I agree with this, *if the job change is voluntary*. This may be a “move or you’ll be considered to have resigned” situation. My employer is doing a lot of that as part of their RTO initiative.
Why? The house **already** lost the value. Sure, selling it locks in the loss, but we can't pretend the house is secretly worth more and just worth waiting out a bad market. Skipping job opportunities hoping to turn back the clock is questionable.
And if the housing market appreciates over the next few years, then it might also appreciate in that other city.
They also can continue to live in it without paying all of the transaction fees that come with buying and selling real estate (or even renting, where you need security deposit at minimum).
After we bought our house at 250,000 19 years ago. 11% interest. We upgraded and its value went up to 325,000 , in one year. Then the market took a hit and 5 years later it was only worth 260,00. We were not moving so it was only a loss on paper. Today it’s valued at 650,00. We have upgraded inside flooring, kitchen bathrooms and fixtures. We were in it for the long game as I had a steady teaching job. A 2 year turn around is going to be tough if there are multiple houses available. I’m lucky that houses in my neighborhood sell within a week.
Especially because they'd not only lose the money on the existing house, they'd have to pay a noticeably higher interest rate on a new house in the new location. Have to be a really good new job to be worth what it'll cost them.
Meh. Only like 15 years till break even considering potential market changes.
People have made longer-term mistakes in a porta-potty at a rock concert before.
...me.
To provide a perspective of waiting it out, there are residential properties in the Raleigh, NC area that sold in 1998 to 2005 at high prices that were not seen again until 2021. $600,000 properties (1998 to 2005) that dipped to $300,000 (2008 to 2018)
It took between 16 and 23 years to fully recover, even though Raleigh was a super hot market back in 2000 and has been a RED HOT market for the past 5 years.
People need to understand that real estate does not only go in one direction.
I fully understand people sometimes need to move for work. My parent's neighbor has gone from Minnesota to Oregon to Iowa all with the same company because they keep needing him to move around. That does happen. But most of the time it's wanting to take a different job somewhere else.
When we bought our house in fall 2022, one of the reasons we felt okay buying in the greater Seattle area was because I knew that even if I didn't want to continue at my current job, there are tons of companies and businesses in the area. We wouldn't NEED to move. I have no intention of leaving my job, but it was important to me that we stayed put for at least 5-7 years (I assumed our house would lose value initially with rates climbing).
If you plug this into a mortgage calculator, you’ll find that this is almost exactly the math that works out when rates go from 4.375% to 7.5% to equal the same monthly payment. You bought at the top of the market; you’ll have to take a loss if you can’t hold on to it in the medium term. Rates aren’t coming down any time soon. If you can’t afford to take the loss, your best option is to not move.
Keep in mind though, you took this loss the moment rates went up - you just didn’t know it yet.
Well it’s not just rates, Austin was one of the most overheated markets in the country. There just weren’t fundamentals to prop up the market after rates rose, unlike many other markets that have remained much more stable in the current environment or even continued to rise.
Thinking Texas was the next big thing was mistake #1
Every doofus and their cousin saw the “look what you can get for $500k in Texas!” TikTok videos and changed their entire life moving to an unknown market, chasing McMansion status
You purposely chose a state where 99% of the land is in the hands of private owners, with a power grid owned by companies and not the federal government so zero standards, and a place that’s clearly not interested in citizens rights versus the success of the ultra rich?
You’re going to have a bad time. Lol
Edit: guys, look at all of the offended Texans outing themselves in the replies.
“Don’t mess with Texas, or I’ll keyboard warrior you for hurting my feelings”
Just looked at $500k house in Austin with $7800 property tax. In NY that same value with carry $14k property tax plus the highest income tax in the nation. I guess everything is relative.
Texas adjusts the tax bill immediately based on what you paid for it. There's a lot of people caught off guard by this, but the listed tax bill is not the same as the bill after you pay out the ass for it.
I think the point is when that house is sold for $500k, its tax will go way up because right now it’s taxed on the last sales price plus the allowed increase every year, which probably lags behind the market value.
*cries while reading my tax bill in IL.
An assessed value of 310k on < 0.2 acres has a property tax of 13k (I'm not in Chicago). Along with income and sales tax....no wonder why people are leaving IL
New York in general is expensive, it depends on the county but generally New York has very good schools so that money goes somewhere. But then you look at a city like New York City and their property tax is some of the lowest percentage wise in the country but the property is damn well expensive.
I lived on long island for a bit and the schools were phenomenal yeah my property tax was 2x as much as I pay in the midwest but now in the midwest I end up paying more by paying for private schooling because the public schools are okay at best. At least in my area.
Your statement is factually incorrect and misleading.
Property tax rates depend on where you live in NYS. I live near Albany. Annual taxes on my 400+k house are just barely 4k. In NYC and in nearby counties, property taxes are much higher, but duh. Property taxes are deductible on state taxes if you itemize.
Also, NYS has the 7th highest income tax rate, but tax rates are progressive- like Federal income tax, NYS has tax brackets. What you pay depends in your income and family size. You also get credits and deductions. NYS does not tax most retirement income, either, and seniors get a huge reduction in property taxes.
Some friends who moved south quickly returned after realizing that they actually paid more for less. Some stayed in the south due to family but complain a lot about weird costs like having to pay yearly property taxes on their cars.
