Advice to San Diego Homeowners: Sell Now and Rent

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Submitted by powayseller on April 3, 2006 - 5:54pm

Most people in San Diego should sell their house and rent for the next 5 years or whenever the prices hit bottom.

My idea was validated in the book
Sell Now
, by economist John Talbott, a visiting scholar at UCLA Anderson School. We know those guys were years ahead of everyone else in predicting the housing bubble. Talbott gives a lot more detail about the origins and myths of the bubble than I've read other places. I'll post some of his ideas after I finish the book. (I just need to stop reading this site, so I can read the book...)

Back to the point:

Sell your house, cash out to realize the biggest payoff that you may have in your life, and rent until prices drop.

Personally, this is probably the easiest money my husband and I ever made. Our mortgage interest deduction is offset by losing our property tax obligation. We're also finding that all that money we used to spend at Home Depot to fix up this or that, is staying in our pockets.

This advice, to sell and rent, goes to anyone living in these bubblicious cities.

Any objections?

Submitted by Bugs on April 3, 2006 - 8:48pm.

I think it very much depends on their position. Someone who's property taxes and mortgage are based on a pre-1997 $200k purchase price would have a hard time getting back to such a position if they sold out now and hoped for a decline. They'd also have a tough time renting something equivalent at the same payment as their current mortgage.

If this really is the big one coming on right now, who knows when long term financing rates will be this low again? Then there is the prospect of capital gains to consider.

Submitted by 23109VC on April 3, 2006 - 9:05pm.

the people who bought recently, or refinanced and burned up equity (me) - should get out now.

the property tax hike is a big factor. if you bought recently, many areas have horrible tax rates to go along with the inflated prices. i'm looking to move to temecula where the average tax rate is almost 2% on the newer homes. so if you rent, and lose the tax writeoff - you also odn't pay that nasty propety tax.

although my neighbor, who bought in 1998, paid only $160k for a hosue that is now "worth" $600k. so his taxes and mortgage, which is low - are all dirt cheap. he would probably be ok to ride it out. his house is awesome, awesome pool, great would be a pain...

but to sell, and cash out..what a big payoff that would be.

Submitted by sdrealtor on April 3, 2006 - 10:42pm.

If most people in SD sold who would buy their houses?As for the minds at Anderson/UCLA my favorite story comes from a colleague of mine. Those brilliant minds made a presentation to his company 2 months before the last crash in the early 1990's and said that CA was recession proof and that real estate never went down. Unfortunately, he listened to them and lost everything he had. He's still trying to recover.

Submitted by powayseller on April 3, 2006 - 10:53pm.

I will counter each of your arguments. They are the same old ones I hear over and over again, about why you couldn't possibly sell your house and rent.

First, selling a house is the only tax-free gain I know of. Take the $500K capital gains tax exclusion ($250K for a single person), invest the profit in a CD yielding 5%, and then buy back in when your house is worth half. Heck, you could pay cash for the house in 5 years! Where else can you earn $500K and not pay any taxes on it. I think the government wants us all to sell our homes :)

Second, if you stay put, and need to sell for some reason before prices go back up (12 - 15 years?), you would lose all that paper profit. It won't be there in 5 years.

Third, this is the easiest opportunity to cash out. How many years does you have to save, nice and slow, into that retirement plan, to get the same amount of money you can get by selling your house? In our case, it was about 25 years of saving that equalized our housing profit.

Fourth - the kids argument. I've heard that same lame line over and over, that renting is bad for kids. Why? Rent a house in a great location w/ a pool. That's what we did while we were building. For 2 years we lived in a very desirable area of Poway, called Green Valley. Unfortunately, after we sold the house we built, it was January, and the rental choices were less, so I didn't get the prime property I wanted. The realtor, who helped me find a rental, told me there's always a lot more to choose from around the summer, a time when people move. We may stay put, or move in the summer. Either way, wherever we end up by the end of summer, is the house we'll stay until prices bottom out.

