Author Topic: Advice - move or stay?  (Read 2932 times)

TravisR

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Advice - move or stay?
« on: March 24, 2014, 01:17:33 PM »
I'm pretty sure I already know the answer to this question, just as I have seen in answers to similar questions, but I need to ask. It's therapeutic and may help with our sanity if we add some outside perspective to the equation.

We were young and naive and made the mistake of buying a 1000 sq ft, 2 bd townhouse in 2006 as a "temporary" stepping stone before starting our family and getting a real house. The market had other ideas and we have now been there 8 years and added two boys in the process. Our extra principal payments and the recent market rebound have combined to finally make it feasible to sell and get out. We're up to about $40k equity but we would still have to sell at about $40k under our purchase price.

My wife stays at home and I currently work where it is a 30 min drive in and 60 min drive home. The commute, the close confines and lack of yard and/or parks in walking distance is wearing on the family (did I mention these are 6 and 4 yr old BOYS?). We're eager to get out, but there's a catch. I work at a startup whose uncertain future will come to a head in about a year (could be good or bad, depending on the outcome of a clinical study). This wrinkle makes me reluctant to purchase a home that may no longer be close to work in a year. It also seems like the market is a bit "too hot" right now as I watch low inventory and buyer competition drive up prices. So we've been contemplating selling and then renting for the next year.

While the prospect of getting out of our townhome is exhilarating, it just doesn't seem like it's the financially sensible thing to do. Our extra principal payments have dropped the taxes and interest on our mortgage to a measly $415/mo, whereas a rental near work for the next year would be about $2000/mo. That's at least an extra $19,000 that we'd be burning by moving to a rental for the next year. The money saved by cutting the commute hardly puts a dent in that and we haven't even accounted for the potential of appreciation on the property (though I'm unsure whether it would).

So it seems like this is a no-brainer. The smart thing to do is to stay in our place and wait to see what happens with the company before making a move. It's just extremely tempting to take the opportunity to free ourselves from what has felt like a trap and to go debt free. It also seems like this might be a prime time to sell. Is this too high a price to pay for an extra year of living where you'd rather be and gaining at least an hour a day back from the commute? Am I wrong to think that we might not get as much for our home next year as we can this year (Seattle area)? Am I a 1st world complainypants for so desperately considering taking the financial hit just to be rid of our 1000 sq ft house sooner rather than later? Any words of wisdom is much appreciated. Thanks in advance.

Dman214

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Re: Advice - move or stay?
« Reply #1 on: March 24, 2014, 02:30:23 PM »
Is it possible you could rent it out and then rent in a more favorable location? If you're just renting your new place, it should be OK if something happens with the company next year as you'll have the flexibility to move again. 

The pros of shortened commute and a better quality of life (as far as close free activities for your kids) seems like it's definitely worth discussing a move.

Thegoblinchief

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Re: Advice - move or stay?
« Reply #2 on: March 24, 2014, 03:04:23 PM »
How long is your commute in miles, not time?

Are there parks in biking distance? Boys that age should LOVE bikes. My 4 year old loves his. For parks that are a little far, sometimes he has to ride back in the trailer.

I also have my Frankentrailer for very long rides, but I don't know whether your DW is a biker.

TravisR

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Re: Advice - move or stay?
« Reply #3 on: March 24, 2014, 03:36:45 PM »
@Dman214
Great idea and was my preference, but there's another wrinkle. The HOA has limits on the number of rental units and there is a lengthy waiting list. Active renters are only bumped if they sell or go vacant for 6 months. In short, it's not going to happen in my lifetime.
I appreciate the acknowledgment that the "shortened commute and a better quality of life" make this something less than an obvious decision. The question we need to figure out is whether those things are worth the long term financial costs. As much as I want that to be the case I'm having a hard time selling it to my rational side.

@Thegoblinchief
The shortest route to work would be 19 miles. There are a couple parks that can be reached by bike, as there are just about anywhere, but I doubt that is sufficient consolation.

Cheddar Stacker

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Re: Advice - move or stay?
« Reply #4 on: March 24, 2014, 03:45:11 PM »
You already paid $X for the home, which is a sunk cost and shouldn't affect your decision. Short of living in an RV or something, you will never beat $415 month in housing "expenses" whether you rent or buy, particularly in Seattle. If you move now or in 1 or 2 years, and whether you buy or rent, your housing "expense" will likely increase.

You have to decide how much more $ you are willing to pay each month to increase your quality of life. You need to move for sure, but if I were in your position I would wait until the job front was more secure before deciding where to move. I don't know the Seattle real estate market (other than it's expensive) so I can't really comment on the timing of a sale.

Thegoblinchief

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Re: Advice - move or stay?
« Reply #5 on: March 24, 2014, 04:00:44 PM »
There are threads on here about good suburbs and areas of Seattle proper to find cheaper housing.

Quality of life is important but of course it is hard to put a dollar amount on it.

Badass by 41

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Re: Advice - move or stay?
« Reply #6 on: March 27, 2014, 06:00:28 PM »
Is $415/month the true cost of ownership (TCO) for your current house?  Is that PITI?  Add the total cost of your commute (gas, depreciation, etc.) to the TCO of your home, and compare that to $2000/mo rent + renters insurance + any potential delta (+/-) in utilities.  My guess is that it's probably less expensive in dollars to stay where you are, but not nearly as drastic as $415/mo vs. $2000/mo.

We were in a similar situation last year.  I bought a 1/1.5 condo loft in 2004 as "an investment" and was under water from 2006 to 2013.  In that time I got married, had a kid, trying for a 2nd, and changed jobs (farther away), so when the market rebounded, we sold ASAP.  I made about $5k on the $580k sale.

Now we're renting a 3/2.5 for about 70% of the TCO of the condo and loving it.  No stress of being under water. No HOA. Closer to work (I bike 10mi RT now).

In hind sight, do we wish we had waited a year? Perhaps.  On the one hand, if we could have predicted the future, we would have waited since #2 still hasn't happened, and property values are up 15%.

On the other hand, we would have spent 30% more for the privilege of having a longer commute, less time with family, more stress about being under water, and the "potential" of appreciation.

We're happy we sold, and it's worked out for us.  But waiting a year wouldn't have been that big a deal.  Then again, if we could have predicted the future, we probably would have flown to vegas and put it all on black.  9)
« Last Edit: March 27, 2014, 06:02:29 PM by Badass by 41 »

AccidentalMiser

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Re: Advice - move or stay?
« Reply #7 on: March 27, 2014, 06:56:13 PM »
Am I a 1st world complainypants for so desperately considering taking the financial hit just to be rid of our 1000 sq ft house sooner rather than later?

Yes.

Given the tenuous job situation, I'd stay put until after resolution.  Then I'd figure out a way to be thankful for a $415/month housing cost and stay put anyway. 

Will your kids be attending public/private school?  If so, they'll soon be out of the house for most of the day anyway.