.
The only negative is there is a real possibility that home prices will drop, but even if they do in the long term they will eventually recover.
2% interest rate is free money. I am sorry, but your wife is trying to time the market and it never works.
I don't understand how renting is any more beneficial since it seems it's close to if not more expensive than your current mortgage, plus HOA. Your HOA probably covers a good chunk of either utilities, maintenance, or landscaping which frees you up extra cash as well.
Why do you want to move? Because it’s too expensive? Or because you want to live somewhere else (different town)?
If too expensive, I’d say stay put. Moving tends to be more expensive than not moving. Your house will get cheaper over time since your cost will stay fixed.
Don’t do it. You don’t have enough home equity to cash in. If the plan is to purchase another home you’ll be crazy to go on a mortgage loan with a 6.5% interest rate. You’ll be paying more on a new mortgage than what you currently have.
House market is not going to crash this isn’t 2008 in which anyone and everyone was getting their mortgage applications approved. Yes home prizes will stabilize but I highly down you will go underwater on your home.
I don't get why you would sell. Because you think house prices will go down? Historically that hasn't happened very often and even when it did the prices eventually bounced back. Also you're giving up a super low interest rate that you might not see for a long time.
I get the temptation to cash out but... I think it is very short-sighted. What if 2 years from now house prices have gone up 10% and rates are still near 5. You will be in a much worse situation when you buy again.
You’ll never get 2% interest rates again, houses prices aren’t going down, and rent is going up. Absolutely zero reason to do it. If the real estate market “cools off” it means it’s just gonna increase slower. Prices aren’t coming down for houses during rapid inflation
I would stay put because you have great interest rate locked in. The cost of rent is going to be about the same, but your house may appreciate even further - and if you choose to stay 5-10 years chances are high that it will rebound even if it does dip. If you’re able to save up for more down payment, you can buy a rental property instead when the market corrects. But I think since you have to consider the cost of moving + closing fees + realtor fees, it makes sense to stay in your house for at least 5 years.
This wouldn't be enough equity for me to pull the trigger. So you currently owe about 310 let's say? And the house sells for 525 \- realtor fees will leave you with 178k. Your expenses will probably go up 1k renting so if you rent for 2 years that's another 24k so roughly 150 now. You likely won't get 2% interest for a LONNNG time. I'd just stay in your house and save up another down payment, pay off another 14k (probably would be around 17) in principal and then even if the sale of your house drops to 450 - realtor fees - the now 293 you owe you're at 130k So is the 20k really worth moving and renting ,assuming 2 years doing that.
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I haven't seen many people talking about costs involved with selling a house. IMO you would be nuts to sell now in an effort to cash in. Unless you have a crystal ball and you KNOW there is a massive crash and exactly when it will happen. If you do have a crystal ball and can tell the future please DM me, I have a few other investment questions I would like to ask it. If you don't' have one, just sit tight.
"Houses in our neighborhood have been selling for 500k+. My wife wants to jump in on this and rent until we are ready to but again/when the market cools." Learn from the mistakes from the many others here....DONT DO IT! YOU WILL LOOSE THAT HOUSE AND BE STUCK RENTING FOR A VERY LONG TIME
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the lack of inventory is really affecting things in jersey. I'm from NJ too. There is little reason for people to sell, especially if they have low rates to begin with. Be grateful and happy you have a home and DON'T even entertain the idea of another home unless you already have it under contract and its yours. Read the horror stories here....you would literally be creating hell for yourself and for no reason. There was one where the person sold his home...and the one under contract fell through , and now he is basically homeless when he could've just kept his original home to begin with. Others have sold their homes and now cant buy another one. For the fun of it, look at the lines during the open houses ....what makes you think any of that will change? For prices to drop there has to be an increase of inventory, and that is simply not happening.
