Can I ask my fellow DU'ers for some intelligent advice?

[BigBearJohn]

I have quite a lot of money in equity in my home because
of the housing boom. Enough to buy a small house in Idaho
and live off the interest. A new home costs $125,000 there.
I don't agree with the politics of Idaho, but at least I
could afford to live if there is indeed a housing crash
and good jobs become scarce.

I don't want to panic and just sell if not necessary.
Do you think it would be adviseable to grab the money while
I still can? I don't have much in other investments to
count on.

[ultraist]

1. If your housing market is a bubble, you might want considering selling

It depends on your local market. It's a great time for some areas to sell before the bubble bursts.

What type of appreciation rates did your area (specifically your neighborhood) see this past year? How fast have sales prices increased?

You can look up comps on your county website in the tax records. Compare recent sales prices.

edit to add:
In some areas, bailing out now means making money or not losing money on their property. Some areas permenantly crash and burn. This happens for a number of reasons. Sometimes it's due to local industry moving out of the area (auto factories in Detroit for instance) othertimes, it's due to superficial inflation of prices.

[livetohike]

2. My husband is thinking the housing price boom will slow down

soon (we're in Oceanside). Why not do it BigBearJohn? We're thinking of doing the same, but not to Idaho.

[BigBearJohn]

6. I live in Carlsbad. I would gladly take some suggestions on

where else to buy

[ultraist]

11. You might lose money if you sell now

Depending on your local market. If you are in a stable, growing area, with steady appreciation rates, you might make a lot more money, holding that investment for another five or so years.

As far as researching areas to live, are you looking for a good real estate investment first, with amenities second or a balance? I'd suggest to research the business growth potential of that area as well as the real estate stats. If you see properties are depreciating, I wouldn't buy there, no matter how good the lifestyle was. You could end up losing so much money, that you cannot afford to live there. That's another consideration, cost of living varies immensely from area to area.

Forbes puts out a list of cities with business growth rates, amenities, etc. It's a Repub, money oriented perspective but does offer some good info.

[livetohike]

12. We're planning on going back to S. Carolina

(we lived there years ago) or to Northern Florida. Yeah, I know, both red states, but the climate is good, we love to canoe, and housing prices are low. At least for now :-).

Check out www.realtor.com for ideas!

[ultraist]

17. Housing prices are good except in Charleston, SC!

Real estate in Charleston is very high. I LOVE Charleston, btw.

[livetohike]

19. Me too

We lived north of there in Moncks Corner when it only had a population of 5,000. We want to get back to that area.

[sandnsea]

32. Retirement haven???

That's what I'd base my decision on. I live in a retirement haven. I should have been buying up property for the last ten years. Wait until the baby boomers start to retire, wohoo!! I'll probably have to move to Nebraska just to be able to afford a place to live.

So if Carlsbad would be a popular retirement area, I wouldn't sell just yet.

That's just my opinion though, I have no financial background at all. (Just a knack for picking places to live that have cost of living booms 5 years after I get there, and never any money to take advantge of it)

[lonestarnot]

39. Cali?

[cthrumatrix]

3. might not be a bad idea.... thow a solor panel on it and keep it small

for heating costs...just a thought..best wishes

[sendero]

4. interesting scenario...

... let us know what you decide to do :)

[unblock]

5. diversification is a good thing

warning: i don't have a license to give financial advice.

the upside on the real estate is quickly becoming limited, because rising interest rates tend to cause real estate prices to stagnate at best. and in any event, diversification lowers risk.

so taking your money out and getting some other investments would e a good thing.

as far as idaho goes, that's your business; where you live is more than just an investment. i will point out, though, that democrats moving into red states will eventually turn them blue....

[BrklynLiberal]

7. Take the money and run...but what "interest" are you talking about

living off? Is that truly a sure thing? The solar panel idea is an excellent suggestion.

EDIT: Is therean IDAHO Forum? Post there and ask about locations.

[achtung_circus]

8. Don't move somewhere

if you can't see yourself living happily there. I speak from experience. The 2 years I lived in the interior of British Columbia were hell. The fantasy of living in a mountain valley is one thing, the reality was another.

The move needs to be something you want to want to do for it's own sake.

[hfojvt]

9. why only Idaho?

You could probably do just as well in Iowa, (or Missouri which is probably not as stand-offish as Iowa) which is not nearly so red. Also, you could do better, perhaps, if you did not get a "new" home, and stayed away from major metro areas. Personally, I think living off of interest is "a consummation devoutly to be wished"

[BigBearJohn]

10. Idaho only because of moderate weather and cheap housing

If you have other suggestions, I'm all ears!

[ultraist]

14. You might want to research Madison, WI or Minneapolis, although it's cold

Idaho gets wicked cold too though.

Both cities offer a high standard of living for less cost than say areas such as West Chester county NY or CT. Those are two of the most expensive areas in the country, along with NYC, SF, LA of course.

