Hi guys,
My husband and I have been wrestling with the timing around selling our house and I really need a second opinion on this. Basically, the values of the houses in our neighborhood are dropping due to increasing amount of high crime near us (shootings, daytime carjackings, armed break-ins, etc.). We wanted to move away anyway, but were originally planning on waiting a few more years until we paid off our debts and had more of a stache built up. Now I feel like we really need to push that timing up for safety and $$ reasons, but my husband thinks we can wait another few years. The questions is should we sell now, cut our losses, and get the hell out of here, or should we stick it out another few years until the debts are paid off and we can save up more money for a down payment on a new place?
Here's the info:
Originally purchase of house $206,000 in 2007 as an as-is complete fixer upper. This house was $50,000 less then any house in the neighborhood and needed a lot of TLC, which we did ourselves over the years. We finally finished everything last year, so we're now enjoying a house that's in move-in ready condition.
House sale value (per realtor): $180,000 - 195,000 range. Housing in our area has gone down b/c of the crime and the realtors we've talked too all agreed the expect values to keep declining, although by how much and how fast, we don't know. Last year houses we're selling in our neighborhood for $205,000 - 240,000, now there are like 4-5 houses for sale right now just in my neighborhood between $180,000 - $200,000, including my next door neighbor, and they aren't moving.
Mortgage: $150,000 (3.1% - 4 years into a 15yr refi)
Principal/Taxes: $1100/mo
Mortgage Interest: $400/mo
If we stay 1 more year mortgage will drop to $140,000.
If we stay 2 years, mortgage drops to $127,000
If we stay 3 years, mortgage drops to $110,000
- $25,000 renovations & some lingering pre-MMM debt - 0% CC till end of 2017 - will be paid off in full before then
- $12,500 student loans (3.0%) - Will pay off after
- No other debt.
- No non-retirement stache beyond our emergency fund ($6k) because we've been paying down debts and maxing out 401ks and IRAs for the last few years.
If we sold now we'd want to rent for a while until we're ready to find a new place to live. The rents in the safer areas near our jobs are about $1400-$2000/mo for a 1-2 bedroom. The cheapest studio i can find is $1200 but we'd need to rent a garage for my husband's growing side-gig. We can't afford to rent something and still pay the mortgage here at the same time.
As strange as it may seem to some, my husband grew up in bad area and is completely comfortable with the crime and staying in the house. I definitely did not grow up anywhere like this and although I have had my experiences living in bad areas before, i am not comfortable owning a house in an area with this kind of crime.
Renting the house out is not an option. There are a bunch of reasons for this, just don't want to get into the details.
So, do we cut our losses, get the hell out now, and save money and pay off our debts while renting?
Pay the debt off first, sell next year, and save for our next house while renting?
Stay 2+ years, pay off the debts, build some savings, and take a chance on the neighborhood before we sell?