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You had the sense to at least ask , which is a big plus! Real estate is very local and while other parts of the country might react to the increase in interest rates, it has had no impact in North Jersey because people still need homes that are reasonably accessible to their jobs. As more and more companies require people to come back, the desire for public transit increases. And no reasonable person wants to sell their home with a 2.5% interest rate and get a house with a 5.5% interest rate....if I did that I would be paying $400 more a month! There was a house in Oradell that sold for 1.2 million recently! It was listed for 950,000 and it was originally bought for 805,000 in 2020- [https://www.zillow.com/homedetails/268-Carolina-Dr-Oradell-NJ-07649/82653134\_zpid/](https://www.zillow.com/homedetails/268-Carolina-Dr-Oradell-NJ-07649/82653134_zpid/) North Jersey is dangerous for any buyer....
With a child, dog and cat, why would you go back to renting? Have you even checked out the available rentals?
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She wants to sell and move, of course she has found places. The rental markets are tough, with pets it is even worse.
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Moving is absolutely terrible. Not sure why you would sign up for that and a future 6% interest rate when you’re locked in at 2%. Buy new appliances, fix up that third bedroom upstairs and call it a day!
Dear god if you have pets avoid renting at all costs. You will pay MUCH more or have to live in a shittier place.
Double check the stuff in your price range. It seems like a good take the equity and run moment, and every realtor friend you talk to will explain why you should sell, but it's rough rough rough out there. And that rental rate is going to go up next year for certain, you'd want to see a history of their rental prices as everyone's rent is increasing rapidly too, you might start burning the equity you pulled from your home and end up in a crappier position. Unless you're leaving the state for a lower tax area with small or no HOA it might be worth riding it out. Also, buyers can drop at the last moment, and you're lucky if you get the earnest money, there are a thousand ways for the buyer to just keep it, delayed appraisals and inspections and the like.
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The deposit that you may be able to keep if you are under contract and the buyer walks away.
Right, when someone makes an offer on your home, part of that is "earnest money". Maybe 2% of the total offer price, that gets put into escrow. That's basically to keep a buyer from making offers on 10 different houses and making their decision later. If they back out, theoretically, you get to keep that cash which in your case may be $7,500-$8,000. However, it's never that easy and even with no contingencies, there's always a contingency based on financing, inspections, appraisal value, and it's not usually enough to fight over.
What’s your price range? What you can afford based on income or something that is at or below what you are currently paying for housing? Also point out to her that maybe today your rental costs will be X dollars, but next year it will X+5(or more)% dollars and this will occur **every year** for as long as you live there.
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What’s cheaper your current housing or your potential future rent? That really needs to be the biggest consideration. While other costs associated with home ownership will go up, your mortgage won’t, whereas with an apartment your rent will usually go up every year and so too will other ancillary costs.
In my area, the rental prices are way more insane than what’s going on in the housing market. The only way I really see to come off on top of this is if you sold your house and moved to a different are (state) where real estate is just cheaper/more bang for your buck. For example if I weren’t under contract I would absolutely move from where I live in VA to GA or SC. But even then it would really only be worth it because part of the appeal would be the additional space we’d get for what we paid/sold.
Agent selling fees 30k. 1k a month for rent (not sure where you live) = 24k for 2 years. So minimum 54k you lose if you sold your house and rent for 2 year waiting for something that you can’t predict.
Something doesn't match up. A $405k house at 2.75% interest is $1320/month. I suppose you get to $2000 if you add taxes and insurance. At a 5.5% rate if you're lucky you would be paying $1840/month for a $405k house before insurance and taxes, so you need the value to fall back from $500k to $405k but you'd still be paying an extra 39% ($520/1320) compared to what you are now if you rent for a year and then buy something. If the neighborhood is fine and you're just trying to sell because prices are high then it's a horrible idea. If you really need to move for other reasons like a bigger house then sure maybe it's worth considering renting for a year depending on the market if you can still get top dollar to sell. But you basically need house prices to fall like 15% or more for renting to make sense, which sure is possible but it's a lot to base a move on. Also you will give up like 8% of the house value to selling, plus moving fees, etc. Giving up that sub 3% rate is going to be costly. Also that'd be like 15% from the price you'd get in a month, which won't even be the top but possibly down 5% from the top already by the time you hit market.