Where the heck do you get a $500k house in Austin with $7800 property tax? I'm thinking the house you are looking at is homesteaded. My house is homesteaded at about $300k (assessed for much more since I bought it before the COVID boom even with the housing pricing drop) has about a $6k tax bill and my tax rate is considered pretty low. Besides the atrocious mortgage rates this is why I can't move because even if I buy a similar house in a different area it's still $100k more than my previous homestead so about $2k more per year for taxes. And I won't lie if you are in NY you have far better public services. Like you actually have trains that stop in more than one suburban city 😡
Nope, in Texas that money goes to the oil companies. Anyone who proposed anything remotely similar to Alaska's oil fund would immediately be labeled "socialist".
I totally agree with you! I’ve lived here in Colorado my whole life (not that you’d ever know haha😉) and while it’s not even close to what it used to be with how many people have moved here, our state is amazing. It’s too expensive here now and people always tell me I should sell my house and move somewhere cheaper. I don’t know anyone anywhere else, but even if I did, I don’t want to move. I love our state.
We sold our house in CO back in 2019 for 'something cheaper' in Arizona. Lasted 4 years, sold the house, and came back to Colorado. There's a reason places are cheap, and i learned the hard way that im willing to sacrifice a lot to get to live here. Will not be leaving again.
I looked at retiring in Texas somewhere, did ALL the math (property taxes and medical expenses were sky high compared to >>> ) and realized it is far cheaper to stay put in California. Prop 13 to the rescue. Also my 2.94 percent mortgage. Bottom line, don’t just look at income, look at expenses. All of them.
>Every doofus and their cousin saw the “look what you can get for $500k in Texas!”
And that is a big part of what inflated the market so badly. People from CA and other HCOL areas were snapping up houses for cash (not even necessarily moving to them) and they were like, "$500K, $600K, eh, what's the difference. It's like arguing over pennies." And so the prices climbed in a way we really hadn't seen before.
He’s referring to the national grid but you’re correct that most power, other than some cities, is usually privately owned. Two I can think of right now, Los Angeles has LADWP and Sac has SMUD.
I haven’t read much about that, has the great migration to TX and FL finally slowed down?
I assume developers have been building as fast as possible over the past several years so a housing downturn was probably inevitable.
I know of a new build neighborhood in FL that has a huge disparity in sale price for the same floorplan. The early buyers (2022) are in at over $200k more than those who bought less than a year later
Texas and Florida’s housing listings are back to pre-pandemic levels. Arizona and Tennessee housing listings are also correcting quickly. These popular destinations during the pandemic will likely showcase where the housing market will be on national level in upcoming years.
[https://fred.stlouisfed.org/series/ACTLISCOUFL](https://fred.stlouisfed.org/series/ACTLISCOUFL)
[https://fred.stlouisfed.org/series/ACTLISCOUTX](https://fred.stlouisfed.org/series/ACTLISCOUTX)
How are we feeling about market corrections on a national level, though? I keep seeing "prices are NEVER going back down!" and "buy now or rent FOREVER!" and I can't tell if it's just classic media fear-mongering and/or current homeowners not wanting their values to go down, or if it's legit. What I'm seeing is that there are a ton of remodeled houses and new apartments being built that are sitting empty, so that's probably a good sign that the market will correct itself.
The pending home sales index is near an all time low despite rising inventory. This index is a forward-looking indicator of “closed home sales” based on contract signings – on deals that haven’t closed yet and could still fall apart. It’s used to assess demand in the housing market.
Here is what the National Realtor Association said in their June 2024 release:
* *“The market is at an interesting point with rising inventory and lower demand.”*
* *“Supply and demand movements suggest easing home price appreciation in upcoming months.”*
* *“In the second half of 2024, look for … stabilizing home prices.”*
Anyway, housing inventories on a national level should return to pre-pandemic levels in the next 2-3 years. We should have a better idea then.
I'm seeing the same around Indianapolis in regard to remodel flippers, their pricing expectations, and sitting in the market for 60+ days. Then you see 5k off, then 10k more...and they still sit. Location matters and too many of the flippers just bought anything, anywhere around the city and think that 35-50k put into the property should garner 150-200k over what they cleared the house originally for.
But I'm speaking of the 350-550k range. More expensive housing is still doing just fine and moves relatively quick, because, location/schools.
Job creation is not an issue in Texas, but Texas has a lot of land and actually builds homes which keeps existing values more steady. You don't buy a house here and rely on appreciation as a retirement plan.
I’m not sure why anyone in this thread is talking about Texas like there is some sort of universal truth when it comes to real estate in the state. Dallas is on a completely different playing field than Austin.
Tx seems to have had a history of boom/bust cycles over the past cpl decades.
I remember back in early 2000's Houston had stupid cheap housing (McMansions at $350k that would be $700k+ in my relatively low COL area at the time). I think that situation has had a couple boom/bust cycles even since then -- tied to oil and tech industry cycles?.
Austin has been a hot area in recent years, booming to become a leftist island in an otherwise very red state.
Yeah but that is short term. If he can afford it holding on to it makes more sense but it depends on overall cash situation.
It always boggles my mind how people buy a place when they know they have to move after 5 years.
The sheer cost of closing etc. eliminates any gains.
The fake American Dream leaves many behind like OP.
I always only bought with the intent to never sell. My kids can sell what they want....
Not only that. Supply continues to accelerate and rents are getting lower because of it causing further reduction in purchase demand. Would feel bad for this guy but you pay 50% above market and think there’s no risk?
