SF Real Estate - settle this argument

[Anonymous]

We currently live in a small condo in SF that we bought in 2019 for $1.2m with 40% down, 3.5% interest. Unfortunately, we had to sink an additional $150,000 into major building repairs last year. Values in our area of the city have dropped, but not in crazy terms. We would probably sell for $1.175m.

DH recently changed jobs. We no longer have to stay in SF, though we are able to do so. In the longer term, we want a SFH in good condition for under $1 million. That budget means moving out of SF, likely out of California.

DH is of the opinion that we should move now, even if it means taking a loss on our SF condo. (We almost certainly would lose money if we sell this spring.) His view is that even though we will sell for less, we'll also buy for less. He also says that houses are only going to be more expensive in five years.

I am leaning toward staying for a few more years to allow the SF market time to recover. Though there's no telling how long we would have to be here to break even, based on previous experience from 2008-09, it took about five years. I hate the thought of living in this tiny place for five more years, but not sure if I hate it more than the thought of losing $200k+. In addition, money we saved for the next down payment had to go into home repairs on the condo, which means we'll probably only have 20-30% down payment for the next house, but not more. And the interest rate will be significantly higher.

WWYD? Sell or stay?

[Anonymous]

I’m with your DH in the sense that, esp. once I’m on the property ladder, I don’t organize my life around what I expect the RE market to do.

If you don’t want to live there and you can afford to move (which is certainly sounds like) then don’t let the sink cost of what you’ve invested hold you back from moving on with your life.

[Anonymous]

If you don't want to live there, you should move. Life is short.

I am not intimately familiar with the SF real estate market but the people I know there want SFHs and vacation places outside the city, not commuter-friendly condos. I think the down payment is your limiting factor but you're talking about leaving CA (for somewhere cheaper?) so it seems like you'll have options.

[Anonymous]

You may do better financially with regards to housing if you wait, but at what cost? That’s 5 years of paying for more expensive everything else (gas, groceries, insurance) and living in a space you e outgrown.

[Anonymous]

You only live once and you should follow the path that brings happiness. I’d sell and move.

[Anonymous]

It depends on where you are going to move to...you say out of state. If it's some fly over state, I would say it doesn't matter when you move there. Those places have dropped in value and they won't appreciate as quickly. If you are going to move to somewhere like DC, moving now won't matter since prices here haven't dropped signficantly.

I agree with the other poster who said that life is short. Don't try to time the market. You don't know that interest rates or house prices are going to be higher (or lower) in the future. Do what will make you happy.

[Anonymous]

Sell. In CA, it doesn’t matter if you sell high because you’ll also be buying high. DH is right. And you might as well live somewhere you’re happy

[Anonymous]

Sell. You have options at that price point, even in the (greater) area.

[Anonymous]

Sell. The market in SF is likely to get much worse.

It’s anecdotal, but my employer tried to plan a retreat for SF and staff were vocal that they are too scared to go there. These are educated well off people with this opinion of SF.

[Anonymous]

Anonymous wrote:Sell. The market in SF is likely to get much worse.

It’s anecdotal, but my employer tried to plan a retreat for SF and staff were vocal that they are too scared to go there. These are educated well off people with this opinion of SF.

So you’re saying educated people can be ignorant as well

[Anonymous]

SF RE will plunge when tech commercial leases expire. I'd get out asap.

[Anonymous]

Anonymous wrote:SF RE will plunge when tech commercial leases expire. I'd get out asap.

This. Condos in general are terrible investments, but SF is a special case of crime and homelessness that it may not “recover” in 5 years

The bounce back from 2009 was because of ZIRP, and a tech bubble — both of those we likely more than 5 years away from returning.

Also, condos have all sorts of risks even if you move and rent it out. Landlord rights are terrible. Read about decondonization. All sorts of risks.

[Anonymous]

If you wait one more year, you can shave $500k off of what is taxable. You should also crunch the numbers and make sure you’ve identified another feasible RE market - higher interest rates you’ll pay on the new house and the taxes you’ll pay on the sale.

[Anonymous]

Anonymous wrote:If you wait one more year, you can shave $500k off of what is taxable. You should also crunch the numbers and make sure you’ve identified another feasible RE market - higher interest rates you’ll pay on the new house and the taxes you’ll pay on the sale.

Huh? What taxable money are you talking about? They bought for $1.2M, it's now worth less. Maybe I'm not understanding what you're saying.