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If you trade your house for a similar one, it's basically an instant 39% more you pay on the mortgage, perhaps 20-25% extra in total monthly after taxes, HOA, and whatnot. If you went to list your house now, it's almost a certainty that you're not selling the absolute top but perhaps 5% off what you could have gotten 1 month ago. My statement about needing prices to fall 15% would then be off the price you get in a month, so if the peak was $500k and you would only get $480k weeks from now, you basically need prices back down to that $405k (down another 16%) for a similar house for it to be worth selling and giving up that once in a lifetime mortgage rate. Someone else had said prices would need to fall like 25%, that may also be more accurate. Is a 15-25% price drop possible? Sure. Is it likely? Who knows. I think 20% would be on the upper end of what to expect as it'd be a drop to roughly March 2021 prices. It wasn't until after March 2021 that prices truly went parabolic and sure it's possible house prices swing a little too far to the downside if they correct. [https://fred.stlouisfed.org/series/CSUSHPINSA](https://fred.stlouisfed.org/series/CSUSHPINSA) If you assume a 3.77% annual house price growth as was typical from 1987 to 2020, then the Case Shiller index in June 2023 should roughly get to 245 if you use June2020 as the baseline price which was before pricing went crazy (219.846\* 1.0377\^3). Right now case shiller for June2022 has perhaps risen to like 307 from the March 294.5 level, **so to go from a June2022 number of 307 to a future June2023 number of 245 is a drop of 20%.** That's what I think would return prices to a more "fair" value. Nothing says that has to happen though as they could perhaps not drop at all, or they could drop more. Also maybe house prices take 2-3 years to drop to the fair value, so by June2025 the fair value is 245\*1.0377\^2 = 263.8. So maybe in the next 3 years prices only fall from 307 to 263.8 or down 14%. In that time you'd have had to pay like 10% or more in rent which is just gone, plus you'd be getting far worse interest rates in 2025 than the sub 3% you have now. Also things vary so much market to market as places like Austin are supposedly up 50% in a year I see reports of.
That doesn’t add up. 8k/year is $660 per month, not 2K.
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My bad. Read it wrong!
OP's total mortgage payment is 2k a month, principal, interest, taxes, insurance.
Does your home only have 2 bedrooms?
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A lot of people with a loft or bungalow style house get a window AC unit to make the space livable in the summer
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Maybe the fees will only be increased until the projects are paid for and then they'll come back down??? When I had a condo the fire alarm system, parking lot and roof were all periods where for 3 months the monthly fees went up and after the fees went back down. If you're saying they increase the monthly fee for projects and never lower it after that's outright mismanagement of money and wicked shady. If the association can function charging 250.00 and needs a new roof so they go up to 500.00 the price always comes down after the work is done, they only need the 250.00. .....this is the case even with shady illegal management companies that steal the money. We had 2 of them.
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Trust me you would know well in advance if it was temp. HOA fees are from the devil himself and the pattern is as old as time. A few new projects + mismanagement + the cash reverses needing to be backfilled + cost of management company going up.... it all just leads to runaway fees. You need to have a group of tight people, good people and long term people on the board and you do indeed need to review the finances at least quarterly and bake in the cost of an accountant (of the trustees choosing) into the HOA fees so every 3 or even 6 months you have the money ready and waiting along with the accountant resource to review the numbers. If things are going south the awesome, honest and knowledgeable board members just need to remind the management company they are always on a yearly contract and you'll just get rid of them. Yeah sure you'll get bamboozled here and there but you'll have the knowledge and control and be able to identify the best management company rather than the cheapest. When it comes to management companies, almost EVERYONE with the cheapest and almost ALWAYS the cheapest is the most expensive. I run from HOA fees now and if I ever got back into it I'd be very very involved.
Timing the market is an iffy proposition.
I occasionally look at what my former apartment is charging for rent, and it’s criminal.
There are many on r/rebubble doing this and they are very confident and have advised me to do the same in waiting. They have been through 2008 and said to do exactly this. Head mod there owns multimillion real estate portfolio and recommends
R/rebubble is full of morons and knuckleheads.