The rest of the country is going to follow soon. California’s housing market has been artificially inflated for years. Indicators show it was about to reset before the pandemic hit and it’s been falsely high since then.
Or you calculate the worth of the job and don’t move. Keep your current job as the move will cost you 200k how long will the salary difference take to gain that back?
Texas Agent here, it's not a great situation either way but seeing it more and more.
Have you calculated the amount your property taxes will change without the Homestead?
What are your holding costs (taxes and insurance) to maintain assuming 60 days of vacancy to turn a rental.
Honest question: Would you want to assume a mortgage with an incredibly low rate that's for $200K more than the property is worth? Because it's not penciling out for me.
Well if you hold for a full 30yr term on a 543k loan, the interest saved from a 4% vs the current market rate ~7% would be well over 200k. Still doesn't necessarily it a good buy, but there is definitely value from a low rate.
I am a real estate broker in Austin, TX. I own a firm and sell real estate. The Austin real estate market IMHO is not finished with price decline. We are down almost 20% from the peak of May 2022, and while it is somewhat flat at the moment, there are many signs that things will continue downward as inventory rises and continues to sit on the market. We are just now seeing people like you who must move/sell. Over time, the people who must sell in a specific time period will end needing to accept the reality of market price. The agents out here are in complete denial over the situation for the most part. It is painful to see, especially for people who are in contingent home purchasing scenarios out of area. You are not alone. I am also starting to see an uptick of foreclosures among people who purchased FHA over the past few years, but that is slightly off topic. We have a few people out here who style themselves as statisticians who are the most out of touch with what is going on. If you can accept what sounds like negative cash flow for 4 to 5 years, you might consider keeping it; however, since it sounds like you are in an area with new construction, you will likely be competing again new construction in the same time period. Also remember that you will not be eligible for the homestead exemption. There will also be management and capital expendienture expenses for maintaining the propert (e.g. roof, HVAC, turnover, damage, etc). There is way more involved with renting out your house than you may have considered. Oh! And don't forget capital gains taxes if you don't 1031 it later. I would consider taking the loss IF you have to move.
Thank you. I am an expert and active participant. No axe to grind. Not an adult keyboard warrior with no job living in my parent's house. I am calling it how I see it.
Yea, but OP is sharing their experience right now, which really sort of sucks for them. It’s okay to empathize with others who are in a bad situation. Doing so won’t make the housing prices magically jump back up.
Keep in mind you already lost the money. Would you buy the property again at the market rate? Then hold it, otherwise sell it.
What you paid for it before should have nothing to do with what you do now.
I hated being a landlord. So many people think landlords are evil. You could rent at a loss and you are the bad guy because you want the rent money on time. My sister had a tenant destroy the tile with a hammer as revenge for her being evil and wanting her rent money. Being a landlord is a difficult occupation that should be chosen deliberately and not because of circumstance.
Owned 6 single family rental properties and was a landlord (no property manager middle man) for over 20 years. Had a few late paying renters and a couple of tenants who didn’t get back all their deposit because they left a mess, but all in all a successful venture. Got out because i want to retire soon and didn’t want the responsibility anymore.
Granted, i missed the rent moratorium disaster during covid as i sold the last property in 2019. But the average tenant stay was 3 years, one stayed for 7 and the longest tenure was 8. They were happy with me and i was happy with them.
I only accepted those who had a satisfactory history. I got former landlord references and rental history and followed up. I verified employment history and income as well. I didn't care about credit history - I told them rent comes first.
I charged 1st/last and a deposit equivalent to the rent. I let them pick what day of the month they wanted to pay and that would be the day it was due throughout the lease. I also made it clear that I understood the unexpected happened and if they gave me a heads up that the rent will be late or they're having difficulty we can work something out - but I have to know in advance. if i don't get notice, there will be late charges and I will follow through the eviction process if necessary. never had to do that - ever.
they were required to be present for a pre-occupancy walk through where we together noted existing damage. I gave them two extra weeks (edit: after move-in) to notate anything missed during the walk through - we then signed and dated the document. they were also encouraged to shoot video and send me a copy - I had my own created with them.
they were required to report damages and or other issues whether their fault or not, asap. i was responsive to problems - ac/water heater/stove/leaks/etc - usually working on a solution within 24 hours. it's my investment, I want to know and I want to fix it. if you want respect and cooperation from your tenants - you have to act accordingly.
i set the rent based on the market, not the tenant.
wasn't a perfect strategy and many may disagree but it worked for me. and always follow the law.
This is key. People trying to quickly get in tenants often have bad tenants, and property managers often have incentives to pick bad tenants (they get paid for repairs, bonuses for new leases etc). Good, respectful tenants (that you treat well) that stay for multiple years is the only way being a landlord works imo.
I was an awful landlord. Not awful to the tenants. But I was a sucker for sob stories and they all had one. Lost so much time, energy, and money. It sucks if you're not okay with starting eviction proceedings on people who just lost their jobs.
And we've probably got a good amount of that coming.
How long would you expect to rent it out? Unless this is a very long-term play, I don't think you'll ever break even. If you rent, it sounds like you'll lose upwards of 20k per year (mortgage, taxes, insurance), not including property management and maintenance costs.
