Looking to buy up in FIRE

[Persn]

We did what you are proposing and so far we are very happy with our decision. Our new house is probably worth 300-400K more than the one we sold, our home comprises a much larger percentage of our net worth than yours, and we still have a mortgage (pensions cover our expenses, including the mortgage). Our CA property taxes did double, but since our beach house was a fixer upper and we remodeled before moving in, it could have been much worse.

We would not have predicted just how much moving has added to our quality of life. For one, we are in a smaller city. Neighbors are nice. We spend more time outside - a lot more. We get more exercise. We take walks together on the ocean bluffs. And we have a great house - not oceanfront or even ocean view, but close enough to get there anytime we want.

OP, I say go for it.

 

[Koolau]

You are thinking of the old law. The new law doesn't allow rolling the money. I think if there is a capital gain over $500K, there will be taxed.

Yup and also confusing it with a 1031 exchange as well. Worst thing is - I actually went through the process of selling and excluding the $500K just a few years ago.

I guess I'd better give up the diet soda so dementia doesn't get any worse. Wait! That's another thread.

 

[Scuba]

We may well be in a bit of a small bubble, however not sure what I would do about it if we were/are? We'd take a hit here if it burst, a slightly bigger hit there if it burst, but since I can't foresee the future I can't foresee the future (if you know what I mean). I can say that prices are not yet back to the crazy post-2008/2009 recession highs, so I think there is still room to grow. And in the long run I can't see the coast ever taking a long term dive given the great weather, strong job economy, limited land, and overall desirability of S. OC.



It's a tough, big decision for sure, but one we can afford, which is what I have to keep knocking myself on the head with.

I agree, sounds like you've thought this through well and can afford it. While a temporary crash in So CA real estate values would be consistent with history, continued appreciation of oceanfront property especially in OC is very likely over the long term IMO. Just budget plenty for the transition and for redecorating/refurnishing and you'll be fine. Personally I would take out a mortgage at least through the transition. You can always pay it off but initial purchase mortgage is cheaper than HELOC or cash out later.

 

[AllDone]

That's what we did too. We can afford it, it enhances our life, and it's a reserve of money that will pay for our CCRC and more or less keep pace with inflation.

 

[ElizabethT]

In that I know it's nice to hear about outcomes at times, an update that we are listing our current home later today, with our sights set on a home near the coast, and all the lifestyle changes that will bring with it. Much time spent going back and forth on this, but we've gleaned enough data about possible homes and activities to feel confident this is the right decision for us both at this point in our lives.

I am very appreciative that there is a forum like this available with so many generous members willing to share their thoughts and experiences.

 

[W2R]

In that I know it's nice to hear about outcomes at times, an update that we are listing our current home later today, with our sights set on a home near the coast, and all the lifestyle changes that will bring with it. Much time spent going back and forth on this, but we've gleaned enough data about possible homes and activities to feel confident this is the right decision for us both at this point in our lives.

I am very appreciative that there is a forum like this available with so many generous members willing to share their thoughts and experiences.

How exciting!! I hope your future home is truly wonderful, and brings you as much happiness each day as my own dream home does for me.

 

[daylatedollarshort]

Good luck ElizabethT with the house sale. Orange County near the beach definitely sounds like a nice retirement spot.

 

[Scuba]

In that I know it's nice to hear about outcomes at times, an update that we are listing our current home later today, with our sights set on a home near the coast, and all the lifestyle changes that will bring with it. Much time spent going back and forth on this, but we've gleaned enough data about possible homes and activities to feel confident this is the right decision for us both at this point in our lives.

I am very appreciative that there is a forum like this available with so many generous members willing to share their thoughts and experiences.

Congratulations! Hope you find the change to be everything you're dreaming it will be. So CA on or near the beach is hard to beat!

 

[ElizabethT]

Update: What a whirlwind of a month! We hemmed and hawed, finally listing last week only to get multiple offers within a few days on our current home. When they started rolling in DH and I looked at each other, gulped, and got to work countering until one offer managed to stand out, which we finally accepted.

In that we are buying up, the original point of this thread, it shouldn't be quite as crazy when it's our turn to submit proposals, but we're still expecting to have to compete against one of two other buyers.

We expect to be living coastal by mid-summer.

 

[ohyes]

How exciting is this! Keep us posted. I am so happy for you...(been following this thread as DH and I hope to sell/buy soon).

Update: What a whirlwind of a month! We hemmed and hawed, finally listing last week only to get multiple offers within a few days on our current home. When they started rolling in DH and I looked at each other, gulped, and got to work countering until one offer managed to stand out, which we finally accepted.

In that we are buying up, the original point of this thread, it shouldn't be quite as crazy when it's our turn to submit proposals, but we're still expecting to have to compete against one of two other buyers.

We expect to be living coastal by mid-summer.

 

[Scuba]

Update: What a whirlwind of a month! We hemmed and hawed, finally listing last week only to get multiple offers within a few days on our current home. When they started rolling in DH and I looked at each other, gulped, and got to work countering until one offer managed to stand out, which we finally accepted.

In that we are buying up, the original point of this thread, it shouldn't be quite as crazy when it's our turn to submit proposals, but we're still expecting to have to compete against one of two other buyers.

We expect to be living coastal by mid-summer.

Congratulations! You will love the coastal life!! We live in an area where we can easily walk to dozens of restaurants, the bank, the eye dr, the theatre, the dog groomer, and lots of other places. When I first moved here after many years of suburban living, I couldn't believe the difference. 25 years later, I'm still thrilled with the lifestyle. And the ocean view is pretty nice too! Good luck on your house hunt. I'm sure you'll find something great.

