Wednesday, October 29, 2008

Making a Move

Now that we are no longer actively looking to purchase a home, Mr. BT and I have been struggling with whether to find a less expensive rental that would suit our family better for the long haul. Our current rental is much larger than we need, and we hear the local elementary school is impacted which may force us to drive our daughter across town every day (all this for only three hours of kindergarten).

But moving involves a lot of trade offs in terms of time and $$. The premise is based on two questions that we continually struggle with. How much rent savings justifies the move, and how long do we need to be in the new rental to make the rent savings worth it. There is a lot of time and hassle involved in a move, and some expense (moving costs, utilities etc.).

Moving a family of four is not something I take lightly, even if it is a local move. My kids are too young to be of any help. In fact, they have a special knack for unpacking and destroying any semblance of order. Which will likely make moving more even more difficult.

Its not like our current economic climate will last forever....I am hoping we will know by spring how bad and how long of a recession we are in for (V, U, or L shaped recession). Perhaps by spring prices on the higher end (most of the homes in East Sac, Davis, Arden, CP, EDH, and Folsom) will finally be in line with the rest of the market (Pending Sales are way down according to my weekly screen scrape). According to Housing Tracker, the 75th percentile has started moving downward again, after a bounce earlier in the year.

We aren't too far from what I consider equilibrium (based on income and rent multipliers etc.). However an "L" shaped recession could easily push us past that point.


PeonInChief said...

Don't move unless you make the cost of the move back in a year (deposits, lost work time, moving van, etc. etc.). Generally, it's about a 10% savings, so if you pay $2000 a month in rent, don't move unless the rent is $1800 or less. And if I had young children, I'd want an additional 5% to get me to move.

And are you looking to see how many people are available to babysit?:)

anon1137 said...

I've been considering a move too, so I can check out a new area of the city. The thing I'm most concerned about is the financial stability of my future landlord. I would not rent anything that has changed hands within the last 5-10 years, but even after checking that, you still don't know. As this recession drags on , more and more underwater investors are going to give up. I don't want to get blindsided by something like that.

Patient Renter said...

I'd find a way to quantify all of the variables in terms of dollar value and weigh the two possibilities. At least that way you can feel justified in your decision as being backed by some hard conclusion.

Buying Time said...

Yes, that is a big factor for us as well....but one that is pushing us to move, rather than stay.

We really like our LL...great guy. But I don't think it will be long before he gets into hot water.

So we were actually thinking of a move as a preemptive kinda thing.

PIC - My kids love cats, in case you are volunteering =)

Silly side story....My husband took my daughter to Austin this summer to see his brother (before he deployed to Iraq)...when I asked about her favorite part of the trip....she replied, playing with the cat.

Husmanen said...

I am concerned about my LL too. I know that if she were to sell today she would loose her 20% down-payment and then there are transaction costs. So I monitor a few rental sites to keep my finger on the pulse and costs.

My rent has not gone up in two years and the rental homes of comparable size are roughly the same. We would like to stay as long as we can.

I figure if it does go into foreclosure I still have some time, probably six months given the current political/financial climate.

RV6Flyer said...

Money is starting to move again, credit is getting cheaper again, why not just buy a house and not worry about the LL issue. Really, if you purchase a home 3-6 months from now, which is about how long it will probably take, how much more downside risk do you have? Also, credit is starting to turn the corner and rates will be darn cheap next spring. Lock in a 30 year fixed at once again historical lows and be happy for the next 10-15 years. I know I sound a bit like a realtor pushing smack, but it is begining to make more sense.
Looking forward to Friday morning's GDP numbers.

anon1137 said...

How much more downside risk do you have?

Potentially, plenty, and it entirely depends on where you buy. There are a handful of zip codes in Sac County that have barely corrected (95630 being one of them). People assume that because the county median price is down 50% or whatever, that we're near the bottom. That shows a misunderstanding of statistics. All it takes is a stagnation of sales in some areas together with a flood of foreclosure sales in Del Paso and South Sac to produce a 50% drop in the median. For example, based on Sept 2008 sales, 95816 (Midtown/East Sac) is down < 5% from the peak and 95818 (Land Park/Curtis Park is down only 25%. If you buy in one of those areas, I think you could potentially lose more than $100K before we reach bottom.

alba said...

Only move for the sake of your kids. You could be renting for one or more years. Hopefully, you're renting in the school boundaries you plan to send your kids to school. There couldn't be anything more important than the right school for you and your kids.

Husmanen said...

I realize the distance is not optimal but the school I believe you are referring to has very high scores and is very highly regarded, based on the numbers. The school area might be to your liking as it does not have mello roos and HOAs are very low, but has a great community feel. Very different from Serrano. Not better or worse just different.

Cmyst said...

The Sig and I debated moving to another rental a year ago. We decided the costs were just too high.
Our rent is reasonable for the space, and our landlords have owned this house for over 20 years.

I am very grateful that I don't have to worry about schools. Frankly, I don't think I worried enough about them when my kids were young -- but even if I had, we had no money and had to live where we could afford to live.
Hindsight being 20/20, I'd agree that securing good schooling and a supportive and encouraging peer environment is of utmost importance.

Patient Renter said...

Looking forward to Friday morning's GDP numbers.

Looks like they're out. Decreasing annually.

sacramentia said...

Are you sure that the schools are impacted? Sign ups aren't until March and last I heard there was declining enrollment from all the foreclosures.