Liar Loan said:
We were already discussing Arizona on other housing threads. It made sense to start a new thread because, indeed, Arizona doesn't have to do with Irvine.
Sharing information is not the same as a dig. Arizona and Florida are the two bubbliest states right now, so R2D2 (and her husband C3P0) should go into their housing decisions with eyes wide open. I would feel terrible if I knew housing was going to tank and didn't say something, even though I know my odds of persuading her with facts are not likely to succeed over the emotion of moving into the new build that they are dreaming about.
In 2008, when housing was already in freefall I tried warning various friends and family in the real world that it was much too soon to be jumping into the market. There was more pain to be experienced before things bottomed out. Nobody listened because they were caught up in the emotion/greed of homes being cheaper than they had been in a long time. They couldn't possibly fathom that they would end up underwater after buying at such an opportune time, yet they all did end up underwater.
My aunt & uncle probably fared the worst because they rushed into buying a new build on a golf course that, had they waited longer, they could have gotten a more premium lot, which is what they really would have preferred, for less money. Later, when they were ready to sell some years down the road, it was a huge shocker that they were underwater because they now had to compete against re-sales that were priced much lower than new homes.
So lets see.
I sold my irvine house in 2016 for a net gain after fees, etc of around 1.1 million and took a 500K cap gain exclusion. I moved to legacy and that house will have about an 800K gain minus another $500K exclusion.
I have no mortgage or any other loan for that matter.
I'm not waiting around to see if prices drop and heading out of town to lower prices and taxes. Unfortunately rent has skyrocketed and I'm not a rent type of girl anyway so I'm buying a spec home to sit in while my "real" house is being built. So happens that the base is now higher than my purchase price with lots of upgrades in it. Win for me.
The little one is right under 2000 sq feet 4 bed house in a nice neighborhood within walking distance to a great park with pool etc. Nice to have in the az heat. Cost to live there, property taxes, HOA, insurance etc $5-6K for a YEAR........... sub $500 per month. Meanwhile my "real" house gets built.
The real house has gone up 20% just for the base price since they got my deposit. I have no idea how much upgrades have gone up. Chose those already.
Paying cash for both. What do I care? No uhauls behind a hearse. Kids are going to get all my cash, etc anyway and they would love to get those two properties free and clear.
The little temp house rents for over $2500 per month. Easy rental for that flooplan within walking distance to schools and they do walk there, moms with strollers in tow. Irvine used to be like that too but now it's too expensive to have a stay at home mom. Too bad. U don't get time with the kids back.
I plan on selling it but say rents drop to $2000 and the property tanks too along with the equity I've got. That is $24K per year. Costs are $5-6K. Accounting for vacancies, it's still not going to be a problem for me.
If it sells for a net loss of $30K I'm even on the rent I'd be paying, so most likely I'm good.
Now the main house is much lower than Legacy house. In fact I could buy another one of those plus these two houses for what I'm getting here for cash. Total outlay for that house is maybe $8K - $9K per year........ $750 per month.
ADD UP BOTH HOUSES! $1250 per month letting them sit. Rent the one and I'm um.............. making money. Yes I have cash just sitting but I don't need cash. I've got lots of cash plus the money I made selling Legacy house.
But maybe I should STAY HERE in my house I own now in Legacy because what is the other option? Sell and buy some ridiculously priced house here with higher taxes? I think not. What if prices drop as you say? Well..................... which is going to hurt me more? $1250 per month with rental income that completely pays for that or paying property taxes, HOA, insurance etc here which is more than that? And don't forget, I'm taking a $500K exclusion and CASH even after buying the two properties in AZ and I get to be near two of my kids.
AND to top it off income taxes are L O W E R in az. I make money from stock trading and it's going to save me 10% in income taxes.
HELLO! I think I got this covered!