Move Up: Right Time?
- Thread starter Irvine1stTimer
- Start date
NEW -> Contingent Buyer Assistance Program
So if it won't be as bad a dip, why even wait? If prices only fall a little, and rates go higher, it might be more expensive if you wait.
This is what I mean... unless one of you has a hot tub time machine, given advice based on future [prices/ROI/interest rates/etc] is a risky proposition.
You don't have to wait. You can buy now if you find the right home you are qualified and able to manage to pay.
But if the price does come to 2014 level (say 2000sq detached that is $1m now will be around $750k), then even with the higher rate, cost will come down monthly.
Also having less debt (for non-FCB) is always better.
Why did you sell it? Tire of landlord hassles stuffs?
Other ideas is which is not very feasible, move back into the rental and convert to primary and hold it for 2 years. Husband and spouse will shelter 500K tax. Again this might not be feasible, but a possible alternative to high tax.
It sort of depends on your needs and whether your current place is okay for the future. You should buy a house for use, not profitability, especially for a place like Irvine. I would say that you need work out the numbers...higher prices means higher payment and taxes..it may also mean more upkeep. If you feel comfortable with the new payment, I say do it.
Things will not get better going forward in Irvine...they will at worst stay flat and with interest rate going up, it's a losing proposition to wait.
Yes, if you make it your primary before you sell, you will have the shelter from the capital gains, but you still have to pay taxes on the depreciation you deducted for all the years you had it as a rental.
No one can guarantee a 25% price drop within the next 4-5 months (OP's timeframe). The only scenario that is worth waiting for is when prices AND rates dropped. This happened in the 08-12 time frame which NO ONE predicted (in regards to rates).
People have a short memory, but when rates were falling, even the those in the mortgage industry were surprised how low they went. While I don't think rates will rise sharply... I also don't know if rates will get as low as they did in 2012 and again in 2016 (so lucky we refi'd that year).
I'm no BTB, but a quick glance at the charts looks like when rates went up in 2013, so did prices (which is opposite of the "prices will fall as rates rise" theory) and it looks like it's happening again in 2018.
So I'm not sure how "waiting" is advantageous as no one knows what is going to happen.
This is the most sounds approach. Fortune11, Bullback, Bones, and IHO has been around the corner a few times and offer great advise. This is why TI is so useful. You get the tap the minds of the ones that seen it all before so you don't have guinea-pig yourself. Of course, make certain that it fit your budget.
Fundamentally different market, risk management, and economy from before the crash. There is very little to indicate that RE prices will fall in areas like Irvine...stays flat but not fall.
irvinehomeowner
Well-known member
Waiting for the market to tank isn't the best advice because it's very difficult to time that and what inventory would be available.
We actually were fortunate to have the luxury to do that after the 06 crash, we looked for several years and could never find that one home that ticked all the boxes. Should we have settled for a home that was cheap but wasn't in the location we wanted and just flip it in a few years? We could have, but at that point in time, we were tired of moving around and just wanted to get into something we could stay in for many years.
We could have bought at Laguna Altura, but I did not like those homes nor the location. We could have bought in the 2010 New Home Collection, Cypress Village and Stonegate when they first opened but again... location and home type.
Looking back we could have probably lived in those for 3-5 years and then flipped it into what we live in now... but it just wasn't worth the headache.
Yes, our current home cost more than the target we were looking at, but it's in a location we wanted and had all the features we wanted and was within our budget.
The uncertainty of option C just doesn't work for me because months became years and that type of lifestyle feels so unstable (other than how fun it was to look at Open Houses and model homes).
Just look for a style of home in a location that you like (new or resale), if you can afford it (either with maintaining a rental or selling)... then do it.
Oh, and when we finally sold the home we used for a rental, it killed us on taxes... so just keep that in mind.
We actually were fortunate to have the luxury to do that after the 06 crash, we looked for several years and could never find that one home that ticked all the boxes. Should we have settled for a home that was cheap but wasn't in the location we wanted and just flip it in a few years? We could have, but at that point in time, we were tired of moving around and just wanted to get into something we could stay in for many years.
We could have bought at Laguna Altura, but I did not like those homes nor the location. We could have bought in the 2010 New Home Collection, Cypress Village and Stonegate when they first opened but again... location and home type.