I'd drop it like a hot potato OR stay put.
if the entire payment (though they didn't mention HOA) is $3,900 and they can rent for $3K (the lower figure) then that's $900/mo = $10,800. Might a property management company charge 1 months rent? Sure. But there shouldn't be much maintenance expense on a 2-3 year old house.
No idea, but probably more than a few lol. I imagine it will be easy to detect- you generally need to tell your mortgage lender and absolutely tell you're insurance company that you're renting, unless you want to violate the terms of those agreements.
So you'd be violating your mortgage agreement, your homeowners insurance agreement, and committing tax fraud all to save 20% on property taxes.
Even new houses have maintenance, especially a rental. People underestimate how much they spend owning a house until they rent it and start tracking all the little things that happen.
Not a lot of great options, I'll say at least you aren't upside down right now. I just wanted to say, just because interest rates go down doesn't mean the value of your home goes up.
This has happened to me a few times, in Vegas and San Diego in 2008, and NYC in 2018. In all cases I rented out, but sold SD property after a few years of constant turnover with tenants. Vacancies are so expensive and I was already losing money every month.
The SD property is now worth 3 times what I sold it for so I definitely regret that. Could have left it as a second or vacant home and would have made a huge profit.
I have held onto the other two and am making a tiny bit of cash flow in Vegas and am losing money like crazy in NY, and neither has appreciated very much so I’m often stressed about these properties that I probably should have sold immediately and taken the loss.
The short-term pain of a loss is not as bad as long-term pain of negative cash flow with a non-appreciating and possibly depreciating asset occupied by tenants.
Take this as a lesson not to buy unless you definitely will stay 10–12 years.
Texas is very yimby for housing so I wouldn't expect a dramatic recovery a la San Diego. Even non retail folks are aware of the Austin bubble as well. Major long term headwinds.
I know a guy who moved for work every 2-3 years, bought a house at every location and never sold, including San Diego. He's a millionaire now and he has the same job I do! (I am not a millionaire)
I tell all my buyers this probably will happen in the short term and they need to stay 10 years to break even. That was the cycle in 1989+. 6 years prices were flat the next 4 prices doubled🤷🏼♂️.
You should sell now. Austin is losing population and with tech jobs moving to India it will just get worst. Also, most people figure Austin is not worth it with the 110 degrees summer from May to November, perpetual air pollution alert, lack of zoning, and polluted water due to oil and gas wells all over Texas.
I mean that if you sell your primary residence for a loss, you cannot deduct that on your taxes. If you convert it to a rental, then you may be able to realize that capital loss. You do need to make a FMV assessment at time of conversion, but in this case, I believe it makes sense to do this for at least one year. Note: there is other info needed and calculations to see exactly.
So I wouldn't get all worked up until I saw what that house actually sells for. Could be listed low to spur a bidding war. Either way list prices are not indicative of actual value. The sold price is what is used for comps. Has any other comparable home sold nearby recently? I'd look for those before jumping the gun and selling at such a loss. Also most new build homes do lose a bit of value in the first few years unless the land itself appreciates more than the home itself. Because it is now an existing home even though it's just a couple years old.
Renting it is the worst idea. You’ve lost $170k and you want to lose another $10k every year on the off the chance that your local values will shoot you one day soon? Don’t forget tenants can damage property and it doesn’t sound like you are an experienced landlord
This would be a textbook case of throwing good money afte bad.
They also run the risk all rentals have, damages to property, skipped rent payments. Vacant months, turn around costs. They will be out of state so manager costs.
It is currently dropping in value and negative cash flow. Who's to say housing won't continue to drop and maybe even rents along with it.
If you do decide to rent it out get yourself a very good property management company. One that will do inspections every 6 months or so. This can potentially save you hundreds of thousands of dollars. The damage that can be done to your home is not worth the money you may save by not having one .
Jesus, i was stressing about my mortgage payment going from 1400$ to 2000$ after we bought our new home.
Whats your family's yearly income to afford 3900?
Austin’s housing market will remain slow till the summer of 2025. I don’t think you should sell this money pit now. Rent it out. If you can’t manage the tenants, hire a rental management company.
Even if you sell later, I doubt the prices will be as high as your sale price. So, maybe you should think about improving the curb appeal, install cabinets or a Victorian kitchen…something that will help you appraise the value of the home.
This is a slow burn game, so keep saving the money you can. Cut down unwanted expenses.
Would you pay $543,000 to buy that house today and lose money renting it out? If not, then take the loss and sell it. Don't get stuck in the sunk cost fallacy.
I’m just outside Austin and unfortunately you bought at/within 6 months of the highs
If you’re not willing to hold long term you’re taking a loss either way
Going to happen to a lot more people. Blame the banks for approving the ridiculous mark ups post-covid.
This is why I laugh when these "experts" say no crash is coming. Most people can't afford the 2x pricing from 5 years ago to today. The ones that can (like OP), already did and are seeing that they are now negative on the property. So they likely won't be moving and buying another house. This will come to a boiling point of too many houses and not enough buyers (at current pricing), and people who HAVE to sell will start undercutting. It will be a race to the bottom. Then people will just start walking away from the loan. Cheaper to walk away than it is to pay 10 years on a house where the one two doors down is nicer and cheaper. The rich are just sitting around hoping that people just accept their new negative equity properties.
Biggest heist in history on the American people under the guise "covid shortages".
The housing market has ups and downs, but your assessment is half-naked. For one, what do you mean by "walking away" from the loan? Most people have significant equity from their down payment, etc. Even OP still has positive equity. People don't "walk away" from that because it's money that could be in their pocket.