[LunaC]

16. I'm thinking about Eugene, Oregon n/t

[hfojvt]

22. Scottsbluff, Ne

seems to have about the best weather going. It depends on what size town you want to live in. I would prefer a Boone, Iowa to an Ames or a Madison, Wi or a Columbia, Mo. As I mentioned in the "What's the Matter with Kansas" discussion. I thought Emporia,Kansas was kinda nice as well as being a college town. This is a good time to be in a small town since the internet means you can be less culturally deprived. I found Iowa to be quite stand-offish since everyone there has lived there their whole lives.

[tubbacheez]

13. my 2 cents says...

There are two main reasons to sell any investment now. Either you believe this investment has stopped growing and you've found a better one, or you find yourself in need of the cash.

Provided the latter doesn't apply, you might want to compare apples to apples by writing out both scenarios and looking at them side-by-side.



Scenario A: Stay where you are.
List out your living costs, including mortgage interest and property taxes, plus food, car costs, utilities, etc.
List out your income potential
List out your savings potential (including equity increases).
List out any intangibles like having family or friends nearby, unique traits of your community, etc.


Scenario B: Move to Idaho.
Repeat as above.




I'm unclear what you mean by buying a small house and living off the interest. Houses don't accrue interest. If they appreciate in value, that appreciation is usually untouchable until you sell. (A home equity loan can tap into equity while you still live in the home, but I doubt you'd want to live off of borrowed money for long periods of time.)

If you meant you could buy a small house and live off the interest earned on your remaining cash, that might make sense. You'd be on a fixed income, though, so any unexpected expenses could make life really hard.

Earned income from a job would give you many more options.

Good luck!

[ultraist]

15. Appreciation in value builds equity

You can suck the equity out of your home and use that cash, although you will pay interest on a second mortgage.

I think he means taking the profits from his house and putting that into some type of investment or interest bearing account. And buying a cheaper house.

[BigBearJohn]

18. Thanks -- here's more info

I would still be working in Idaho.
However, if I did lose my job there, I could live off
what was left from the sale of my home in California.

[AlCzervik]

21. Don't forget about capital gains

if you are married i think the exemption is $500k, single it's $250K.

[BurgherHoldtheLies]

20. Pennsylvania?

Western PA has great housing deals...especially compared to California. I saw a reality show where "starter homes" with 2 bedrooms near LA began at $400,000 and people were bidding ABOVE the asking price. A $400,000 home in Allegheny County (near Pittsburgh) qualifies as a McMansion with 5-6 bedrooms.

Ya, the winters can have some rough days, but it's actually nice to have 4 seasons.

Also, as an added bonus, you can help us oust Rick Santorum in 2006.:evilgrin:

[TreasonousBastard]

23. I'd say go for it, but...

Idaho?

I'm no financial consultant, but my crystal ball is probably as good as the experts. Which means I have no idea whether the value of your house will tank or go up.

Going by the book, an expert would calculate your equity, net worth, cost of moving, future gains on the house, gains on the equity turned into cash, stir that and more over low heat for a while and give you a vague answer.

My less vague answer is to follow your gut. If you make out well on the house you sell, and find a decent place to live with a lot of cash in your pocket, you've got a nice place to live and a lot of cash in your pocket. If the balloon bursts, you might even be able to buy the place back for a song. Housing prices probably won't really crash unless something very, very, bad happens, though, but there's little chance it will go up too much more.

If you can work from Idaho, you should be able to work from Washington, Oregon, Nevada, New Mexico...

There's gotta be some place out there with reasonable housing.

(There's always Wyoming.)

[AirAmFan]

24. How's the rental market where you are now? If it's possible to rent

your California house for enough to pay most of your mortgage there, and you have a job offer in the new location, you might be able to keep open the option of coming back to California, if you don't like the new place.

I've been thinking about doing this myself. Ideally, the housing market in the new location would allow you to rent on a lease with an option to buy, and you would get a tenant in the old location who planned to stay for only a year. At the end of the year, depending on how much you like the new location and on how the California housing market looks, you could choose from a number of options, including--

--selling your California home.

--moving back to California

--buying a home in the new location.

Of course, you'd be risking a real estate crash while you were making up your mind what to do. On the other hand, the California market might continue to go up, you might love the new location, and you might be able to sell for a higher price with more confidence a permanent move was a good idea.

[BigBearJohn]

28. what a GREAT idea. I will consider it. Thanks!

[whistle]

25. Idaho is extreme neo-conservative, that...

...might be like moving from Geneva Switzerland to Munich Germany back in early 1939! Why not relocate to Canada?

[imenja]

26. Real estate is a great investment

Are you talking about a second home that you would rent and hold for investment purposes? If so, I would choose its location according to potential for increase in market values rather than politics or where you might live one day. If you decide you want to move to Idaho in the future, you could always buy property then. Even if $125 won't buy a house in an area you choose, which it won't it most parts of the country, you can take a mortgage out on the remainder, rent the property and still turn a profit.

If you're looking for a part of the country where real estate prices rise, look into south-central Florida. St. Lucie county is a booming area, and homes are not as expensive as further South.