Looking back we could have probably lived in those for 3-5 years and then flipped it into what we live in now... but it just wasn't worth the headache.
Yes, our current home cost more than the target we were looking at, but it's in a location we wanted and had all the features we wanted and was within our budget.
The uncertainty of option C just doesn't work for me because months became years and that type of lifestyle feels so unstable (other than how fun it was to look at Open Houses and model homes).
Just look for a style of home in a location that you like (new or resale), if you can afford it (either with maintaining a rental or selling)... then do it.
Oh, and when we finally sold the home we used for a rental, it killed us on taxes... so just keep that in mind.
irvinehomeowner
Well-known member
Mety said:
So if it won't be as bad a dip, why even wait? If prices only fall a little, and rates go higher, it might be more expensive if you wait.
This is what I mean... unless one of you has a hot tub time machine, given advice based on future [prices/ROI/interest rates/etc] is a risky proposition.
irvinehomeowner said:
You don't have to wait. You can buy now if you find the right home you are qualified and able to manage to pay.
But if the price does come to 2014 level (say 2000sq detached that is $1m now will be around $750k), then even with the higher rate, cost will come down monthly.
Also having less debt (for non-FCB) is always better.
irvinebullhousing
Well-known member
irvinehomeowner said:
Why did you sell it? Tire of landlord hassles stuffs?
Other ideas is which is not very feasible, move back into the rental and convert to primary and hold it for 2 years. Husband and spouse will shelter 500K tax. Again this might not be feasible, but a possible alternative to high tax.
Irvinecommuter
New member
Irvine1stTimer said:
It sort of depends on your needs and whether your current place is okay for the future. You should buy a house for use, not profitability, especially for a place like Irvine. I would say that you need work out the numbers...higher prices means higher payment and taxes..it may also mean more upkeep. If you feel comfortable with the new payment, I say do it.
Things will not get better going forward in Irvine...they will at worst stay flat and with interest rate going up, it's a losing proposition to wait.
The $54k deduction loss may have been me. Between state income tax for me and my wife plus our property taxes. That said, the little calculator that someone posted showed me saving money on my taxes under the new tax code, likely due to the changing in marginal rates on the tax brackets. So it's possible that SALT change might be offset by some other changes that benefit people. Guess we'll find out next year.
To OP --
first thing you should do is sell your existing home and lock in those equity gains . All the gains are on paper unless crystallized
Once that is done, now you have equity and optionality . If your buyer is an investor or part time resident , they may let you lease it back for a few months to an year while you decide
Few things
1. dont fall for that "rates are rising" mantra on this forum . Rates have already risen from 0% to 2% now in the front end and mortgage rates have not moved by the same proportion . reason ? long terms interest rates have fallen because market is not buying this story about high growth and high inflation
2. Housing is not about to crash in Irvine either . But you have optionality now having sold your home and here is how I would use it --- wait for a few months to see how the impact of these trade tariffs , midterm elections etc plays out. stock market has already priced in the tax cuts , but the consumer impact of SALT limitation is yet to be seen (eyephone has a good point there) . If Trump really follows through with tariffs then you will be looking at a serious lowering of interest rates (10y treasury might actualy break below 2%) as market actually begins to price in rate cuts as opposed to further rate hikes - this is very important
3. (if the market does soften) Try to optimize location rather than go for the best price discount. Homes that would have been hard to access without a bidding war may become more available etc. So keeping the budget the same, you may be able to get a better , more choice location.
Hope this helps
first thing you should do is sell your existing home and lock in those equity gains . All the gains are on paper unless crystallized
Once that is done, now you have equity and optionality . If your buyer is an investor or part time resident , they may let you lease it back for a few months to an year while you decide
Few things
1. dont fall for that "rates are rising" mantra on this forum . Rates have already risen from 0% to 2% now in the front end and mortgage rates have not moved by the same proportion . reason ? long terms interest rates have fallen because market is not buying this story about high growth and high inflation
2. Housing is not about to crash in Irvine either . But you have optionality now having sold your home and here is how I would use it --- wait for a few months to see how the impact of these trade tariffs , midterm elections etc plays out. stock market has already priced in the tax cuts , but the consumer impact of SALT limitation is yet to be seen (eyephone has a good point there) . If Trump really follows through with tariffs then you will be looking at a serious lowering of interest rates (10y treasury might actualy break below 2%) as market actually begins to price in rate cuts as opposed to further rate hikes - this is very important
3. (if the market does soften) Try to optimize location rather than go for the best price discount. Homes that would have been hard to access without a bidding war may become more available etc. So keeping the budget the same, you may be able to get a better , more choice location.