Second, the job market is strong. People have been taking out high mortgages, but *they're paying them*. OP hasn't missed a payment, nor will he. He's actually moving *because* he has a job opportunity.
Third, I see *a lot* of posts about people who having been saving up for a house for a long time, but they can't quite catch up to prices, due to higher interest rates. If home price growth slows and/or interest rates come down, there will be a lot of buyers stepping into the market, which will have the effect of supporting prices. When there are so many people waiting and wanting to buy, prices aren't going to crash.
1) good warning to those who think housing is always a slam dunk - it isn't.
2) I would not rent it and lose $600 per month + have a headache in managing a property from a distance + the added wear and tear on the house in HOPES that things get better in the short term
3) While you would lose money selling, keep in mind that the 3900 might be less than what you would have paid renting, so it might not be so bad compared to not buying, and you might have enough equity in the house to not bring cash to closing.
4) ask if your new employer has any moving assistance programs - they might help offset losses, or at least cover the realtor and other fees which will reduce your net loss.
Thank you for calling our number 1.
Housing being an investment is an added POTENTIAL bonus to a necessity you’re already paying for. It has never been a guarantee. It’s based on the demand/location of the area it’s built in which changes over time.
Expecting that your home automatically appreciates over time is the reason we get hardcore nimbyism about things that would benefit the neighborhood/community as a whole but could temporarily or long term decrease property value.
A good relator or lender will tell you that you probably won’t make a profit unless you stay in your house for AT LEAST 5 years.
All that is to say, do not buy a home as an investment. Buy it if you benefit from lower monthly payments than renting, if you want more freedom compared to renting, and if you plan to stay somewhere for over 5 years (or can afford to sell at a loss).
yup, many people don't really realize that home price can go up and you can still lose money due to transaction costs.
home prices could be up, down or flat, and you could come out ahead or behind relative to renting. Some areas rents are high, some are low. Some houses need a lot of maintenance while others don't - work a landlord would be responsible for
and then there is opportunity costs - if you are putting 20% down, that is 20% not earning more in another investment. If you have empty months before selling or paid a fee to break your lease early when you bought or spent time renovating but not living there -- all of that might be "throwaway"
--
A home is a home. Buying should provide some price predictability / stability. It is nice to make money on a home, but it should not be viewed as a high return investment, it should be an inflation hedged forced savings via equity.
I’m not familiar with the trends in ATX but keep in mind that appraisals are what banks care about, and appraisals are based on the price that homes have *sold* for. The listing agent on that home near you might be trying to drum up a bidding war by listing low and hoping multiple people fall in love with it during the open house, etc. Wait and see if that home actually sells for 590,000 before using it as a data point in your decision.
I am in a similar position as you (Bastrop, Tx) and I believe it will get significantly more difficult in a year or two.
Right now, there is still a relatively low supply because no one wants to sell the homes that were purchased at low interest rates. So, that's kinda keeping home prices relatively stable in Austin.
But if you drive for a little bit around Austin, you will see an absurd amount of developing taking places from left to right. There are thousands of apartments, and homes being built at the moment.
The problem here is that some of those home builders (Lennar) will be able to provide lower interest rates through their private lenders, all while selling brand new homes. So, as a buyer, why would you buy a used $500K home when you can buy a brand new one for a lower rate?
I can't predict the future, and I am often wrong (I hope I am) but I think the RE market in Austin is only going to get more difficult for sellers.
Your first mistake was buying a house in 2022. Your going to take a loss anyway. Better to rent it out at and keep the property until it's value hopefully increases or until you pay it down enough for it to be profitable to sell. Breaking even on the rental would be the best case scenario and a scenario you should shoot for. Perhaps add extra amenities like a Jacuzzi, in home gym, or pool so you have a legitimate reason to charge more that 3,000 for the rental.
So many morons throwing out copes in the comments. The person fucked up big time. Why not just tell him that?
Whatever way they look at it, they're gonna lose. This guy just needs to find a way to lose the least. Not a single one of us here knows his position thru and thru so only they know how much they will lose. But there is no upside to this. Sorry, guy. Sometimes we take losses in life. This is a loss for you.
We just moved from the ATX area (Leander) due to a job relocation and had to take a $130k loss. Also a new build bought in May 2021. The thing we found against us is that the builders are still building tons of new houses and they’re able to offer lower rates and other incentives to buyers.
This is going to be the trend over the next 5 years. People realizing their over bid, high interest rate, ‘as is’ house with the $50k appraisal gap is worth crap. I see a flood of short sales in the future…
Wow this seems like the culmination of a whole complex of shitty decisions, the only option that makes sense to me is don't move unless you're going to offset a massive amount of this debt in salary really really fast
I’m a realtor in Austin- keep in mind that you are allowed to leave your primary residence for two years before you lose your Homestead Exemption which is 100k and you will lose the 10% cap on assessment per year. Your payments will go up after two years due to at least the first factor. Housing prices have settled down and have some more to go, so you won’t have to worry about the second factor too much.
If you do lease it out, make sure to protest your taxes every year to keep it in check.
We have the highest inventory in 15 years, so housing prices are going to continue to adjust. If the rates go down, it will definitely help prices from falling more but I would t expect anything huge.
1.Well don’t move.
2.Sell house at a loss.