Also - consider that realtors and mortgage brokers have been pushing ARMs because "most people only live in their homes for 2-3 years anyway". Ok, so owning a house for 2 years is great, but renting for 2 years is not??

My old neighbor, an upwardly mobile professional, has been moving his kids and wife across the country every 2 years, since his kids were born. When things went downhill at Gateway, his Senior VP job wasn't looking so good anymore and he went back to Chicago. They just completed their 6th new-city move. Oh, and they were homeowners each time. Are their moves sanctioned as a higher quality of moving, because they owned their homes? Would their moves be disdainful and harmful to their kids if they had been renters instead?

The people who say that kids need the stability of the same house: if you had a job offer in another city, would you forego it because you don't want your kid to live in a different house?

Kids don't know whether you own or rent, unless you tell them they can't paint their room. Lighten up - spend a thousand dollars painting their bedrooms. Chances are the landlord will appreciate your nice paint job. (More women list painting as the #1 reason they couldn't possibly rent. How shortsighted! Paint is much cheaper than the alternative of losing $500K of housing profit. Take the emotion out, people.) For stability, keep them in the same school. From my experience of moving, I found that kids are not even fazed by the move if stay in the same school. I moved twice in Phoenix, and 4 times in SD, keeping the same school. I saw that the kids were excited about each move. My kids find it exciting and wonderful to move. Kids are move like dogs in that regard, always looking for an adventure. If they have to change schools, it can be stressful for a few weeks, so you can avoid changing schools if you wish. Again, mobile career people have kids who change schools frequently.

Fifth - "moving is a pain, I have pets, I have guinea pigs, it's too much work to pack them all up". If you give that argument, you probably aren't in the military. Moving takes a couple weeks: packing and unpacking, getting situated. Definitely hire a moving company to help you out. Yes, it's a pain, but so is going to the dentist, cleaning out the fireplace, and running up a mountain. Oh, and the dog survived just fine.

Bugs, someone who bought pre-1997 for $200K has an even better reason to sell: take the profit. It's the oldest investment mantra: take your profits while they're there. Take the capital gains exclusion, and pay cash for your house in 5 years. You won't even care what the interest rates are.

I can't figure out why anyone is still holding on to rapidly depreciating assets. The only reason would be emotional attachment.

If I handed you an envelope with $300K inside, would you take it? Yes. If I told you, this envelope is yours, but you have to move? Now - different story. The thought of moving is not worth several hundred thousand dollars to some people. I'm just mesmerized by this, I can't figure out why not. Am I superficial, to put a value on a physical structure, to be willing to sell it?

What makes you all so attached to your homes, that you are willing to work 5-10 years of your life to save the money that you could make by just selling your house? I am seriously wondering.

I know this is long, but I hope I covered all the lame arguments about why it's impossibly difficult to rent. I won't bore you with all the commentary on the advantages of renting, but here's a list:
1. no property taxes
2. no maintenance fees. Call landlord when something breaks.
3. renters insurance costs less than homeowners insurance
4. earthquake insurance costs less on a rental (yes, make sure y'all have that earthquake insurance)
5. if you're just getting into the market, rent is much cheaper than a mortgage
6. I can afford to rent in neighborhoods where I can't afford to buy
7. No money spent on the constant improvements. No ongoing projects.
8. Husband has more free time, since he's not gardening, fixing, building, improving, and being a guy in his castle. More time to work on hobbies and spend w/ family.
9. No ties to a depreciating asset.
10. No mortgage, no debt. Financial freedom.

The only reason that I personally would stay in my house is if the house is almost paid off, or paid off. I might still cash out, but would have to handle the adjustment from zero mortgage payments to paying rent.

Submitted by powayseller on April 5, 2006 - 4:17am.

You're right, only the early adopters can make this strategy work. There aren't enough rental houses to allow everyone to rent. The early bird gets the worm.

Also, make sure your landlord is not too cash-flow-negative. If he can't afford to carry his property any longer and needs to sell, you'll have to move again.