Hope this helps
irvinehomeowner
Well-known member
Compressed-Village said:
Yes, if you make it your primary before you sell, you will have the shelter from the capital gains, but you still have to pay taxes on the depreciation you deducted for all the years you had it as a rental.
Mety said:
No one can guarantee a 25% price drop within the next 4-5 months (OP's timeframe). The only scenario that is worth waiting for is when prices AND rates dropped. This happened in the 08-12 time frame which NO ONE predicted (in regards to rates).
People have a short memory, but when rates were falling, even the those in the mortgage industry were surprised how low they went. While I don't think rates will rise sharply... I also don't know if rates will get as low as they did in 2012 and again in 2016 (so lucky we refi'd that year).
I'm no BTB, but a quick glance at the charts looks like when rates went up in 2013, so did prices (which is opposite of the "prices will fall as rates rise" theory) and it looks like it's happening again in 2018.
So I'm not sure how "waiting" is advantageous as no one knows what is going to happen.
This is because even supposedly smart people ignore the context in which rates are rising or falling
lot of boomers in this business (either financial advisor or mortgage) have seen high rates of the 80s are somewhat anchored to it, not fully understanding that economic fundamentals which drive rates have changed
lot of young millennials have only seen a rising stock market and low rates
why do rates rise ? -- when inflation expectations are going higher , or productivity is booming -- Is it happening right now ? incrementally but nowhere near enough
why do rates fall -- when there is risk off sentiment and people seek shelter in safer assets like US treasuries and also begin to price in an accommodative Fed
As you can see there are various scenarios where rates can go higher and home prices do well (rising incomes), and rates can go lower when home prices do poorly (falling income expectations, forced liquidations)
also ask yourself why will US rates rise beyond where they currently are when European rates are at 0% ? we live in a globally connected economy.
lot of boomers in this business (either financial advisor or mortgage) have seen high rates of the 80s are somewhat anchored to it, not fully understanding that economic fundamentals which drive rates have changed
lot of young millennials have only seen a rising stock market and low rates
why do rates rise ? -- when inflation expectations are going higher , or productivity is booming -- Is it happening right now ? incrementally but nowhere near enough
why do rates fall -- when there is risk off sentiment and people seek shelter in safer assets like US treasuries and also begin to price in an accommodative Fed
As you can see there are various scenarios where rates can go higher and home prices do well (rising incomes), and rates can go lower when home prices do poorly (falling income expectations, forced liquidations)
also ask yourself why will US rates rise beyond where they currently are when European rates are at 0% ? we live in a globally connected economy.
irvinebullhousing
Well-known member
fortune11 said:
This is the most sounds approach. Fortune11, Bullback, Bones, and IHO has been around the corner a few times and offer great advise. This is why TI is so useful. You get the tap the minds of the ones that seen it all before so you don't have guinea-pig yourself. Of course, make certain that it fit your budget.
As I previously stated, the music is slowing down.
1. Redfin?s CEO said in February that he expects housing-market conditions to get worse before they get better
2. Goldman downgrades online real-estate stocks as housing headwinds loom
3. Spring selling season has got off to a weak start, a bad sign as it is a key period for the housing industry for both new- and existing-home sales.
https://www.marketwatch.com/story/g...e-stocks-as-housing-headwinds-loom-2018-06-18
https://www.investors.com/news/homebuilder-stocks-winner-analyst-warns-housing-slowdown/
1. Redfin?s CEO said in February that he expects housing-market conditions to get worse before they get better
2. Goldman downgrades online real-estate stocks as housing headwinds loom
3. Spring selling season has got off to a weak start, a bad sign as it is a key period for the housing industry for both new- and existing-home sales.
https://www.marketwatch.com/story/g...e-stocks-as-housing-headwinds-loom-2018-06-18
https://www.investors.com/news/homebuilder-stocks-winner-analyst-warns-housing-slowdown/
Irvinecommuter
New member
Mety said:
Fundamentally different market, risk management, and economy from before the crash. There is very little to indicate that RE prices will fall in areas like Irvine...stays flat but not fall.