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Old 11-18-2007, 12:25 PM   #21
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Originally Posted by cute fuzzy bunny View Post
Still depends on what you mean by 'recover'. I'm suggesting it'll be easier to sell with less out of pocket cost in a 12-18 months. I doubt prices will be higher then. Just that the cost of sales will be lower. And a lot less inconvenience due to lookyloo buyers that arent going to buy.
When I say "recover" I simply mean that we hit bottom and start seeing both demand and prices increase again. For example, in the 1990 bust, prices and demand started to recover around 1996.

But it wasn't until 2000 (10 years after the bust) that we saw nominal prices reclaim their peak.

And it wasn't until 2002 (12 years after the bust) that we saw inflation-adjusted prices reclaim their peak.

And the current bubble/bust appears to be much bigger.

That's all I'm sayin'.

I assume the seller is thinking about recovery in terms of price recovery, which I don't think will happen in one year.
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Old 11-18-2007, 12:43 PM   #22
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Join Date: Nov 2007
Location: Orange County, California
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I should clarify my budget numbers. I have $10,000 plugged in for vacation, travel, family ski trips and general fun. Our basic needs budget without a mortgage is $65,000 a year which puts our withdrawal rate at 3.82% and a 92% firecalc sucess rate. If I FIRED now I think we could cover basic expenses and the part time work goes to the vacation fund.

I am also being conservative with our home equity amount and am assuming that prices could drop another 5 - 6% in addition to the 6% drop already accounted for from the market high earliar this year.

There are some great posts regarding the So Cal Real Estate market. Been tracking the market prices for our zip code in the weekly paper and our prices have been holding steady at +- 2% of the sales cost of last year. Sales have been down 20 - 40% over last year but 20- 25 homes a month are selling. We live in a desirable neighborhood and our house is in very good condition. Neighboor down the street put his house on the market last week it looks like his pricing is reasonable to the market, it will be interesting to see how he does. Our good friend is a local RE agent and says the buyers are out there just being cautious and picky.
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Old 11-18-2007, 02:21 PM   #23
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It seems to me that the critical vulnerability in your plan is selling the house. If you quit work before you sell the house, you could be trapped with no income while you become increasingly desperate if the house fails to sell. Since you don't NEED to move or quit by any particular date, if you decide to continue working UNTIL the house sells, then you can tough out the market whether it's a year or two or longer; or even if it only a matter of months. With cash in hand from this sale, picking up a suitable house in your new place should be easy -- their market may not be as bad as your current one, but it should still be a buyers market there. By making your move based on when the house sells (including making your decision to quit your job) you eliminate a major risk from your plan. You should be able to quit and move (and even find a new house) pretty much anytime. Selling your current house seems to be the limiting event. I'd suggest make everything contingent on that.
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We "downshifted"
Old 11-18-2007, 07:53 PM   #24
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We "downshifted"

I think you're ready to downshift! We sold our construction business 1.5 years ago and have about 1.4 million is assets, in addition to $600K equity in our house (no mortgage). Our kids are 11 and 12. The biz was taking up way too much of our time and energy. We have no regrets about downshifting. We've accumulated enough of a nest egg for now. We are both 51. I work part time (accounting), with access to health benefits, and he is working very part time running bids for the new owners of the company we sold. We did not move to a lower cost area, although we considered it. We're in northern California and the roots we've established here in the past 22 years are ones we don't want to give up, although we were tempted by Oregon! We own one rental house, also mortgage free. My priority at this point is to not miss out on our kids' lives. I figure when they go off to college we can work more hours if need be. But for now, the priority is to have time as a family before the kids are grown up and gone. If that means we go out to dinner less often, or the kids don't get the latest and greatest toy, or we don't buy a flat screen TV when the neighbors do, so be it. You'll find that when less money flows in, it's easier to say no to stuff you don't need anyway. (We're keeping our expenses at about $60,000 per year which includes $6000 for vacations.) Best wishes.
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Old 11-18-2007, 08:02 PM   #25
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Originally Posted by SimpleMom View Post
I think you're ready to downshift! We sold our construction business 1.5 years ago and have about 1.4 million is assets, in addition to $600K equity in our house (no mortgage). Our kids are 11 and 12. The biz was taking up way too much of our time and energy. We have no regrets about downshifting. We've accumulated enough of a nest egg for now. We are both 51. I work part time (accounting), with access to health benefits, and he is working very part time running bids for the new owners of the company we sold. We did not move to a lower cost area, although we considered it. We're in northern California and the roots we've established here in the past 22 years are ones we don't want to give up, although we were tempted by Oregon! We own one rental house, also mortgage free. My priority at this point is to not miss out on our kids' lives. I figure when they go off to college we can work more hours if need be. But for now, the priority is to have time as a family before the kids are grown up and gone. If that means we go out to dinner less often, or the kids don't get the latest and greatest toy, or we don't buy a flat screen TV when the neighbors do, so be it. You'll find that when less money flows in, it's easier to say no to stuff you don't need anyway. (We're keeping our expenses at about $60,000 per year which includes $6000 for vacations.) Best wishes.
Very nicely stated....and with encouragement too!