 

[Ready]

We have lived at the beach in Orange County for 16 years now and have loved every minute of it. I don't think you will be disappointed. Good luck finding the new home!

 

[daylatedollarshort]

Good news on the house sale. I hope you find your dream home.

 

[Shanky]

We downsized dramatically when I retired to a modest house of about 2100 SF and a small yard. Less than a year later, we sold it and upsized to something larger and about double the cost.

Downsizing had some downsides. Visiting relatives were more frequent than we expected, our furniture was too large scale for small rooms and I did not like having to dodge furniture to walk around in my own house. Plus we missed having a big yard since we could not put in a proper pool with a 60 ft wide lot. So we fixed that, 1/2 acre, so still small, but enough for pool & gardens. No regrets.

 

[Fedup]

We downsized dramatically when I retired to a modest house of about 2100 SF and a small yard. Less than a year later, we sold it and upsized to something larger and about double the cost.

Downsizing had some downsides. Visiting relatives were more frequent than we expected, our furniture was too large scale for small rooms and I did not like having to dodge furniture to walk around in my own house. Plus we missed having a big yard since we could not put in a proper pool with a 60 ft wide lot. So we fixed that, 1/2 acre, so still small, but enough for pool & gardens. No regrets.

I wish I have 1/2 acre. Around here it's considered a big lot if it's 6000 sqft and above. I was looking for a very large lot like 14,000 sqft. But that's a luxury.
My brother has almost 1 acre, boy do I envy him. But not the heat.

 

[ElizabethT]

Update: We found our dream home, and will be living coastal in just about a month. We are about 2.5 miles inland, with a paved trail leading directly to the beach accessible at the end of our street. We can see the ocean in the distance from our backyard. I've been joking that we bought the view, and the house just happened to came along with it.

Once this all shakes out, our home as a percentage of our total net worth will go from 12.5% to 19.7%. Appreciation in the new community is stronger than in our current community, as is cost per square foot, so we are comfortable with the increase in our home value as percentage of overall portfolio, knowing we could shift back downward if necessary, with no loss in buying power.

The process of selling, then buying in a more expensive community, was much more stressful than we anticipated. We have absolutely no regrets thus far, but we would very like to not go through it ever again!

Life after we relocate should consist of morning coffee out on our ocean-view backyard, daily walks to the beach and back for exercise, no need for A/C in the summer, instead leaving our windows open to catch the coastal breezes, easy access to an endless list of coastal restaurants and festivals, lack of significant crime to worry about (the troublemakers seem to prefer the coast proper, not the boring communities that lie just behind), and an amazing array of year-round outside activity options - hiking, biking, kayaking, boating, paddle boarding, surfing . . .

Well, maybe not surfing.

At this point I have no desire to travel afar and simply want to settle into and fix up our new abode. It'll be interesting to see how long that lasts given that our love of travel resulted in being gone almost three of the five years we've been FIRE'd.

To think we almost let fear stop us from making this change - what a tragedy that would have been in hindsight.

 

[daylatedollarshort]

Enjoy the new home. It sounds like a great lifestyle.

 

[Persn]

Congratulations on taking the plunge - it sounds like a wonderful FIRE adventure. A little envious of the view too!

 

[Scuba]

Congratulations and enjoy your new home! The coastal lifestyle is wonderful!!

 

[RobbieB]

Good for you!

I love stories like this, do what you want and blow that dough -

 

[Fedup]

Congrats on your new home.

 

[whatnot]

Congrats! Sounds awesome.
We are looking at buying up in retirement. I was curious on what a reasonable home cost to total net worth - so thanks for including that info.

 

[ElizabethT]

Final Update for those of you that indicated you have been following along on our journey.

We moved into our new coastal home over the weekend, just in time to enjoy the 4th of July. We ended up buying something slightly larger than our current home, as well as considerably more expensive than we'd originally planned. (I'm sure many of you know how that goes!) Our home value now represents 20% of our total portfolio, though for WR purposes we do not include it. Other than property taxes, our run rate expenses related to home should be the same. Certain items went up slightly, but other items should come down in equal increments.

One thing I did underestimate, however, was the stress generated by giving up our long term home for something completely unknown. While we have now embraced our new home and community fully, the transition from something known to something completely new was extremely difficult. More so than I would have ever imagined. In hindsight I think we would have been better off first selling our current home and letting it close, then moving to temporary quarters while searching for our new home. Doing both simultaneously almost did us in. YMMV of course.

At this point, however, we have absolutely no regrets about buying up so in that the views of the hills and the ocean from our new home are absolutely wonderful, and have actually worked to temporarily kill any desires to travel very far afield. Why leave when were we live is already so scenic, weather perfect and utterly relaxing?

And already one of our children has asked if they might come visit us with the family for a week. Exactly what we had hoped would happen once we were coastal-close.

Here is a photo of the view from our new backyard . . . still can't believe we did it, and that we actually live here.

 

[Ready]

Congratulations on the new home! The view looks fantastic. And you're right, you will find you have much less desire to travel because you are now living in paradise. We have a major heat wave coming up tomorrow, and it's supposed to hit 90+ at the beach, so we can expect the rest of the world to head to the beaches here. Last night we walked around town and mingled with 300,000+ guests. It's a great place to live, and many have figured out a great place to visit too.

But your backyard looks about as tranquil as it could be. I'm very happy for you!

 

[Fedup]

Beautiful view!!
It's always stressful to buy and sell home at the same time. I avoid that stress by just buying new homes only. I have yet to do both. Congrats!