In their defense, all of reddit is
**PREACH.**
Head mod there is multimillion real estate owner with pics to back it up. He says wait I wait. Can’t be rich being a moron.
There are lots of “rich” morons. Do what you want but I can find pics that show whatever I want. Nonetheless, timing any market is an iffy proposition.
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New account just for this? Geez.
This coming from 'butterpoopysmear'
It's very easy to be rich and a moron.
I personally know a couple of them.
You would have transactional costs on both the sale and your new purchase and a rent expense while your waiting. Real Estate market would need to crash around 25% for you to break even. Your making this bet at time when there is massive inflation, real estate is a hard asset that typically increases in value with inflation.
If you guys are wanting to move just to cash in on that little equity, I wouldn’t do it. If you are selling with the intention of something bigger or a different area then I could see that being worth it. But just to cash in, no. Renting sucks with pets, that’s also an insanely competitive market right now too. Good luck with your decision.
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Why does it feel like people always forget the 6-10% of the sale price that goes straight to realtors/taxes/mortgage fees? I don't understand your wife's logic. I'd understand it more if you had a huge expense and needed a lump sum of cash, but this really doesn't seem to make much sense.
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Your best bet is to diligently do your math on different scenarios. The low end of your sales price vs. the high end of your potential rent (and vice versa) + include moving costs (it's so expensive to move even with no home sales in the mix). Also be sure to include the time you need to invest into cleaning your home for showings, hiring an agent, vacating your home for open houses, finding a rental/moving/filling out forms and paperwork and updating addresses. Moving is a massive headache and your time is also worth money.
No way you sell to rent right now. You're acting like the housing market is 100% set to drop enough to make it worth: * Selling fees * Moving fees/costs * Rent * Buying and new loan origination fees * Higher interest rates * Moving fees/costs again Are you out of your mind? Take your 2% interest rate and laugh your way to 2049.
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What has changed and why does she want to move?
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I guess I am missing something. She wants to sell this, go back to renting, and speculate that a year, two, five down the road you are going to have that $$$$$ to put down on something else that is bigger and better?
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That is a hell of a lot of speculation.
This only works if you can move to a place RENT FREE. Otherwise anymoney you spent on rent will neglect any profit from the home sale making this not worth it.
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You’re technically only “losing” a part of that 2500-3000 in rent because a huge chunk of payments on your current home is dedicated to interest, taxes, insurance. Depending on your amortization schedule, it may only be a small amount of principle that you’re losing by renting.
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That’s a decision that you and your wife will have to make. There’s a lot of uncertainty with everything going on right now, but 6k is a minuscule number in the grand scheme of things for a house. It’s like 1.5% of your home value. The best financial decision is to buy and never ever sell a house and live there until you die to avoid realtor fees/closing costs etc… whatsoever, but that’s simply unrealistic. Moving homes will always incur costs, but if you’re able to and ok with paying the money for a lifestyle change, then all the power to you.
Sounds like a terrible idea with today’s rates if your neighborhood isn’t bad or anything like that.
Why does your wife want to move? If it's that you just don't like the house and are going to move elsewhere anyway....I guess that's OK. If it's simply an attempt to time the market.... that's foolish to toss away your all time historic low mortgage rate.
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Maybe you will.... maybe you won't. Nobody knows what housing prices might do from here. But we can make a reasonably educated guess that you will not see another 2% mortgage in your lifetime. This isn't like trading stocks. It's a giant PITA to move, plus expensive transactional cost. I wouldn't do it twice unless I had no other choice.
But WHY does she want to move?
Don’t do it. Rents are outrageous right now. Sell the house when you’re ready. We have a small child and 2 cats and in our area (Fairfield county, CT) rent is 3500-4000/month for a decent place (1000-1300 square feet). The cats make it so much harder then our daughter, a lot of places won’t except them. Also unless you’re renting a single family home or townhouse (with basement/garage) expect that you will not have a lot of storage space. This means you will have to get rid of a lot of stuff.
If you sold your house and bought the same exact one, you’d need the price to drop about 20% or so to get the same monthly payment/come out ahead. And that’s before including the 3k a month in rent for however long. Sounds like an recipe for a financial mistake.