Welcome to posting on the board!
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Old 11-18-2007, 11:51 PM   #26
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To the OP - I guess the good news is that you have lots of options - and based on your clarification of your expenses, it looks like all options will work out just fine, esp. if you have a little flexibility in adjusting your spending during any 'lean' years.

As for the timing of selling your house - if I was in your same situation, I would try to sell as soon as possible. I think most people would agree that current prices are too high in most markets (esp SoCal). But prices fall slowly due to seller resistance. So prices are likely to slowly keep sinking until prices level off (relative to inflation). The question is, what adjustment does it take to 'level off', and how long does it take to work through the inertia?

I tend to agree with the following article - which points to about a 20-25% adjustment over 5 years. But regardless of how long it takes, the article implies that you can take advantage of the still-inflated prices due to seller resistance if you sell now vs. waiting until prices equalize.

http://finance.yahoo.com/real-estate...Sell,-or-Hold?

As I said earlier - I think you're set either way - but if I were you, I would consider my options to be either a) keep working, or b) sell the house as quickly as possible, move immediately after the sale and rent for 6 months, then buy once you have a better read on your new neighborhood.

BTW, I'm also thinking of relocating to OR, although I'm thinking central OR rather than coastal (I want drier weather). Have you considered central OR (like Bend)? If so, why'd you decide to go more coastal?
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Old 11-19-2007, 09:37 PM   #27
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Thanks for all the encouragement and great advise ! I would agree that the selling of the house is the one difficult component in the plan.

Some time ago I set a FIRE date of my 50th birthday. Don't no why it just seemed like the right time. That is 16 months from now March 2009. My crystal ball says that housing will bottom out in 2008 and starting to get better in 2009. They are not making anymore land in Orange County, the job market is strong, the big housing developers have put new developments on hold so hopefully the inventory will reduce.

SimpleMom hit it right on I am ready to downshift and find some meaningful part time work that will allow more family/ kid time. Nice to see someone is making it work with a similiar situation. We lived in No Cal for 10 years, loved it.

Between now and my 50th birthday I will start moving in that direction knowing that if work really gets too bad I can walk and with some belt tightening will be OK.

In the meantime the wife and I are planning a getaway over the holidays to check out Central Oregon.

In regards to relocating to Oregon we were originally looking at Ashand/ Medford. We spent a week there last summer. Very beautiful area but we thought it was a bit remote. I have a good friend who lives in Bend and have visited, again very beautiful but the housing/ cost of living was skyrocketing faster than California. We liked the looks of Salem or Eugene. Small cities with colleges, close to Portland, lower housing/ cost of living, green, wine country, hour to the coast hour to the mountains the big question is can we handle the rain ?
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Old 11-19-2007, 09:56 PM   #28
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Fire48, I used to live in OC (I left before people started calling it "The OC" ).

You're right about the builders. There's significantly less new inventory overhang than there was during the last bust. But, as you know, OC is the epicenter of the mortgage industry. Something like 50% of the OC job growth in the last few years came from housing. Job growth will not save OC.

Now, take a look at the following graph, and ask yourself if you really want to bet on an OC housing recovery in one year.



Even if you're right, it wouldn't hurt to start trying to sell your place now, would it?
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