Is it time to sell, San Diego?
Question: Should more owners list their homes for sale to benefit from record-high prices?
Phil Blair, Manpower
NO: Not unless they need to move or are ready to take their equity out of the home and move out of the San Diego market. If your house has appreciated you can be quite sure that the next house you buy has appreciated at least equally. But maybe this is the time to analyze whether renting is really a better option for you than owning a house. Rents will be high but if you can invest your equity elsewhere for a higher return then go for it and let the home owner worry about maintenance.
Kelly Cunningham, National University System
YES: Seems a good time to be selling a home, but if you want to continue living in Southern California, of course [owners] need to buy another home in an era of rising prices. New housing construction in San Diego has been faltering since last year. San Diego household population increased by 30,646 in 2016, according to California Finance Department estimates, suggesting a need for 10,848 additional housing units, but the inventory of units added was only 8,122.
David Ely, San Diego State University
NO: Sellers will receive high offers, but will then face the challenge of finding new housing. A seller could purchase another expensive home in San Diego, rent, or move out of the area. Renting is an unattractive option as San Diego is an expensive city for renters and lacks the tax advantages of home ownership. Homeowners should sell if they want to move up or downsize, but not simply because home prices are setting records.
Gina Champion-Cain, American National Investments
NO: Nor should homeowners consider their home as an investment vehicle. Home sale decisions should be based on factors such as relocation or to downsize but not purely for presumed profit. Capture of home equity through a sale requires a reciprocal act of attaining new accommodations. Unless moving to a completely different market, you would still be subject to the same relative 'pricing' conditions. A primary residence is a home, not currency.
Alan Gin, University of San Diego
NO: The rate of increase in housing prices is expected to slow due to higher interest rates and affordability issues, but prices are not expected to fall. The job market is still strong, with the unemployment rate below 4 percent. Also, the supply of single-family housing is really tight compared to just before the Great Recession. Back then, nearly 10,000 single family homes a year were being built. Since the Great Recession, the most built in a single year was just over 3,000 in 2015.
NO: High real estate prices reflect the continuing, very low interest rates, which raise the price of any asset you might think of buying. In this environment, taking your money out of real estate and putting it into stocks or bonds isn’t going to help you. Of course there’s no guarantee that prices will continue to rise. If you bought a house because you thought prices can only go up, then maybe you should sell now.
YES: The housing market may now be at or approaching peak values. If you are among the growing number of “house hoarders” who have stayed on, this may be your moment. Listings in our region are considerably down, as is new construction, each of which has abetted the bid up in pricing. The problem is, move to where? This remains a perpetual problem in San Diego, so if you wish not to sell, the moment may last.
NO: Most don’t use their homes like a traded commodity. When you sell, it is usually because you need to upsize, downsize, or move out of the area due to a new job or other personal reason. Unless you are planning to move out of San Diego County to a part of the country that has a lower cost of living, then it doesn’t make sense to sell high and then buy high. A benefit would be if you were to sell your home here and then move to somewhere like Indiana, Texas, Mississippi, or Michigan.
YES: With prices high, anyone seriously considering moving should list and see what happens. I would start by looking into websites like Zillow, Redfin, and Trulia to list my home as for sale by owner for free (or very cheaply relative to starting with a Realtor).
Bob Rauch, R.A. Rauch & Associates
NO: Really? Unless you are leaving the area for personal, employment or retirement reasons, it makes absolutely no sense to sell based on the possibility that the market has peaked. The median home value in San Diego is $572,000, up over 7 percent this past year and according to Zillow they will rise 4.5 percent this next year. Stay put and enjoy living in the best place to live on Planet Earth.
YES: Low inventories have made housing a “seller’s market.” Prices may rise further, but this will also be an issue for sellers trying to buy a new home. The Federal Reserve desires to raise interest rates gradually, but mortgage rates could climb faster than expected. Alternatively, economic growth could suddenly slow. Property tax reassessments are an important consideration, but if an individual desires to move to a different home, now is a good time.
NO: The choice of where you live should be made based on lifestyle. Changes in your job, vocation, size of family or personal circumstances should drive the decision to move or sell your home. Fundamentally there is a limited supply of land and therefore housing in San Diego County. Owning real estate in San Diego for the long term will yield positive financial results despite short term fluctuations in price.
NO: Not necessarily. While your home might be worth more right now, most likely so are the homes you will want to buy to replace the home you are selling -- unless you are moving out of the region. The decision to buy or sell a home is a personal one, and involves multiple factors, such as whether you are doing so as an investment or for some place to live and raise a family.
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