I'm puzzled about your friend's story regarding the UCLA Anderson Forecast. They're one of the most respected economists in California.

According to the Los Angeles Business Journal, "The UCLA Anderson Forecast has provided forecasts for the state and national economies for the past 50 years. The forecast predicted both the seriousness of the early-1990s downturn and the strength of the state economy's rebound since 1993".

Submitted by FormerOwner on June 8, 2006 - 6:39pm.

My wife and I live up in Temecula and recently did exactly what PowaySeller did - sold our house, put the money in CD's, and we're now renting a house. I actually like the house we're renting better than the one we owned (this was an unexpected bonus). I completely agree with everything PowaySeller said and I would also add a few more reasons why I think real estate is overvalued in So Cal:
1) Go to Google and search on "peak oil". I am convinced that energy (especially oil) prices are on a long term up-trend which will cause property values in outlying areas / areas with no public transportation to fall substantially as the cost of commuting continues to rise.
2) There are a LOT of people who overextended themselves with home equity loans and ARM's on the hope that "when the value increases, I'll just refinance". When they all have to sell under duress or get foreclosed, this will start downward spiral in prices.
3) Much of the job growth in the last 5 years has been in the housing/construction/real estate/mortgage industries. These people buy houses, which increases their income, which allows them to buy more expensive houses. When this cycle reverses itself, it will drastically reduce demand.
4) The economy is not nearly as strong as Dubyah would have us believe. Most of the non-housing related jobs created in the last 5 years are either temporary jobs or low-pay service jobs that don't pay enough to buy a shack in So Cal. We don't make anything in this country anymore and we're losing more and more industries to foreign countries every year. We are drowning in debt as a nation - government agencies (federal/state) as well as individuals/corporations. The debt levels have increased risk enormously. Not to mention all of the Social Security/pension/retiree health care issues on the horizon. The list goes on. We're living in the last days of the Roman Empire and we're overdue for a correction IMHO.

Submitted by powayseller on June 8, 2006 - 6:51pm.

FormerOwner, welcome! Regarding point #2, someone told me yesterday that his friend kept refinancing his house to pull out cash to pay the mortgage. The last time he took out $200K, and that would make his mortgage payments and pay other bills for 2 years. His plan: in 2 years, when his house is worth $1.5mil, do another cash-out refi.

Can you believe this spending plan?

How many people are living like this, depending on rising home equity to pay their mortgages!

Submitted by sdappraiser on June 8, 2006 - 10:15pm.

"Take the emotion out, people." Direct quote from Powayseller.

I've followed your logic for awhile. You are very emotional about the path and decisions you've made. To the point where you spend hours on a blog trying to convince others that you've made the right decision for you and your family. From what I have read, it really appears that you are desperately seeking validation.

"Personally, this is probably the easiest money my husband and I ever made."

Now you are an investment guru? It is one thing to discuss and debate new ideas, but now your starting threads titled "Advice to San Diego: Sell now and rent"

Seriously, take some of that easy money you made and spend some time with the family. Only time will tell if you have made the right decision.

What IS your motive?

Submitted by zk on June 8, 2006 - 10:58pm.

"The thought of moving is not worth several hundred thousand dollars to some people. I'm just mesmerized by this, I can't figure out why not."

It seems to me that you've confused your forecast with the actual future. If the future were certain (and it involved prices dropping 50%), and moving meant several hundred thousand dollars free and clear, I think almost all people (who are not wealthy) would move if they had the option.

The people who don't want to sell and rent feel that way because they know that the future of nominal home prices in San Diego can't be predicted with the certainty that you apparently believe it can. They are (rightly) concerned about the possibility that prices may stay level (or go up, or go down but not enough), in which case you can forget about intangibles and emotions. They've lost their low-interest-rate loan, their lower property tax basis, real estate commissions, moving costs, and the time and effort spent moving.

Submitted by powayseller on June 9, 2006 - 5:27am.

My motive is helping people.

