When does selling become worth it to you?
Rental Property Investor · Austin, TX · Member since 2017 · 38 posts · 4 votes
When does selling become worth it to you?
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Real Estate Investor and Instructor · Gilbert, AZ · Member since 2010 · 303 posts · 332 votes
4yWhat information/data are you reading that suggests "we may be due for a correction here in the near future"? Where would you reallocate those dollars? The stock market? Crypto?
There are some excellent sources/housing experts to follow that paint a much different picture for the future of real estate. For example, check out Logan Mohtashami with HousingWire.com.
The key ingredient required for any type of correction is a massive increase in supply, and that is not happening. Check out this quote from his latest post:
"Rates have risen at the fastest pace ever, which makes houses more expensive, so in theory, some homebuyers can’t move. Home sellers with high equity aren’t as sensitive to higher rates because they bring a more significant down payment. Inventory skyrocketing back toward historical norms of 2 million to 2.5 million, which I would find to be the best thing ever for housing, is not happening this year."
32 Replies
- Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes4y
When I can use the proceeds to scale up bigger :)
- Investor · Greenville, SC · Member since 2012 · 269 posts · 187 votes4y
Clearly I'm in the minority, I sold everything. The timing felt right and the appreciation outpaced the cash flow for me. Now that the market is a tad less crazy, I've been working on rebuilding my portfolio with a lot more buying power.
- Rental Property Investor · Austin, TX · Member since 2017 · 38 posts · 4 votes4y
@Allan Smith ROE is a great metric here. You're right.
@Carlos M. Totally understand your point. I do plan on this property being the first of many, but in my case current cash flow and my W2 savings would realistically take 5-10 years to save a down payment where I'd like to live. Seems to me like an ideal time for me to sell and reallocate not just with regards to the market, but my personal goals as well.
- Rental Property Investor · Austin, TX · Member since 2017 · 38 posts · 4 votes4y
@James Hamling This was just meant to be a hypothetical. I should have left the part about the market tanking out of it.
Seems like you have some deep seeded hatred for news outlets that preach doom and gloom. Totally get that. I was referring more to the fact that home prices with respect to average income are substantially higher than they were in 2007, mostly in secondary markets people moved to during Covid (and might not stay forever). Add huge rate hikes on top of all-time high prices, and it seems shortsighted to me to just say "well there's not enough supply and people have equity in their homes so Americans should be able to afford ever increasing prices to infinity." What about the huge influx of first-time millennial home buyers that can't afford current prices? What about those whose buying power has been inflated by this unprecedented stock market run that's now coming back down to earth? They'll all just be renters (maybe, I hope not).
Anyways, just my opinion, but I'm not simply reading a headline that says the sky is falling and treating it as gospel.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes4y
Quote from @Hunter Peterson:
@James Hamling This was just meant to be a hypothetical. I should have left the part about the market tanking out of it.
Seems like you have some deep seeded hatred for news outlets that preach doom and gloom. Totally get that. I was referring more to the fact that home prices with respect to average income are substantially higher than they were in 2007, mostly in secondary markets people moved to during Covid (and might not stay forever). Add huge rate hikes on top of all-time high prices, and it seems shortsighted to me to just say "well there's not enough supply and people have equity in their homes so Americans should be able to afford ever increasing prices to infinity." What about the huge influx of first-time millennial home buyers that can't afford current prices? What about those whose buying power has been inflated by this unprecedented stock market run that's now coming back down to earth? They'll all just be renters (maybe, I hope not).
Anyways, just my opinion, but I'm not simply reading a headline that says the sky is falling and treating it as gospel.
I have a deep, to the core, loathing or those who use "news for profit", which is never news, and has the most miniscule of fine prints to clear liability, while presenting themselves in such was as to deceive persons just to drive views for advertising or schlep some BS like iodine because were all about to be nuked or what ever s#it. And psychology is fear has a 3X action and engagement focus factor from pleasure, so they just sell fear. Such a passionate hatred for such...... And I say such as a person who has had vision from the inside, it's intentional, and with 0 consideration of what it does to people.
As for the item of prices vs incomes, I am 100% with you there. But it's not just housing, that's the really scarry thing, it's everything. Things are simply NOT operating as they should in our economy, I mean from an economics and math perspective, things don't add up, and it's this whole array of things that are not operating as they should be. 45% is the "safe" maximum threshold for housing cost against household incomes, we recently exceeded 56% on median. BUT, we have housing shortage pressing things up, while vs median incomes presses down. It's not good, no argument there. All indicators are for the worst of possible economic cycles, Stagflation.
Stock-market, that's a non-issue. It's well known by market investors, myself included, that there is manipulating factors at play that are being left to very literally "own" the market and they have such trading frequency that they make they make the market. Numerous companies share values are at insanely low pricing vs all business fundamentals, and there is this riding of the bench at this moment to see how low they press it before jumping back in to grab what deals one can. NOT like real estate, bot's can't come in and buy and sell a property 37 times in 4 minutes.
I take special disdain for those who speak that "it's time" for a recession or R.E. market drop. There is no such thing as a schedule for such. People talk about R.E. market collapse and '08' as if it is something that happens every 10/20 years. '08' was the 2nd time in the history of the nation that such a drop happened, 2 times in 100-odd years is not a "cycle".
We live in a time of total chaos, absolute total chaos. In such there is only a handful of certainties and those are people WILL need food, water & shelter. It's really that simple. So with so much uncertainty where does one put there $, well can't own water, good luck getting food as 2 companies own 98% of the entire chain, so I go with shelter. Especially with demand being more then supply.
And when people can't afford there desired shelter know what they do, they adjust HOW they get shelter, because not having shelter is not an option. That means more renting, that means smaller spaces, more multi-generational living, and a market effect of "market compression" which itself drives up prices and rents on lower entry homes even more while pricing drops on the higher.
NO signs, and I do mean 0, are indicating collapse. I get it that 90% of Y.T. says collapse, just like tabloids had about 83K reports of Elvis lives and married sasquatch on a UFO trip too Jupiter, and each shares the same basis for facts and reality.
- Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes4yWhat happens if the correction you're assuming is going to happen doesn't happen and you can't get something better that gives better returns than what your current property is making?
The main driver to help answer your question should be- what's that current property making you? That should drive everything decision-wise.
Except for your quick mention in there of possibly selling to find something better suited to you, well then that's a different scenario that should be looked at different. Your motivation for selling your current property should be known- is it for numbers/returns or lifestyle?- and your decision based off of that. - 4yBasit SiddiqiBusiness MemberAccountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
Selling becomes worthwhile when you believe that you can make a higher return elsewhere even after factoring in all the costs it takes to sell the property + Taxes.
I.E. If you sell the property and lose 10% to selling costs and another 10% to taxes , Can you get a better return elsewhere and make up the 20% you lost over a couple of years, if yes, then it is time to sell.
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