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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Don Green who wrote (36026)	7/22/2005 2:58:01 PM
From: CalculatedRisk	Read Replies (3) \| Respond to of 306849

My neighbor just sold his house last month and is now renting. He thinks he timed the top. I'm not complaining, here is my new neighbor: sashacohen.com

To: Don Green who wrote (36026)	7/22/2005 5:20:00 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

I have a sister who sold out five years ago to rent. The house she sold is now priced a little over twice what she sold it for. She rented a smaller place for three years, the rent was slightly more than her previous mortgage, but the overall expenses were, of course, a little lower in the rental because she never spent anything to fix it up. She didn't make much interest income with the sale proceeds plus she spent some principle on rent (the important part about 'rent and invest the difference' is to actually get into something that has a better return than RE) so last year she decided to buy a more expensive crappier house in a lousy neighborhood with what money was left. Her landlady wanted her out because she was turning the rental over to her daughter to live in, they had to move, the kids had to change schools. My sister's thinking was that the new neighborhood looked like it might be coming up (and RE now looked more attractive at higher prices). The neighborhood has been signifcantly improved over the last year by people moving in and fixing up older houses (or investors, who knows). She hates the house but it has gone up in price about 20% since she bought back in. All and all she is far worse off because she lost principle, lengthened her loan, increased her overall borrowing and worst of all, she now lives somewhere she doesn't even like. The last time I visited she spoke bitterly about, "If I'd only held onto that house...." When she tried to blame it on her husband I looked at her funny because I know, and she knows I know, that it was all her idea to try to get out at the "top" of the RE market. She thought she was being smart and rational.

To: Don Green who wrote (36026)	7/22/2005 10:41:11 PM
From: John Vosilla	Read Replies (2) \| Respond to of 306849

Don I think if someone plans to stay in the area for the next cycle (say at least 10 years) and has no reason to downsize he should continue owning and be locked in to a 15 year fixed rate. However now is a great time to either downsize to something smaller or cash in your chips completely and move to a low cost area and repeat the process.