Adventures in House Hunting, Buying a House, Selling a Home

Super Bowl is over, time to get selling or buying, or both

So now that the Super Bowl is over, people’s thoughts have returned to the spring realty market. Specifically, is this a good time to sell? Most everyone agrees that it is still a good time to buy. So the only remaining question is, is it a good time to buy and sell?

At brunch the other day a friend said she thought she could sell her place for break even but Cannot bring herself to do it because she paid “all that money for it.” I said “that’s because you’re thinking of it like Microsoft stock — you bought at $50/share and now it’s $25/share and you just know it can go back up to $50 a share”.

She completely agreed with my assessment yet she is also going to continue to be a reluctant landlord. She and her spouse they were discussing keeping the condo into retirement.

If this were last year, I’d say sell as soon as you are at a point where you won’t bring money to the table, even if you don’t get a dime back. However now that the market is starting to improve, it  might be prudent to hold on to your property assuming you have a stable renter that doesn’t have the drama llama as a pet.

It’s really an algebra problem:

Let X be your mortgage, which principal decreases by $4K/year. Let Y be you Property Value which rises by 3% per year. At what point are you:

  1. no longer underwater?
  2. Able to sell and get some cash back after transaction costs (note: not necessarily profit)
  3. Able to sell for more than you bought?

My wife and I think that by the time we even reach #1 with her South Loop condo, we will be so close to paying it off that it would be fine to keep it as an in-town or a dorm room for our future kids could live if we are lucky enough to afford UIC tuition when they are college age.

My SB prediction was sort of correct. I did pick the Ravens and technically we had overtime in The form of a 30+ minute delay though Ray Lewis was mostly ineffective.  So you should completely follow my advice for the rest of your life, which should last about a Weekend before something I recommend kills you.

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