[Trailrider1951]

27. You might consider Texas

That's right, I said Texas. Austin is very liberal. San Antonio is just plain wonderful, and the beautiful hill country around those two cities is some of the best living area in the country. Go east toward Houston, and you'll find the land flatter, but very cost effective. $150,000 will buy you a mcmansion here in the Houston area. Property taxes are rather high, but there is no state income tax, no city or county income tax, and food and gasoline prices (now about $1.80 per gallon) are reasonable. Texans are a friendly bunch, especially those of us who are liberal. Take a peek at the real estate:

[BigBearJohn]

29. Holy cow... Thanks... I would have NEVER considered this idea.

[livetohike]

30. Is the first picture Lost Maples State Park?

I loved TX when I lived there. Big Bend National Park is my favorite National Park.

[Catherine Vincent]

37. I've always thought those areas were nice but

I figure you'd have to be pretty well off to live in those areas.

[LeahD]

31. Might want to think about the humidity.....

because moving from Carlsbad, CA to Houston would throw you for a loop. We have friends in the hill country of TX, and they like it. I also have a friend who lives a couple hours north of Boise, and let me tell you, it is serious winter in that neck of the woods. Boise is much warmer. The real estate prices are starting to tick up there with a new resort moving in. Let's face it, the exodus of Californians to other states is having an affect on real estate prices.

[bush_is_wacko]

33. BigBearJohn. I pondered the same issue not too long ago.

But decided to stay put for a while. I can afford the house I'm in with a relatively low paying job and am now paying extra principal on it to try and get it paid off sooner. All my family is in this state with me and I am just not prepared to leave them all behind. My brother lived in another state for 15 years because the houses were cheaper but even he eventually came to the realization that it was too far away if something happened to one of our parents and moved back to be with his family.

If family isn't an issue for you you might be better off but if it is you will likely regret it. Idaho though, hmmm? Nothing against Idahoans, just I lived in Kansas for a few years and would NEVER go back even if they GAVE me a house and a generous lotto style bank full of cash! There was NOTHING to do there!

[Nikia]

34. Lot's of nice places around here in WI for $125,000 or under

There will buy you a ranch style house or even a 2,000 sq foot older home. I actually think that $125,000 is around national average, but usually not in metropolitain areas or the coasts.

[Booster]

35. Just a thought, but why don't you sell your house and rent a place

in Idaho to see if you can live there. Put your profit in something that grows - don't you have 2 years before you have to buy another house, at least I think that's right. Trying to judge the housing market is just as hard as trying to judge the stock market, but if you're ready to move, just do it - you might lose more if you wait longer. One thing I've learned in buying and selling houses, if your house goes up, so does the house you're looking to buy. Vicious circle.

[orpupilofnature57]

36. Home is where the heart is, how much do you desire your own..

Private Idaho, I have a blast in N.J but I live in upstate N.Y.

[lonestarnot]

38. Sellers' Market in AZ; People who want new home have get in lotteries!

Simply unbelievable. Don't know which part of the country you are in so don't know.

[earth mom]

40. I'm from Southern California...

and couldn't WAIT to get the hell out of dodge! Dh and I left in 98-ended up in Oregon and love love LOVE it. That said, we are kicking ourselves BIG TIME that we didn't keep Dads little old boring tract home house there! That ugly a$$ house has almost tripled in price since!

Okay, so...if I were you...and guessing what your house may likely be worth....I would probably sell-IF and only IF-

1. I stood to make enough dough to live on for a long long LONG time

and

2. Was worried that the housing prices may crash and burn as they have done before in Southern California.

and

3. I had found a place I wanted to live and absolutely loved!

and

4. Knew that I had was absolutely NO reason or desire to move back to Southern California.

HTH and Good Luck!

[aePrime]

41. I've lived in Idaho for all but 2 years of my life

Feel free to ask any questions you may have. I don't know if I know the answers, but I'll try.

Where in Idaho are you looking? Boise is actually fairly liberal, but the cost there will be higher than any other place in Idaho (for housing), but it also has more amenities. That's where I grew up.

I'd stay away from the eastern part of the state -- it's really conservative there. That's where my liberal parents are, and it drives them crazy.

I'm now in northern Idaho, and I think I know more liberal people than conservative people, but most of them are either university students or professors.

[kittykitty]

42. Oooo, Oooo, Free land in Kansas! www.kansasfreeland.com

This USA Today article is about the free land deals being offered in order to entice people to return to small (very small) towns in the mid-west.

"So why Kansas, when other rural states offer the same unhurried pace and relaxed lifestyle the Canaans sought? And why Ellsworth, a town of 2,900 with one grocery store, one stoplight and no mall, no fast food and no movie theater?

Free land is why. Ellsworth's pitch is this: Agree to build a house here and pay nothing for the lot it's on. Got three kids in school? OK, that's worth $3,000 toward a down payment. Need jobs? We'll help you find them. Still not sure? Come visit, we'll show you around."

http://www.usatoday.com/news/nation/2005-02-08-land-cover_x.htm

[Swamp Rat]

43. Come to New Orleans and enjoy yourself before the Rapture! n/t

:D