Every person who sells now trades in potential bankruptcy for financial security.

This is the greatest gift I can give.

Submitted by powayseller on June 9, 2006 - 5:30am.

zk - owning real estate in San Diego is very risky. Did you read Rich's June 7 Voice article? Wow, talk about a parabolic price spike in SD housing! What percentage correction do you expect?

Do you think that the 2000-2006 real estate bubble is the only asset bubble in the history of the world which does not correct?

Read about asset bubbles. The same fear and greed permeate them all: fear of missing out, greed to get in. They all pop. Every one.

Perhaps some people cannot afford to rent at current rents, because their income doesn't allow it. Their mortgage is less than rents. Or their home is paid off. Those people ought to stay in their homes. Everyone else: Sell Now.

Submitted by zk on June 9, 2006 - 6:50am.

I've read all of Rich's articles, and hundreds more on the San Diego real estate market. I've also read quite a bit about asset bubbles. I understand they all pop (by definition).

Do I think that the 2000-2006 real estate bubble is the only asset bubble in the history of the world which does not correct? Of course I don't. But this bubble could correct without nominal prices dropping. And, for someone selling, renting, and buying again, nominal prices are what count.

The spike Rich illustrates in his June 7 voice article is a spike in the ratio of home prices to per-capita income. For this ratio to return to normal, there has to be a drop in nominal prices, or an increase in wages, or some combination thereof. The question is: how much of each will occur? If most or all of the correction comes in the form of increased wages, then someone who sold, rented, and bought again will not have made several hundred thousand dollars for his trouble. And, as I said, they've paid maybe 30k or 50k in real estate commissions, increased their property tax by several thousand dollars a year, paid to move at least twice, and will probably have to borrow at higher interest rates the next time.

Do I think most or all of the correction will come in the form of higher wages? I think that there's a good chance that it won't. But I don't think it's anywhere near the sure thing that you make it out to be.

Submitted by PD on June 9, 2006 - 7:14am.

History has a nasty habit of repeating itself. The chances that the market will correct outwiegh the chances that it will not.

The consequences that zk outlined in the event the market does not depreciate are certainly true. However zk's points also ignore the benefits of having sold.

I now have a significant amount of cash that is earning me money. Instead of this money sitting in my house, it is working for me, increasing my net worth.

We are saving hundreds a month in gas as my husband's commute has been cut by 95% (This may not benefit some as they may want to stay in their neighborhood).

Most people who choose to rent can rent a house that is equal to or better than the one they sold for LESS money. This is more money in your pocket.

Renters do not have to pay for upkeep. This can translate into thousands.

So, if prices stay flat, it may not benefit me significantly to have sold (adding in added expenses like seller's fees etc, and subtracting money gained like earnings etc).

But if prices go down.... HOMERUN!!!

If a person isn't living in their dream home, they have the chance to get it when this all over... if they sell now.

Powayseller is showing her compassion for those poor souls who may be about to find their finances slaughtered.

Submitted by lendingbubbleco... on June 9, 2006 - 7:40am.

Let's say one sold their house (cost basis 150K) for 500K and pocketed 300K but then later "had" to buy that same house back for a MILLION dollars. The taxes question seems pretty insignificant when you consider that 300K would cover the roughly $8500 a year differential in taxes for a VERY long time (35 years or so, not including growth on that money).

I'd be interested in learning of an asset bubble in the U.S. that corrected without nominal prices dropping. Perhaps there have been many? I don't know. Can anyone enlighten us?

Finally, Powayseller...kudos to you. I sold my second house in 2003 (early, some would say, but due to a job change and move, it was the only real option) and the 1800% return I experienced on my down payment (in just 2 years)proved very helpful in getting me to where I am today. Good things can and do come from ignoring the MSM and those with a vested interest in seeing you make financial mistakes, er buying your "starter home" for 800K.

Powayseller simply has the anti-cry of the real estate machine's "buy now or be priced out forever" hoax. I would hope that those questioning powayseller's motives would look equally hard at the real estate brokers and loan officers who made the opposite plea.

