Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Housing Slump vs ER
Old 03-05-2008, 05:57 AM   #1
Thinks s/he gets paid by the post
Texarkandy's Avatar
Join Date: Feb 2008
Posts: 1,281
Housing Slump vs ER

I am planning to ER next year at 49 y/o - part of the plan "was" to sell the house this year or next, use the equity to purchase a smaller house, & dump the mortgage payment. (We have about 200K equity in a 300K- 3400 sq ft - house.)

Well, it seems the housing slump is really messing with that plan.

Things are not so bad here in my area in housing as it is in some others, houses are selling, but prices have depressed quite a bit this past year from what they were. (Texarkana has been second for 2 years in a row on Forbe's list of fastest growing small metro areas)

We still plan to do the ER next year, but things will be a bit "tighter" month-to-month than I had planned if we have to continue paying on the mortgage. (We do have a good 4.5% fixed loan)

So I'm currently contemplating if we should:
Tough it out with the mortgage till the housing market comes back (if ever)
- or
Go ahead & sell this year & take the "hit" on our equity & write it off to "that's life"

Thoughts anyone?
(Note: canelling/delaying ER is not an option due to reasons of my sanity!! )

Retired 2009!
Texarkandy is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-05-2008, 06:10 AM   #2
Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 2,020
Put it on the market. You never know what kind of offer you'll get or if you'll even get an offer. But, if you get a few offers, at least you'll have solid numbers to plan with. At that point, you can always decide to not sell. It's good to be prepared for an abysmal sale, but you should at least have some buyers tell you what they're willing to pay.

Is the motive for selling purely to be able to put the cash down on a new place or is it also about cash flow? What about refinancing the current mortgage if it's significantly lower than when you last financed? If it helps cash flow, it might not feel quite like you're toughing it out

Marquette is offline   Reply With Quote
Old 03-05-2008, 07:00 AM   #3
W2R's Avatar
Join Date: Jan 2007
Location: New Orleans
Posts: 34,802
If it was me (and it will be, in 2009), I would sell the house. The price will be lower, but then the price of your new house will be lower as well. Taxes might be lower, too.

Maybe you can downsize a bit more than you had planned, or maybe you can move to a less expensive area.

I suppose the other alternative is to keep working. Whether or not you would be wise to choose that might depend on your age. I will be 60 in June, so I don't have as many days left on this earth as someone who is 35 or 40. They are too precious to me to waste working, if I can work out a satisfactory lifestyle with what I have.
"You can never cross the ocean until you have the courage to lose sight of the shore." - - - C. Columbus
W2R is online now   Reply With Quote
Old 03-05-2008, 07:25 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,019
how much are you planning to downsize? from house to apt or condo?

an off-the-wall idea but it may work for renting your current house to the "right" kind of tenant a possibility? are you near a university or miltary installation or industry - the idea being visiting professors and 2-3 year PCS families or short term transfer executives are looking to rent but not buy? use word of mouth vs public advertisement to rent it.
being a landlord has its own headaches...but it could pay the mortgage while you re-establish your own residence (lower mortgage) and give you the option to sell later in a better housing market.
sanity is a good thing to keep.
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 03-05-2008, 07:45 AM   #5
Thinks s/he gets paid by the post
Texarkandy's Avatar
Join Date: Feb 2008
Posts: 1,281
The idea is (was?) to use 100% (or near) of the equity we get back out to purchase outright a smaller home with less property tax, insurance, heating/cooling bills - and no mortgage payment.

We don't need the cash to finance ER - it's just that the mortgage & associated xtra expenses kind of mess up our ER month-to-month cash flow.
Retired 2009!
Texarkandy is offline   Reply With Quote
Old 03-05-2008, 07:48 AM   #6
ziggy29's Avatar
Join Date: Oct 2005
Location: Texas
Posts: 15,419
Originally Posted by Texarkandy View Post
The idea is (was?) to use 100% (or near) of the equity we get back out to purchase outright a smaller home with less property tax, insurance, heating/cooling bills - and no mortgage payment.
We did that a couple years ago. I guess some people "trade down" for retirement; we just did it early while still w*rking. Our property taxes are only 1/4 of what they were when we lived in Houston (in a house twice as large). Our summer cooling bills are about 1/2 as much (about $100 a month instead of $200), our insurance about 2/3 less (about $600 a year instead of $1700).

And no mortgage, though all the talk of bailing out irresponsible borrowers on my dime makes me wish we had a huge one sometimes.
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
ziggy29 is offline   Reply With Quote
Old 03-05-2008, 01:33 PM   #7
Thinks s/he gets paid by the post
jIMOh's Avatar
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
I would put house on market and see what the offers are.

You clearly want all 200k equity you created back. You probably want 300k. Will 100k really make that much of a difference in the long range (40 year) retirement plan? I would assume close to retirement you have 1-2 M saved up, so 100k would be 10% of his total.

Maybe when you move you downsize slightly more than planned to make up for the difference (maybe a 2 BR condo instead of a 3 BR ranch, or 1 BR condo instead of a 2BR condo). Maybe move to a cheaper area too.

I think you can recover the 100k easily because whereever you buy is probably lower in price too. But make that decision once you get a reasonable offer (maybe 225k so difference is only 75k from plan). Then maybe house you want is 50k below plan so you only lost 25k from plan.

Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
What do you look for in housing? Walt34 Other topics 38 02-16-2008 09:18 PM
Will the housing slump affect Lake Front Property?? dessert FIRE and Money 20 01-20-2008 07:24 PM
Would you now agree that there is a Real Estate slump??? Texas Proud Other topics 64 01-17-2008 08:17 AM
Mr Housing Bubble brewer12345 Other topics 69 08-31-2007 11:47 AM
Unbelievable - housing farmerEd Other topics 23 12-15-2006 10:35 AM


All times are GMT -6. The time now is 03:41 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.