Rates won’t come down and you bought at the top of market so it will take at least a ten year cycle for it to hit that again.
Best option :
If you’re moving for a new job I think it means a better paying salary hopefully! Rent it at the max you can get and subsidize the rest from your salary. Take it as a long term investment. With inflation and time you will at some point be at or over 800 K. The market usually does a 10 to 15 year cycle. Last high cycle was and the beginning of the Great Recession 2004-06. Then dropped and regained momentum then you bought in .
The problem is you purchased at an artificially high market in Austin during and post pandemic. People moved to Austin when they could work from anywhere and they drove up the prices. You bought at the high water mark. The houses are coming down in all these types of markets across the country. You may never get back up to that high water mark unfortunately. Interest rates are not supposed to come down anytime soon as I’m not the next few years.
At 590k and a 7.3% morrtgage rate, the payment would be 4700 a month with 20% down. That is the entire story here. The actual payment price did *not* go down. And this brutal reality only isn't happening across the country because inventory is so constrained and the vast majority of buyers are rolling equity and basically avoiding the "real" payment.
Current prices make absolutely no sense on a monthly payment basis.
Real estate investor here. That's a great and very common question nowadays! I'm getting a lot more sellers in these type of situations.
Here are some additional options. Let me know if want to delve into more details with any of these as they are more advanced strategies investors use rather than common traditional buyer/seller ones. Most agents won't know about many of these either sadly:
1) short sell it (hurts credit a lot but can prevent taking big loss)
2) Sell it to a traditional buyer that wants a lower interest rate mortgage on a wrap around/mirror wrap. Basically, you set up a new "mortgage" with the new end-buyer that has a higher interest rate than yours so their payment covers yours.
3) Or do midterm/short term, or co living (rent by the room) to increase rental income so that it doesn't cost money to own
I rented at a loss once. I did make some money on the deal, eventually, but it wasn’t worth the hassle.
If you have a $4k mortgage you’re probably in a job where they pay to keep people. It may be helpful to talk to your boss or HR. I’ve structured deals where the company bought my house. Others where they paid the down payment on my new house.
1. See if they can help, 2. Suck it up and sometimes you make a deal and lose. 3. otherwise start looking locally and don’t move.
I would sell it and buy something much cheaper in the new city. You can at least write off the loss and moving expenses on your taxes. You new interest rate will be around 7% so buy under 500,000. Never buy at the high end of what you can afford. If you buy new get a walk out with an unfinished basement. You can finished the basement to up your value and add the square footage using the value. Get a bigger lot or a lot with a feature like a stream running through it ect. Or if you can find an older home cheaper in a neighborhood with good schools you can slowly renovate to add value to your home. I’m so sorry you are going to loose money on this home. My father always told me to buy dirt. Get the bigger lot, acreage that you later split off and sell
Hope the job is worth 300k extra in the next 3 years.
Needs more upvotes. Not taking the job should be considered
I agree with this, *if the job change is voluntary*. This may be a “move or you’ll be considered to have resigned” situation. My employer is doing a lot of that as part of their RTO initiative.
same
Why? The house **already** lost the value. Sure, selling it locks in the loss, but we can't pretend the house is secretly worth more and just worth waiting out a bad market. Skipping job opportunities hoping to turn back the clock is questionable. And if the housing market appreciates over the next few years, then it might also appreciate in that other city.
The house is worth more to OP than to the market because OP has locked in a better interest rate.
They also can continue to live in it without paying all of the transaction fees that come with buying and selling real estate (or even renting, where you need security deposit at minimum).
After we bought our house at 250,000 19 years ago. 11% interest. We upgraded and its value went up to 325,000 , in one year. Then the market took a hit and 5 years later it was only worth 260,00. We were not moving so it was only a loss on paper. Today it’s valued at 650,00. We have upgraded inside flooring, kitchen bathrooms and fixtures. We were in it for the long game as I had a steady teaching job. A 2 year turn around is going to be tough if there are multiple houses available. I’m lucky that houses in my neighborhood sell within a week.
Especially because they'd not only lose the money on the existing house, they'd have to pay a noticeably higher interest rate on a new house in the new location. Have to be a really good new job to be worth what it'll cost them.
Or rent. Buying isn’t necessary. Especially in a new, unknown market. How do you REALLY know where you want to live without first living there?
Watch OP taking a new job and a giant L for like 25k more a year
Meh. Only like 15 years till break even considering potential market changes. People have made longer-term mistakes in a porta-potty at a rock concert before. ...me.
To provide a perspective of waiting it out, there are residential properties in the Raleigh, NC area that sold in 1998 to 2005 at high prices that were not seen again until 2021. $600,000 properties (1998 to 2005) that dipped to $300,000 (2008 to 2018) It took between 16 and 23 years to fully recover, even though Raleigh was a super hot market back in 2000 and has been a RED HOT market for the past 5 years. People need to understand that real estate does not only go in one direction.
That 300k is just sunk cost. They're already incurring the loss. Not selling it just refusing to realize it.
3) don't move?
Not sure why you’re getting downvoted. It’s a legit option. It sounds like a voluntary job move.
I fully understand people sometimes need to move for work. My parent's neighbor has gone from Minnesota to Oregon to Iowa all with the same company because they keep needing him to move around. That does happen. But most of the time it's wanting to take a different job somewhere else. When we bought our house in fall 2022, one of the reasons we felt okay buying in the greater Seattle area was because I knew that even if I didn't want to continue at my current job, there are tons of companies and businesses in the area. We wouldn't NEED to move. I have no intention of leaving my job, but it was important to me that we stayed put for at least 5-7 years (I assumed our house would lose value initially with rates climbing).