P.S. If by "forever" the real estate machine meant "until 2007" please accept my apologies. I completely mis-understood what you were trying to say ;)

Submitted by powayseller on June 9, 2006 - 8:11am.

zk, I love a good debate, and I thank you for raising these counterpoints.

With some of your logic I cannot argue. You're right that I cannot predict the future. I have a 95% confidence that prices will drop, and 80% that they will drop by at least 35%. Time will tell if I was right.

The question of whether wages will rise is also valid. In the 1970's, inflation caused everything to rise: wages, interest rates, housing. Could this happen again? I think not. Now we are a global economy. Goods made by worders earning US$4/day in the export-oriented Asian economies are what sustains the US consumer. If our wages went up, we would lose even more manufacturing jobs. The global economy cannot support higher wages in the US. The only room for wage increase would be in the Asian countries, to bring the $4/day to $6/day. If Nokia started paying their engineers $100K instead of $80K (or whatever they make), then Nokia would instead go to China to hire cheaper labor. So higher wages are unlikely.

If housing prices stay flat, wages would have to double to bring the ratio in half. Do you think it is even remotely possible for everyone's wages to double in the next 6 years? I don't know about you, but statistics show that wages have been growing at a nominal 3-4% rate. What would make them grow at an annual rate of 10-15%?

If wages doubled, then the prices of goods and services would double also, so you still have the basic problem of ARMs resetting.

I think doubling wages cannot save this bubble.

The only hope for prolonging it is another liquidity bubble, something that forestalls the ARM resets. The exotic loan resets are the most ominous feature, and what gives me the confidence this will all fall apart.

In the end, all bubbles correct, in nominal prices. Have you ever heard of any bubble which corrected itself by prices staying flat? I'm thinking of past housing bubbles, stock market bubbles,the tulip craze, railroad stocks...they each burst with nominal prices dropping like mad.

I am fascinated by the arguments that people make to try to see if this time really is different. It isn't. All excesses correct on the nominal side. It's a law of nature.

Just look at a pendulum. As it swings so close to the right, you can almost convince yourself that if the wind blows hard enough, the pendulum will remain suspended in that position, on the right side. Perhaps a gust comes along and does just that. But no gust last forever. The pendulum follows the laws of nature and reverses course. Regardless of all the observers who questioned the move...

Submitted by zk on June 9, 2006 - 8:11am.

Those are good points, PD. However, the point of my post wasn't to debate the finer points of selling vs. not selling. (In fact, that is a lengthy discussion which has only been debated on this forum in bits and pieces.) The point was that making hundreds of thousands by selling and renting is not by any means the sure thing it seemed to have been made out to be.

Submitted by powayseller on June 9, 2006 - 8:17am.

I am more convinved that selling and renting is a sure thing, than I was in 1999 of the tech stocks collapsing.

The tech stock bubble was my first experience of an asset bubble. I did not participate in it, until the end, when Lucent was $5/share. I couldn't believe that rational people lost all rationale.

The psychology and thinking of anyone doubting that nominal home prices will collapse is the same as those doubting the tech stocks could go down.

The future cannot be proven. I can't prove that housing prices will go down. I can only make parallels from the past, tell you why this time is worse, and hope you listen.

As you can see,even someone as well-read on this housing bubble as zk, is not convinced enough to sell his own house. If only high schools would teach economics classes, with a 2 week section on asset bubbles, then this wouldn't seem like such a remote possibility. zk has been so programmed by the RE industry, that housing prices cannot fall, that even all my logic, data, and charts, cannot change his thinking.

Submitted by PD on June 9, 2006 - 8:38am.

Zk, nothing is a sure thing. My husband and I sold our house because we felt that there was at least a 90% chance that housing prices were going to decline. 90% is a big number. It is very rare to see an investment opportunity with those kind of numbers. There is certainly a chance we could be wrong but we will still feel like winners.

