It's more accurate to say that housing prices are already messed up. That's the thing that the realtors won't tell you - when everyone can get cheap financing, everyone prices their houses higher. It's simple supply and demand - if everyone needs a house, and houses cost $50k, but then the government decides everyone should be able to get a $100k mortgage, houses will double in price.
And of course the interest deduction and the capital gains exemption do nothing to put the breaks on this phenomenon. My neighbor just put his house up for $600,000, and it's not that different from mine. If it sells (and I don't think it will at close to that price), I think I'll try to be the lesser fool and get out of the home ownership game for a year or two until things get irrational in the other direction again.
Yeah, the tricky part is always calling the top. Locally, we hit it a few months ago. I'm already starting to see panic sales of flips. Thing of it is, though, how stupid is your rental market right now? 'cuz ours is stupid. Without getting too dumb let's make up some numbers: Let's say we bought the house for 60k in 2000. Current market on it is 130k. We pay a $500 mortgage that matures in 9 years (we refinanced into a 15 in 2009), but we were renting the fucka out for $750. So we're already $250 ahead on renting vs owning in this shell. Funny thing, though - in 2009, when the economy tanked, the rents didn't go down. When all these people lose their houses 'cuz they got mortgages they can't afford, it makes the rental market worse because if you've got a place that you can afford, there's suddenly a lot of people who don't have the nut for a downpayment, don't have the credit rating for a loan, but need a roof over their house. If the economy takes a shit when it's amenable to me, I'll likely buy another house, not sell this one.
It's a good point, and one I've also considered. I don't really need an equity cashout, and I also generally like where I live. I have a cousin who is some C-suite occupier of a finance firm, and he once told me that one should never look at their primary residence as an ATM. I agree with him in principle, but goddam is it ever tempting to make a quick buck when possible (of course he was also talking about cash-out refi, but I think the same rule basically applies here). The rental market here is high by our standards, but by west coast standards it's laughably low, I'm sure. Anyway moving sucks, and selling a house sucks, and I won't do either for less than what I consider to be a lot of money at this point in my life.If the economy takes a shit when it's amenable to me, I'll likely buy another house, not sell this one.
Here's what I know: if it's advantageous to you, it's probably illegal. Banks don't do shit out of the goodness of their hearts so always try and figure out who's getting screwed. If it's you, don't do it. If it's the guy with worse credit than you who isn't going to get the offer... ...well, that's why we're in a 15-year. There was no way I could force Bank of America to offer their TARP funds to the people who needed TARP funds, and hey - when they offered them to us, we were grinding up placentas for money so it's not like we were living phat. But it was a $70k giveaway that benefited us and it wasn't supposed to.I agree with him in principle, but goddam is it ever tempting to make a quick buck when possible.