[TheLaw]

So my wife has been beating me up about selling our house for a bigger one. We were planning on selling jut before the market to a dive. There are some fantastic deals out there to be had right now on purchasing but I don't want to lose my shorts too badly on my current house. We looked at a house last night that was valued at $435,000.00 two years ago according to the County Tax Assessor. They are asking $195,000.00.

I do not want to rent my house - been there done that.
We can't afford two mortgages


If anyone has any real insight on this matter, I'd like to chat. Let me know. Thanks.

 

[VolGrad]

If anyone has any real insight on this matter, I'd like to chat. Let me know. Thanks.

We are in the same boat. We would love to up-size right now and move to the OC but likely can't sell our current home. I will be watching this thread but don't expect there's anything you can do. You have already considered the options ... take a hit on your house or keep it and rent.

 

[TheLaw]

Well, it's the amount of hit I want to take, or not take as it were. We paid $135,000.00 for the house 8 years ago. Typical first time home, 3 bedroom 2 1/2 bath etc.. I have a decent sized yard at almost 1 acre. I put $10,000 in the addition that we built onto the workshop, which has become my office/guest bedroom. You know it as the "cabin". So, I've got $145,000 in the house, owing just at $100K.

If I could get my initial investment back out ($135,000.00) I'd be happy. The issue of course, is as with most neighborhoods, we have had owners that have had to leave and or foreclose on their homes, bringing the values of all homes in the neighborhood down. My house is one of the larger houses in the neighborhood, as most are single story ranch style homes. Mine is a split level and there are a few two full levels in the neighborhood.

 

[TAP]

I'm in a similar situation as both of you. We will be upsizing in the next six months. I suggest taking a hit on your current home so you can get a great value on the new home. You need to think of it in overall value terms. Say market is down 20%. If your current home was worth $200k (now $160) and the new home was worth $300k (now $240k). As you can see, it will be better to buy the bigger home in a down market even if you need to take a hit on your current home.

 

[TheLaw]

Another thing to keep in mind is the 3.8% tax on profits over the capital gains. I don't think I would fall into this category but I still want to do the math.

http://www.snopes.com/politics/taxes/realestate.asp

 

[VolGrad]

TAP is right. I think most folks in our price range and income level would be in better shape to just cash out so long as they aren't upside down. Cash out with any pocket money you can and take advantage of the current down market to upsize. I need to do some math myself and see if we might want to consider that. I need to see where we are at mortgage wise vs our expected market value.

We would be doing very well if we could get in the OC as that would be MUCH better for us for schools.

 

[TAP]

Capital gains on a primary residence doesn't kick in until your profit is more than $250k (single) or $500k (couple). That wouldn't be a bad problem to have in this down market.

 

[TheLaw]

lol. as I said, I didn't think it would affect me.

 

[coop]

for me it would be, what can I get for my house and can I swing the new one.

lets say you get only $125k for your house, yes less than what you really want, but your getting the other for $195k and you can afford the difference. Yes you're taking a little less than you hope for, but man are you getting a great deal on the new one.

Or

You can wait, and odds are that everything will be raising at the same time, which way is a better deal?

My wife and I are refinancing our house, going from 8 years left to a new 30 year note, plus I plan to sell in 3-5 years. But we are lowing our payments and putting money in our pockets. Plus it gives us money to buy a home in NM, where prices are at an all time low and where we are planning to retire to in a few years. Prices are not as good as the new place you are looking at, but very good. I am guessing something that will not be around in 3-5 years.

 

[TAP]

You can wait, and odds are that everything will be raising at the same time, which way is a better deal?

The better deal will always be the more expensive home at lowest point of the market even if you take a hit on the least expensive home. Of course, this assumes that both homes will increase in price at the same rate at the same time. A 5% increase (profit) on the least expensive home will be much less than the 5% increase on the more expensive home (expense).

 

[TheLaw]

I have no question that buying a bigger home in the down market is a great deal right now. I mean seriously. The house I looked at the other night was over 400K. I can't afford a 400K house, yet here it is in my price range at less than 200K.

If I can sell my house and make a few thousand off what I owe I will be doing it. I've been paying extra every month for 8 years. I've knocked out a decent chunk and as long as I can pay for the move, build a fence if necessary for the dogs, and have some cash in pocket afterwards, I believe I'll be moving before the end of the year. I have some stuff to do to the house between now and spring when I believe it's the best time put a house up for sale.