I've been telling everyone I know that now is a bad time to be in RE. A few have gotten mad at me because they have significant exposure in RE. I'd rather have them mad at me now for making them fearful AND mad at me later for being right then mad at me later for not telling them the truth when they still had a chance to do something about it. If they make an informed decision to ride it out, then at least they know the risks.

There might still be some upward movement in RE --- if interest rates went to 2.5%.

Submitted by deadzone on June 9, 2006 - 8:42am.

For most working class San Diegans, selling their house now is the best investment choice they will ever make in their lives. We will probably not see another financial bubble of this magnitude in our lifetimes, this is a rare and unusual situation but it is also an ubelievable opportunity for those with real estate. Selling your house is the only way to take advantage of it.

Most people are clueless and have no idea how bad real estate is going to crash in San Diego. However, if you actually thought prices were going to drop 30% or more, would you still hold onto your house? Of course not. People continue to try to rationalize not selling but there is no rational reason to not sell unless you are filthy rich. Amazingly, there are still people buying! What idiots!

Submitted by lendingbubbleco... on June 9, 2006 - 9:18am.


I agree with everything you said. I also think, however, that we are likely to continue to see repeated financial bubbles of this magnitude every few years from now on. After all, wasn't it just five years ago that NASDAQ peaked and then burst?! Here we are five years later and FL, MA, and AZ housing markets are certain to burst! SD, SF, OC, Excremento, LA are soon to follow...

I have faith in the INABILITY of the masses to AVOID getting sucked up in the backwash of bubbles, getting pitched, then thrown "over the falls" headfirst into the sand EVERY few years. Many break their "neck" yet continue to paddle back out into the shorebreak "tsunami" time and again.

Submitted by Carlsbadliving on June 9, 2006 - 9:51am.

I agree completely with PS. So many people right now have a chance to cash in on something that may never come along again in their lifetime. Several hundred thousand free and clear.

Unfortunately, it just comes down to how many people actually understand and believe that there will be a major correction. Everyone debating on this board has a good grasp of the bubble and the impending implications. However, the vast majority of the population go about their day with no clue of the waterfall lurking ahead. It goes back to the media, and the fact that the worst thing that's been reported so far is that prices may stay flat for awhile. But if the media reported the truth and everyone knew that prices were in for a major correction then everyone would try to sell and nobody would be dumb enough to buy right now. So there reaches a certain point that if enough people know the truth, then the opportunity to cash out becomes less. So PS should actually thank the media and the general public for being oblivoius to the whole thing. Without them, you wouldn't have made all that money.

It's the smart people that understand this bubble that will make the money. I wish I'd had the fortune to buy 5-8 years ago. I'd be selling right now in a heartbeat.

Submitted by zk on June 9, 2006 - 10:07am.

Nothing is a sure thing. Exactly. That's my point.

Submitted by PD on June 9, 2006 - 10:20am.

zk, nothing is a sure thing but there is such a thing as The Best Bet.

lendingbubbleco, your comments about bubbles are right on. I think that it is interesting how these bubbles, one right after another were dependant on a new phenomena - it suddenly became easier to get into the party.

The tech bubble rose right after it suddenly became easier to invest in the stock market. It used to be that you had to have a stock broker and were forced to pay big commissions (there were a couple of discounters but it was hard to get info, the internet made that easier). Suddenly there were all sorts of online firms that made it possible for garbageman Joe to get into the party with his 2k, swelling the numbers.

The housing bubble has been created by easy, cheap money. Fill out a form online, produce minimal paperwork, make a few calls and you're a homeowner or a multiple homeowner.

Submitted by zk on June 9, 2006 - 10:21am.

Well, PS, I'm not sure if calling someone "programmed" passes the "gentleman test" (or in this case the "lady test") but I'll respond anyway.

