4 years ago, I bought a condo in Chicago. As it turned out, housing prices continued to drop, although they seem to have stabilized now.
Now, my financial situation is substantially better. In a perfect world, I would have held off on buying the condo, and be in the market for a house now. However, in the real world, I still could sell the condo, albeit almost surely at some loss, potentially tens of thousands of dollars, cover the loss, and still be able to afford to buy a house with 20% down, and still have money left over.
I’m wondering how good/bad an idea that is. Caveats apply, I know you’re not my financial advisor, etc. Seems to me that for every dollar I’d be losing on the condo, I am in theory getting back by buying a house that is similarly depressed in price. If that is true, then it would make sense to bite the bullet and do it.
What do you guys think? Am I utterly off-base in my thinking? I’ll be reaching out to my real estate broker and lawyer to get their thoughts down the road (I wouldn’t be taking action on this till next spring at the earliest so I’m in no rush).
No, you are definitely not off base in your thinking. A lot of your decision depends on how you view your next house. If you really want a home, to live in for an extended period of time, then I’d suggest it would be foolish to put off getting where you want to be over some tens of thousands financed over 15-30 yrs.
You sound as tho you are pretty fiscally secure. When you think of the loss on your condo, compare it to the rest of your portfolio - I bet you made gains elsewhere.
If you view your next home as an investment, I can’t help you because I don’t think that way.
Where are you looking? The current housing market is weird. I just bought in the W burbs a couple of months ago. Good stuff is selling instantly at or near list, while the dogs are sticking around for months. A lot of the biggest bargains are gone, but there is still inventory coming on the market with some regularity. IMO your best bet is to buy something that needs significant updating - the old person who moved out to a home. Instead of paying for some flipper’s improvements which are not your taste. Be patient.
Also, sell your condo first, to allow yourself to come in was a cash buyer. There are plenty of opportunities to find month-to-month rentals. The hassle will be worth it.
I know NOTHING about the condo market, but you might be surprised at the price you can get. in 09 your condo’s price should have already dropped somewhat from the peak.
Good luck.
That I have - the last couple of years have been kind to my portfolio. And I am thinking of the house as primarily a place to live; I don’t really expect the housing market to rebound too terribly strong.
I’m still in the process of deciding. In my (very preliminary) looking, I’ve been looking at near north suburbs like Niles and Morton Grove. I may look further afield, though.
I will keep that in mind! I’ve seen some ludicrous carpet and panelling in some of the houses I’ve looked at online - not that any of them will be around when I actually do begin looking for real. I think I can handle doing some renovations.
We looked quite a bit in MG, Skokie, Niles, Park Ridge, Glenview - not our cup of tea. We greatly prefer the W burbs - less congested and you get far more house for your money. But that is a very personal decision.
You are right on the money, pun intended.
The longer you wait for your condo to regain it’s value, the more the housing market will also be rebounding. You’re correct that these two factors may offset each other but what you need to consider is the lending rates. Interest rates are at a record low and are expected to rise in the next few years. You can save tens of thousands of dollars by getting a lower mortgage rate now than in a year or two when rates have increased %1 or %2.