San Diego real estate advice needed
Question: My wife and I have owned a 2br 2ba condo in San Diego for about 3 years- our first place. From checking the comps in the area, we guess we have around 200k in equity in this place.
We also just had our first child (cute little bugger) and the condo is seeming a bit small. From our current finances we could afford (30yr fixed) payments on a place up to about 600k without suffering too badly. That will get you a 3br 2.5ba townhome around here with about 1500sqft. If you are lucky.
What really worries me though is of course the bubble. Its either gonna go up more, go down hard, or just flatten out for a while. It seems to me that in a good market, you might leapfrog your way house by house making equity as you go, but eventually the market will cycle back down and you will get screwed unless you just hunker down and wait for the next bubble (every 10-12 years from what I have read).
So the big questions are how can we protect the equity in our condo if we choose not to sell? So that we can buy if the market crashes? And does it make sense to upgrade now and lock in at these interest rates and then just try and weather the storm?
Seems like no matter what, if you are a home owner you can never get ahead! When prices are low, and you should buy, you cant sell. And when prices are high and you have lots of equity, everything else is high as well and you have to extend the hell out of yourself to get into that new place.
What a conundrum.
Would love to hear thoughts or advice!
Answer: Fellow SD condo owner here. My advice is to cash out and rent for awhile. The market appears to be stagnant… in many cases esp. with mid-range housing ($500k-$1M) I notice listings are taking longer to sell and coming down in price. Couple that with fear from rising interest rates, an economy in which only 15% can afford to own a home, and so on – it doesn’t look great. Not necessarily a bubble, but a correction of maybe 10-20% might be in order pretty soon.
I’m actually about to list my 1 bed, can’t think of a better time. I’ve only been in it a year and will take the long term capital gains hit off of ~50% appreciation. Then I’ll move back in with my folks for 8-12 months until my new loft is built across from Petco Park – keep that unit and rent it, then move into a highrise also in downtown when it’s ready in 2007. My attitude is getting into a somewhat depressed yet desirable location undergoing gentrification is a safer bet – than say moving into some UTC or Carmel Valley townhome.
Peronsally if I were in your position in your price range I’d look into one of the neighborhoods surrounding downtown such as University Heights/North Park/Normal Heights. I believe you could get a small house, like 1200 sq. feet or so (about a 3 bed townhouse, right?), in a nice pocket of a so-so neighborhood. Give it five years and watch the land value skyrocket as gentrication ensues. Or if that’s inadequate maybe a place like Chula Vista, which is also on a quick path to redevelopment?
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