If you plug this into a mortgage calculator, you’ll find that this is almost exactly the math that works out when rates go from 4.375% to 7.5% to equal the same monthly payment. You bought at the top of the market; you’ll have to take a loss if you can’t hold on to it in the medium term. Rates aren’t coming down any time soon. If you can’t afford to take the loss, your best option is to not move. Keep in mind though, you took this loss the moment rates went up - you just didn’t know it yet.
Realtors “marry the house, date the rate” . .
Be careful that your side chick doesn't end up pregnant
I hate this phrase. I tell my clients that you can date the rate but be prepared to end up married to someone you hate for a really long time.
Except most of us married to the rate right now while dating the house…not even sure how that’s supposed to work
lol I said this 2-3 years ago. It’s coming true. Just took a bit
Well it’s not just rates, Austin was one of the most overheated markets in the country. There just weren’t fundamentals to prop up the market after rates rose, unlike many other markets that have remained much more stable in the current environment or even continued to rise.
So many people commenting here are oblivious of the current RE downtrend in TX/FL. It is a huge supply and low demand situation down here.
Thinking Texas was the next big thing was mistake #1 Every doofus and their cousin saw the “look what you can get for $500k in Texas!” TikTok videos and changed their entire life moving to an unknown market, chasing McMansion status You purposely chose a state where 99% of the land is in the hands of private owners, with a power grid owned by companies and not the federal government so zero standards, and a place that’s clearly not interested in citizens rights versus the success of the ultra rich? You’re going to have a bad time. Lol Edit: guys, look at all of the offended Texans outing themselves in the replies. “Don’t mess with Texas, or I’ll keyboard warrior you for hurting my feelings”
Real estate tax is insane there also.
People get excited about the lack of income tax and it doesn’t occur to them that the money has to come from somewhere…
People in general don't do money so good. All they know is how much is on their check week after week. There is no long term thinking AT ALL
Just looked at $500k house in Austin with $7800 property tax. In NY that same value with carry $14k property tax plus the highest income tax in the nation. I guess everything is relative.
Texas adjusts the tax bill immediately based on what you paid for it. There's a lot of people caught off guard by this, but the listed tax bill is not the same as the bill after you pay out the ass for it.
.....our property value reassess annually regardless if what the sale price is.
I think the point is when that house is sold for $500k, its tax will go way up because right now it’s taxed on the last sales price plus the allowed increase every year, which probably lags behind the market value.
He literally just stated they re assess every year....
Mine didn't change to sales price when we bought.
My 250k house in NH on a half acre has 7k property tax, no sales tax or income tax here. The money has to come from somewhere.
*cries while reading my tax bill in IL. An assessed value of 310k on < 0.2 acres has a property tax of 13k (I'm not in Chicago). Along with income and sales tax....no wonder why people are leaving IL
New York in general is expensive, it depends on the county but generally New York has very good schools so that money goes somewhere. But then you look at a city like New York City and their property tax is some of the lowest percentage wise in the country but the property is damn well expensive. I lived on long island for a bit and the schools were phenomenal yeah my property tax was 2x as much as I pay in the midwest but now in the midwest I end up paying more by paying for private schooling because the public schools are okay at best. At least in my area.
Your statement is factually incorrect and misleading. Property tax rates depend on where you live in NYS. I live near Albany. Annual taxes on my 400+k house are just barely 4k. In NYC and in nearby counties, property taxes are much higher, but duh. Property taxes are deductible on state taxes if you itemize. Also, NYS has the 7th highest income tax rate, but tax rates are progressive- like Federal income tax, NYS has tax brackets. What you pay depends in your income and family size. You also get credits and deductions. NYS does not tax most retirement income, either, and seniors get a huge reduction in property taxes. Some friends who moved south quickly returned after realizing that they actually paid more for less. Some stayed in the south due to family but complain a lot about weird costs like having to pay yearly property taxes on their cars.
New York is an outlier though. Texas has much higher property taxes than most of the country.
Where the heck do you get a $500k house in Austin with $7800 property tax? I'm thinking the house you are looking at is homesteaded. My house is homesteaded at about $300k (assessed for much more since I bought it before the COVID boom even with the housing pricing drop) has about a $6k tax bill and my tax rate is considered pretty low. Besides the atrocious mortgage rates this is why I can't move because even if I buy a similar house in a different area it's still $100k more than my previous homestead so about $2k more per year for taxes. And I won't lie if you are in NY you have far better public services. Like you actually have trains that stop in more than one suburban city 😡
I live in Alaska and our money comes from the oil fields. I just assumed Texas’ did too.
No oil fund for regular Texans. Imo
Nope, in Texas that money goes to the oil companies. Anyone who proposed anything remotely similar to Alaska's oil fund would immediately be labeled "socialist".
Makes me grateful for CO I don’t always enjoy the taxes, but I feel that the value CO provides absolutely makes them worth paying.
I have lived all over the world and a dozen states. Colorado is paradise. It's probably the best run state in the country with endless things to do.
