Should I sell my home?

October 20, 2008 2:14 PM

Should I sell my home or not? (in Alberta, Canada)

Okay,

I am a single father. 3 kids, sole custody. No support from exwife who lives in Calgary as well.

I have a decent home, not too big, not too small, but too much for a single dad to take care of. Our housing market is beginning to crash here.

Do I sell and rent while I still have equity, or should I hold on and see what happens in a few years as everyone tells me that there will be a 'temporary' slump.

The stakes are high - I want to be responsible and do the right thing, but have no idea what to do as exwife was the financial brains behind the business.

Renting would allow me to save $400/mo or so.

posted by burhan to home & garden (8 comments total)

Not about the finance end of things, but how old are the kids, and how do they feel about moving? Has the divorce been recent, are they all in turmoil mode?
posted by kellyblah at 2:30 PM on October 20, 2008

You have a home in Calgary? How far is it from the city core? Calgary is estimated to double in size by 1 million between now and 2050. They intend to stop expansion of city limits and grown on the outskirts of the city. How close are you to public transit. Parks? What's your commute like? Take these things into consideration.

More thoughts: How far into your mortgage are you? The nice thing of having 20 years to go on a 25 year mortgage is that you know your payment in 2028 will be the same as it is now (and who knows how little that will be as part of your salary when compared to now), while rent will continue to gradually increase (in theory)).

Further thoughts: Put your house on the market at a price you'd be happy to sell at. If nobody takes, then stay in your house or reassess your math. No cost to you. Don't forget you'll lose 4% of the sale to the real estate agent.
posted by furtive at 2:38 PM on October 20, 2008

I got out last year, this slump isn't going to be temporary anymore than the heated markets in the states were. Prices are totally out of line with fundamentals and prices are going to either continue to decline or at best remain steady for years. The fact that you can rent a similar place for $400 a month less is proof of the over valuation of residential property.

However keep in mind selling is going to cost you thousands of dollars in commission and assorted costs with moving. And you have to trade off the capital gain vs. the hassle of renting long term.
posted by Mitheral at 2:44 PM on October 20, 2008

Kids are young. Divorce is now at 8 months. They view moving as an adventure. They are okay with it.

Selling while I can still pull positive equity out of the house is good, in that I can then move anywhere else in the country if I wanted to. I am worried that if I don't, I'll be trapped.

I am about 3 minutes from the train, in the NorthEast part of calgary - at what was the 'edge' 3 years ago, but is now not. The commute downtown is <2>
3 years into a 40 year mortgage.

I meet my Realtor tonight, he wants me to list at a price that will sell the house at a good market price. I'd be happy to sell it. I just don't know if it's the right thing to do.
posted by burhan at 2:50 PM on October 20, 2008

Sounds like you want to move if not now then in the next few years. In which case selling now and being fairly aggressive on pricing is the way to go IMO. Prices are going to remain steady at best or more likely decline significantly in the next few years.
posted by Mitheral at 3:20 PM on October 20, 2008

Everyone says for me to be very aggressive on my price - to read the contract to ensure that he's not just highballing me to get a listing that he's going to drop the price on.

I'm thinking that's the way to go.
posted by burhan at 3:22 PM on October 20, 2008

That $400 a month will build equity for you. If it's not too big a strain on your budget (i.e., if you're not having trouble paying bills and saving for the kids' education and your retirement), then keep the house. It gives the kid a place that is their home, rather than someone else's that they're just staying in, and it will be worth quite a bit when you own it.

Of course, you have to consider whether the gap will get bigger if your mortgage resets; will you be able to afford it then; will the value of your house have dropped? Might be worth talking to a financial advisor before a realtor.
posted by Dasein at 6:07 PM on October 20, 2008

I just bought a place in January, after renting for over a decade (Vancouver, yes, hell of a time to get into the market, eh?). So I'm sure my house value is going down soon, if not now. However, here's how I look at it, and how you may wish to as well. This place is, after all the dust settles, about $350 more than I was paying for rent. However, I am building eventual equity. Yes, the market's going down, and later on it will go up again. I'm looking at it long term, and despite the extra cash per month to own this place, I couldn't be happier. I live in my own place, I don't have to ask anyone but me about changing anything in it, painting, ripping up the deck/lawn/carpet/whatever, nobody upstairs/downstairs to bother when I'm pounding on something at 11 at night, playing a movie loud, etc. You won't have to worry about the rent going up, or the landlord coming in and poking around with things, or the landlord deciding to sell and suddenly you're moving on (happened to me), or the landlord just decides he wants to live there.
All the time I was renting, it was like mentally walking on eggshells. You don't own where you are living. You don't have the final say. It's an intangible, but a very important one. With a child (I have one part time), it's even moreso. In fact, when I first moved into my place, I found myself acting just like I did when I was renting for a while, keeping the volume down real low on the TV at night, trying not to make noise when walking, etc. Took a while to shake that behavior.

What I would do if I were you is just sit down and see if you have the resources to stay in the house or not, firstly. Don't think about it as an investment or any other financial vehicle. Be rational, and dispassionate with the calculation. If you don't have the resources to stay, then that's an easy call. You should sell. If you do have the resources to pull it off (and having the resources doesn't mean can do if everyone eats mac and cheese for 2 years), you may want to take the long view. Don't worry about what your house is going to be worth in 2 years and what value you've "lost". Think about it over 10 years. It's probably not going to be upside down in that length of time. And you'll have had a stable base for you and your kids to live a life, instead of worrying about living under someone else's roof.
And if you do decide to stay, I should point out that the next little while may be a good time to refinance your mortgage at a lower rate, if you're a solid credit type guy.
posted by barc0001 at 11:30 PM on October 20, 2008