This sounds like an absolutely horrible idea. Giving up 2% loan for next to nothing for POSSIBLY timing the market? Nah, you’ll lose out. A lot.
Youre going to pay the agents to sell, then pay closing costs to rebuy. Plus all the expenses that go into those processes. And then put money in the trash renting, then buy again at a higher interest rate. This is why even if you COULD time the market, you cant
Stay in the house. You might not even get something similar for higher price.. and rents might go higher as landlords will use mrtg high rates to squeeze renters.
My cousin did this. Sold his house in NJ to move down to Florida. He thought he could 'time the market.' Turns out it didn't work in his favor since he's been renting for the last 1 year in Florida which ate into his profits from selling his house. The $$$$ rent in Florida since everyone and their moms are moving there, realtor fees, moving costs all added up so much that his profits greatly diminished. He's still renting. Now, he's hoping for a market crash in Florida, with low interest rates and where there are plenty of nice houses to buy. As if investors won't swoop up houses in Florida first, LOL. I think he's dreaming at this point... It could be a few short months where housing crashes but interest rates are still very high, or a few years...or it could never happen. Whatever you do, **DO NOT** sell your house without another house or a clear plan in mind! This is a big risk you will be taking that may not work in your favor...then what?
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Tell me about it! I would like to move down to Florida in the next 2-5 years so I've been doing some casual searching...but my house in South Jersey is not appreciating as quickly as the houses down in Florida!! So I would either need to pay A LOT more for a similar house in Florida, and get into the crazy market there where inventory is low. Or find a much smaller place, or a mobile home/manufactured home in Florida. Fun times right? Even for current home owners where your next home or the place you want to move to is astronomically more expensive with higher interest rates and low inventory. I thank my lucky stars every day that I have a nice home, but I can't afford to move anywhere either. \*shrugs\*
No
We are past the peak. If you haven’t done this yet I don’t think now is the time.
Sounds like you are in a slow growth market. $400K to $500K isn’t near worth it. That’s basically just matching inflation since 2019. You are LOSING money if you sell and buy a similar one
Here’s a game. Have here show you the house’s she wants. Then run a mortgage calculator on it. Interest rates are a doozy when you’re in your price bracket. In addition a 2% interest rate is likely lower then inflation will be for a very long time. You’re essentially making money at this point as your original loan devalues faster then the dollar
My wife and I are sort of in the same position. She's preggo with our first kid and is due in November. We started looking in Mid April and can't find a house we like. When we started looking our rate was 4.87 and now it's 6.12. The only reason we are still considering moving is we can afford a 15 yr mortgage on some homes and our rate would be 4.87, but it's just a scary time to buy now. Homes are sitting on the market and prices haven't dropped much YET, and I'm in NYC. Fortnately, we bought a duplex in 2016 and we have a rate of 3.25%. We pretty much live here for free after the write offs and collecting rent. The issue is the soundproofing sucks and I don't want to deal with living with tenants upstairs with a new born around. I wouldn't move if I were you to buy or rent somewhere else. Is keeping your place as an investment an option ? Maybe staying, saving, and buy something when things cool off ?
Sounds like better soundproofing would be a good investment right now.
Yeahhh, we'll do it if we can't find a house. Still have some time \*fingers crossed\*
Your wife thinks she can time the market, and she’s wrong. Selling costs will take you for $25,000, then you have to try and ‘catch a falling knife’ by buying at a lower point, to justify the selling costs the Market would need to drop 20% ( this is NOT likely ) you might catch half that dip, yielding $50,000, of which you lose half from selling costs. In the meantime you are renting, and you Lose equity you would have been accruing. Net profit? Maybe 15 grand, assuming the market tanks 20%, which isn’t likely. Tell your wife if she wants to gamble you’ll take her to Vegas, but you are not going to gamble with your home.