You are correct that your logic cannot change my mind. I don't always agree with your logic. But I have found plenty of information and solid (in my opinion) analysis that does lead me to believe that a good chance exists that nominal prices will fall. And, as I mentioned in an earlier response to one of your posts, I have sold my house and I am renting. I am simply not as certain as you are that it was a good move.

I, like you, want to help other people. And that is why I point out on this forum that, in my opinion, your certainty is excessive, and that anyone reading this forum and basing his real estate decisions (at least in part) on what he reads here should hear a different viewpoint.

Submitted by powayseller on June 9, 2006 - 10:27am.

zk, do you own any real estate? If so, what are your reasons for holding on?

deadzone and carlsbadliving, I completely agree. This was the easiest money I've ever made. I felt guilty for selling my house to the young couple who bought it. My husband and I doubled the money we'd scrimped and saved at $500/month for 20 years, in one fell swoop. We earned a half lifetime of scrimping and saving in that one deal.

And for those who are saving $2k/month, you don't have kids yet. Just their activities are $900 - $1200/month. I am thrilled to blow my money on those little darlings though. You should have heard my son play his sax at that SD Youth Wind Ensemble downtown last week, and my daugther sing and dance. My 9 year old plays Chopin. Add tutoring, rec sports, instrument rental, music lessons, preschool...And clothes, additional airline tickets, more driving, toys/books/games... All worth it, I say.

So if you don't have any kids yet, keep saving, because it gets harder once you've got kids and activities and a wife who stays home. All you men out there, please see the value in a woman who keeps a house humming and sees after you and the children. Don't ask your wife to work outside the home. A woman with children should spend most of her time looking after her family, or else, why bother having kids? She should clean her own house, not hire a maid to do so. Housekeeping and child rearing are jobs that shouldn't be outsourced. Off-topic, but I couldn't resist making a pitch for babies who can fall asleep nursing in their mommy's arms.

Submitted by zk on June 9, 2006 - 10:34am.

I assume our posts "crossed in the mail." As you can see, I've sold and I'm renting. I own no real estate.

Despite our slight differences in opinion on RE, I think we agree on a lot of other things. My wife stays home with our daughter; she has since before birth. And I, too, am happy to spend thousands of dollars on ice skating, ballet, gymnastics, soccer, swimming, piano lessons and art class. As I occasionally say to my wife, those things (and saving for college) are the very reasons I work so hard.

Submitted by PD on June 9, 2006 - 10:36am.

Is anybody else getting fed up with hearing, "Year over year prices are up!" I can't wait for November when they won't be able to say this garbage anymore.

Submitted by powayseller on June 9, 2006 - 10:46am.

zk, I didn't mean to insult you at all. I just meant to point out that the "RE only goes up" mantra is so ingrained in all of us, that even a well-read person like you is doubting that it CAN go down. Your decision to sell and rent was brilliant. Why are you having second thoughts?

I pat myself on the back everyday for selling. Each article about the falling market is confirmation that I did the right thing. So far, nothing has happened to question my move. All signs point to "good decision". The more I learn about the global liquidity bubble and dollar problems, the more I believe I did the right move.

Submitted by zk on June 9, 2006 - 11:28am.

I don't doubt that in CAN go down. And my doubts that it will go down are limited. But they are there.

I agree that most signs so far point to "good decision." But I figure that just to break even (after real estate commissions, increased property tax, and moving costs but not increased interest rates) nominal prices have to drop about 12%. After that, how much further they have to go for it to be worth the hassle is a nebulous matter. In any case, I have some doubts, albeit mostly limited ones. But those limited ones, I must admit, do weigh a bit on me.

Something to think about for those thinking of selling and renting. How sure are you, and how much concern will you have during the long period of time that it will take for this supertanker to start heading in the other direction and then actually make significant progress in that direction.

Submitted by anxvariety on June 9, 2006 - 1:13pm.

I would hope that someone that insists on buying at bare minimum does a lease option.. this way they can feel like they own the house, and at least have the choice of getting away from their strike price when the lease term ends... this scenario will at lease significantly reduce their losses and might even teach them a lesson.

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