Taking the plunge – why I’m selling now

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Normally I’m providing my opinion on this blog. Tonight this is just a life-update. It could be applicable to you; it very well could not. Not all areas of the country are like Ladera Ranch, CA. Not all situations are like mine. However, if the following sounds remotely familiar please talk with your loved ones ASAP.

I live in Ladera Ranch, California. Over the past several months we’ve watched home prices slowly drop and inventories slowly creep up in our neighborhood. You can look at the graphs or you can look at all the signs marked reduced around the neighborhood – either way it validates the thinking.

Note: Charts courtesy of Altos Research, check out their awesome charts and full service market intelligence packages on their web site.

We bought this home, our second, after making a ridiculous killing on our condo after 10 months of ownership. We bought a new construction condo in Ladera and sold it for $90,000 more than we bought it for after 10 months. That was 2 years ago and the condos are still listed for that amount – we got out at the top.

This home cost $610,000 which was a good deal at the peak of the market two years ago for a 1,700 sq. ft. 3-bed 2.5 bath detached SFR is beautiful South Orange County. We hoped that two things would happen: (1) our income would increase significantly and (2) our home would appreciate significantly.

Both of those things didn’t materialize. My income increased, but my wife decided to stop working to raise our son. Perfect for me, I think its a great idea, just outside of our original plan when we bought the home. Our home has definitely not appreciated. A home right across the pocket park from us was just listed for $635,000 and it is replete with travertine floors, granite, cherry wood and hard-scaping. All upgrades over our abode.

In order to sell our home I would guess we’re looking at $610,000 BEST CASE SCENARIO. We’re in an ARM that starts to adjust on us in August and we’re done playing the game. We feel like people who hit it big on roulette and have just been playing with house money. Even if we lose some on this property (which after fees, Realtors, etc. we most likely will) we’ll come out ahead overall and that is what is important to us.

We’re not going to let a small loss put the entire gain in jeopardy just to be stubborn about it. Then, we’re going to rent. We’re going to put the money somewhere safe and manageable and sit out on the sidelines until the market bottoms. We’ll know the bottom because as "patient renter" once said housing bottoms are "long and flat." When we get to that point we’ll buy again – if it makes sense.

I’m excited about cashing out. I think I’m making the right move for myself and my family. I’ll keep you posted on how it goes.

THE POINT?
If you own a home right now what is your game plan? Whether you stay or go if you don’t have a plan you can articulate to someone you are unprepared. Sit down with your loved one, decide what you are going to do. Figure it out. You owe it to yourself to be prepared. The smart people will survive and get through this; the foolish, unprepared and those unwilling to admit what is happening will be the ones who end up as the sob-story poster-children. It doesn’t have to be you.

Better yet, you could be in Seattle (the link is old, but Seattle is still going and going…) and riding pretty.

P.S. The photo is actually from another OC neighborhood courtesy of the Irvine Housing Blog but it is a damn-good visual.