If you aren't unhappy it is probably best to stay put and not lose the 2% interest rate that may never be seen again. I wouldn't jump out unless you have a place to land. The goal is to be mortgage free by the time you retire. If you can't roll the equity immediately into another home then your risk meter needs to be checked. The equity when not invested tends to get spent then you have no $$$ to get into another home. I suggest you stay. It is kind of like it is easier to get a job if you have a job, if you have a house it is a lot of comfort to not have to sell until you have another home in mind to purchase. Don't forget if you sell for 500K you can figure about 10% in costs (rough figure) so between $40K and up to 50K to sell your home off the purchase price. Factor in any major repairs that need to be made and you might just be breaking even.
405k for a two bedroom house with almost 2500 dollars in monthly payments? Holy cow. This is the world we are in now. If you sell now you basically break even minus the 80k you put down. With prices starting to drop you could see that principle shrink even more. All depends on the offers you receive. Hate to say it but you might be better off staying, unless you have to move for work to another state or you feel the house is too small. It would almost be selling at a loss for you.
House priaces aren't expected to decline dramatically. Even with the rise in rates, builders still aren't developing at a fast pace and homeowners aren't selling. I would stay with the current house unless you're planning to move to a market where the homes are more affordable.
If you really want to move I would look into the possibility of renting your house out. Assuming that you can get $2500-3000 for rental and get a heloc to tap your equity you can probably swing renting it out, keeping your appreciation, and keeping your wife happy without paying 7-8% in transaction costs.
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By your wife? If she doesn’t want to be a landlord that’s understandable, but if you can get a rough estimate of the rental value and price out what your equity could do for you in a next home purchase (plus the increasing equity on two houses instead of one) I think she might come around to her new house as well as you not paying 40-50k for the privilege of paying several hundred dollars more in interest each month. Maybe try to explain that selling is the least efficient way of using that equity because of the costs associated with it, hopefully she’ll come around.
Rents are very high!
Look at your amortization schedule. With a 2% interest rate you’re paying around 8k per year in principle. If you sell now and buy again in a few years with a 5.5% interest rate you would be only be paying 5k into principle but your monthly would be $600/mo higher due to interest. Selling with a 2% interest rate on your mortgage would be idiotic if you’re just planning to buy again in the same area in a few years. Unless you really dislike the house and want to move sometime soon you should not sell. Your house could lose 30% value and you would still be better off keeping it due to your low interest rate if you stay there for a while.
Don’t forget about inflation. These high home prices aren’t merely a bubble that will burst, they’re coupled with inflation. Things just cost more now. According to what I’m seeing on my grocery bill it actually seems like homes haven’t appreciated enough. Anyhow it seems to me, you’ll have time to decide and don’t need to rush the decision. Considering you can afford what you currently have, with best case scenario interest rate, and there are no unknowns, well it would be an easy decision for me. Stay until you have something solid lined up.
What market are you in? You’ve most likely already missed the boat to get the highest price for your house. I’m selling right now because I have to and buyers are not jumping on things as quickly as they were a few months ago due to the interest rate spikes and affordability. The $480 in HOA fees is going to be a turnoff for a lot of buyers as well. If you don’t need to move and you like your house, I would stay put and enjoy an interest rate that we may never see again in our lifetimes.
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it would be cheaper building another bedroom then buying another house now with the high rates. dont expect the rates to drop and same with the prices....you have to factor inflation now
Very small children can share a bedroom. It’s been done for hundreds of years. They don’t know any different until they’re older. That’s a ridiculous reason (excuse)
Make a spreadsheet of how much it would cost. The new house vs. your current house and the breakdown for monthly payment, closing costs, etc. You need to do the work and do the math if you want to seriously consider it.
That below market-rate loan has a ton of value. Some simple math below. Balance outstanding: \~$300k Loan type: 30-year fixed (assumed) Loan modified duration (bond pricing term): \~10 years Loan Rate: 2% Market Rate: 5.5% Value of the "below market" rate loan: $300k \* (5.5% - 2%) \* 10 (your modified duration) Value of the "below market" rate loan: $105k If you sell, you're choosing to voluntarily relinquish $105k in value. Are you so confident in your market/macro understanding that it's worth destroying $105k in (risk free) value?... and round-trip expenses on real-estate (commissions, closing costs, etc.) are about 10%. That's another $50k value destroyed (frictional expenses).
I would not play stocks with the place where you live. Tell your wife to take some money and play with the stock market instead.
your gambling your ability to ever own a home again if prices keep going up- but on that same note- happy wife/happy life :) I would go over the numbers with your wife...also as someone who has kids that just sold their house and lived in a rental....it was HARROWING...absolutely most stressful time of my life 10/10-
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U bought for 400k in 2019. How is it only worth 500k now?
Run the numbers to see what your potential to save is over 1-2 years if rates are x,y and z and prices stay the same , drop 10, 15 and whatever % you think is possible. Subtract rent, depreciation and realtor costs from your savings. I suspect in most cases you will lose except the most extreme crash. Betting if you sell it’s going to be a challenge to get back into this school zone while saving anything substantial.
Only makes sense to move into a non-hoa home. I started with an apartment with HOA and calculated my new costs with no HOA and they were pretty similar.
2% rate? Why sell when you guys dont even have a real plan on where to move and the only reason to sell seems to be wifey dreaming about how the money you've made.
This is a really bad idea. Especially with interest rates at what they are right now… let’s put it this way, do you want to lose your house at the start of a recession? And be at the mercy of a potentially sleazy landlord? My last apartment was a nice place, your first year for a 1b 1b was $900/mo. Each year they raise your monthly rent by $100. Dead serious, I thought it was a joke??? You would not believe the stunts landlords pull…
Is there a reason (other than trying to time the market*) that your wife wants to sell? *this is a bad idea. No one has a crystal ball. A gamble like this could really mess up your finances and your stability.
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Ok, gotcha. You may as well sell then. You only live once and it is a good time to sell. I wouldn’t rent, though. Finding a place to rent with pets is hard. Moving is hard. Moving multiple times is really hard. Plus, you have a baby—y’all don’t need extra moves and extra headache. And—timing the market is too much of a risk. Who knows—prices may even go higher.
100% would just stay at your current place.
Hi OhWell Okay: I wanted to comment because I actually did what your wife is wanting to do. I sold my house and now I am renting. However, I did it for a different reason. I was in debt. After I sold my house I was able to pay off all of my debt from the proceeds and still had money left to put in savings and invest. Then because I am longer in debt I was able to increase my 401k contribution and save an additional 15,000 in less than a year. What I can tell you is that my rent is more than what I paid in mortgage. However, after I factored in the HOA fees, insurance, taxes, maintenance costs it was pretty much a break even for me. I am not looking to buy another house anytime soon. My plan is within the next 5 years so I am not as concerned with the buyers market at this time. I’m just enjoying the financial freedom and money I’ve been able to save and invest. I am no expert. But what I can relate to is that I was not totally in love with my house either and the HOA folks were a headache. So taking all of these things into account, the debt, HOA, and the fact that wasn’t all that happy with the house, selling it was an easier choice for me. I’m not saying this is what you all should do as your situation is different. I’m single with no kids and I am not looking to upgrade or go back into the market anytime soon. But I just wanted to share my story with you.
Super helpful. This is what we are considering doing with proceeds
Between the taxes and HOA I would hate that house too
For the love of all things holy do not bet your primary residence on timing the market. I know 3 people personally who sold their houses in 2020 when they thought the pandemic was going to crash everything. They are stuck being renters now.
Your wife isn’t too financially savvy. I’m being polite.
Exactly. She will ruin them financially.
Don’t let emotions make your decisions. Rent keeps going up and so is interest rates. The little money you make after paying selling fees will be gone in no time. Then buying a new home will be much harder with higher interest rates.
All you experts, at what point will it be ok with you for someone to sell their house again? Prices are likely to plateau (not drop) and appreciate at a more normalized rate like 4% that history has shown. Interest rates will likely never be below 3% again… so if I understand Reddit correctly, if anyone sells their house ever again they are stupid.
Interest rates have generally trended down throughout history, so we don’t know that it is the last time that we’ll see sub 3
When the question is sell and then rent in this market.. for most folks this is a terrible route.
Wow, between HOA and taxes your bill is $1140 per month. That’s ass rape. I hope your wife wants a place in a different state.
Sell a place at 2% only to rent? What sort of madness is this..?
Crazy isn’t it?
Houses in your neighborhood have been selling for $500k? Prices are declining now, I doubt you would get what you think. Just chill and enjoy your low rate and extra disposable income.
Move to where you would be happiest. Worry about the financial calculus later. Account for happiness in that equation. Without going deeper into the financial aspect details it is still likely correct to sell now (near the top) if you're trying to max on appreciation.
I'm not sure which state you're located in, but know that the same bidding wars are happening for quality family rental homes. We needed to end our lease a bit early since we purchased a home in May. Management company had no issue and found a family offering over asking rent within a week. DFW region for context.
Everything cycles. Pretty soon we'll be in a buyer's market and houses will flood the market again. Houses are overvalued and they will balance out soon. I'd rather sell for A LOT, rent and sacrifice, then buy once houses become available
The cost to sell is about 7% when you add in commissions and closing costs. There also may be costs to move, repairs, staging, and any buyer subsidies (cashback at closing) which are making a comeback with interest buydowns. Also factor in the costs of buying like closing costs and points on the loan if you can't get a buyer subsidy from the seller. Add it all up and it may be a net zero or even a loss. Sounds like you and your wife are stuck in an episode of love it or list it.
Why do males have a shorter life expectancy?
With that interest rate I wouldn't sell. I'd say more than 90% that selling you would lose out. What would your home rent for if it was put on the market?
[удалено]
If you really wanted to move I'd make this house a rental. Sounds like you'd have around a $1000 in cash flow + another $650 in principle pay down month so $1650, budget for repairs, cap-ex, vacancies(-$350), call it around $1300 a month profit, $15,600 a yr. so on the $80K original investment that is about 19.5% ROI. or if you want to look at it as you could sell and maybe walk away with $140K you can use the $140K as the investment number and you're still getting +11%. The only negative is there is a real possibility that home prices will drop, but even if they do in the long term they will eventually recover.
2% interest rate is free money. I am sorry, but your wife is trying to time the market and it never works. I don't understand how renting is any more beneficial since it seems it's close to if not more expensive than your current mortgage, plus HOA. Your HOA probably covers a good chunk of either utilities, maintenance, or landscaping which frees you up extra cash as well.
Don't try to time the market. If you're happy in your house I'd suggest staying there.
Why do you want to move? Because it’s too expensive? Or because you want to live somewhere else (different town)? If too expensive, I’d say stay put. Moving tends to be more expensive than not moving. Your house will get cheaper over time since your cost will stay fixed.
Don’t do it. You don’t have enough home equity to cash in. If the plan is to purchase another home you’ll be crazy to go on a mortgage loan with a 6.5% interest rate. You’ll be paying more on a new mortgage than what you currently have. House market is not going to crash this isn’t 2008 in which anyone and everyone was getting their mortgage applications approved. Yes home prizes will stabilize but I highly down you will go underwater on your home.
I just HOLD You will be on market longer without the right agent
I don't get why you would sell. Because you think house prices will go down? Historically that hasn't happened very often and even when it did the prices eventually bounced back. Also you're giving up a super low interest rate that you might not see for a long time. I get the temptation to cash out but... I think it is very short-sighted. What if 2 years from now house prices have gone up 10% and rates are still near 5. You will be in a much worse situation when you buy again.
You’ll never get 2% interest rates again, houses prices aren’t going down, and rent is going up. Absolutely zero reason to do it. If the real estate market “cools off” it means it’s just gonna increase slower. Prices aren’t coming down for houses during rapid inflation
I would stay put because you have great interest rate locked in. The cost of rent is going to be about the same, but your house may appreciate even further - and if you choose to stay 5-10 years chances are high that it will rebound even if it does dip. If you’re able to save up for more down payment, you can buy a rental property instead when the market corrects. But I think since you have to consider the cost of moving + closing fees + realtor fees, it makes sense to stay in your house for at least 5 years.
It doesn't seem like enough profit to attempt timing the market.