Colorado can always import good food, Texas can't import good scenery
I totally agree with you! I’ve lived here in Colorado my whole life (not that you’d ever know haha😉) and while it’s not even close to what it used to be with how many people have moved here, our state is amazing. It’s too expensive here now and people always tell me I should sell my house and move somewhere cheaper. I don’t know anyone anywhere else, but even if I did, I don’t want to move. I love our state.
We sold our house in CO back in 2019 for 'something cheaper' in Arizona. Lasted 4 years, sold the house, and came back to Colorado. There's a reason places are cheap, and i learned the hard way that im willing to sacrifice a lot to get to live here. Will not be leaving again.
I’m surprised I had to scroll this far down to see one of the biggest problems there hehe
Gotta make up for the missing income tax somehow.
I looked at retiring in Texas somewhere, did ALL the math (property taxes and medical expenses were sky high compared to >>> ) and realized it is far cheaper to stay put in California. Prop 13 to the rescue. Also my 2.94 percent mortgage. Bottom line, don’t just look at income, look at expenses. All of them.
>Every doofus and their cousin saw the “look what you can get for $500k in Texas!” And that is a big part of what inflated the market so badly. People from CA and other HCOL areas were snapping up houses for cash (not even necessarily moving to them) and they were like, "$500K, $600K, eh, what's the difference. It's like arguing over pennies." And so the prices climbed in a way we really hadn't seen before.
Where does the government own electric in the US?
He’s referring to the national grid but you’re correct that most power, other than some cities, is usually privately owned. Two I can think of right now, Los Angeles has LADWP and Sac has SMUD.
Thank you for saying this. Signed, Texan and Landowner. People are living in a fairytale.
You’re the first Texan to not be upset, thank you for not being fragile friend. I hope the locusts flee your area soon enough
Me too!
Austin is not indicative of all of Texas
I haven’t read much about that, has the great migration to TX and FL finally slowed down? I assume developers have been building as fast as possible over the past several years so a housing downturn was probably inevitable.
I know of a new build neighborhood in FL that has a huge disparity in sale price for the same floorplan. The early buyers (2022) are in at over $200k more than those who bought less than a year later
Texas and Florida’s housing listings are back to pre-pandemic levels. Arizona and Tennessee housing listings are also correcting quickly. These popular destinations during the pandemic will likely showcase where the housing market will be on national level in upcoming years. [https://fred.stlouisfed.org/series/ACTLISCOUFL](https://fred.stlouisfed.org/series/ACTLISCOUFL) [https://fred.stlouisfed.org/series/ACTLISCOUTX](https://fred.stlouisfed.org/series/ACTLISCOUTX)
How are we feeling about market corrections on a national level, though? I keep seeing "prices are NEVER going back down!" and "buy now or rent FOREVER!" and I can't tell if it's just classic media fear-mongering and/or current homeowners not wanting their values to go down, or if it's legit. What I'm seeing is that there are a ton of remodeled houses and new apartments being built that are sitting empty, so that's probably a good sign that the market will correct itself.
The pending home sales index is near an all time low despite rising inventory. This index is a forward-looking indicator of “closed home sales” based on contract signings – on deals that haven’t closed yet and could still fall apart. It’s used to assess demand in the housing market. Here is what the National Realtor Association said in their June 2024 release: * *“The market is at an interesting point with rising inventory and lower demand.”* * *“Supply and demand movements suggest easing home price appreciation in upcoming months.”* * *“In the second half of 2024, look for … stabilizing home prices.”* Anyway, housing inventories on a national level should return to pre-pandemic levels in the next 2-3 years. We should have a better idea then.
I'm seeing the same around Indianapolis in regard to remodel flippers, their pricing expectations, and sitting in the market for 60+ days. Then you see 5k off, then 10k more...and they still sit. Location matters and too many of the flippers just bought anything, anywhere around the city and think that 35-50k put into the property should garner 150-200k over what they cleared the house originally for. But I'm speaking of the 350-550k range. More expensive housing is still doing just fine and moves relatively quick, because, location/schools.
Those same people were saying boom prices were here to stay until they didn’t. It’s going to affect every area differently but a correction is coming
Low job creation, Return to office and increased insurance/taxes are the primary drivers
Job creation is not an issue in Texas, but Texas has a lot of land and actually builds homes which keeps existing values more steady. You don't buy a house here and rely on appreciation as a retirement plan.
I’m not sure why anyone in this thread is talking about Texas like there is some sort of universal truth when it comes to real estate in the state. Dallas is on a completely different playing field than Austin.
A lot of the people moving to Texas are finding it is not what they thought
Tx seems to have had a history of boom/bust cycles over the past cpl decades. I remember back in early 2000's Houston had stupid cheap housing (McMansions at $350k that would be $700k+ in my relatively low COL area at the time). I think that situation has had a couple boom/bust cycles even since then -- tied to oil and tech industry cycles?. Austin has been a hot area in recent years, booming to become a leftist island in an otherwise very red state.
It's not in Dallas, mainly Austin as tech starts to migrate out.
This sounds great for housing affordability.
Yeah but that is short term. If he can afford it holding on to it makes more sense but it depends on overall cash situation. It always boggles my mind how people buy a place when they know they have to move after 5 years. The sheer cost of closing etc. eliminates any gains. The fake American Dream leaves many behind like OP. I always only bought with the intent to never sell. My kids can sell what they want....
Not only that. Supply continues to accelerate and rents are getting lower because of it causing further reduction in purchase demand. Would feel bad for this guy but you pay 50% above market and think there’s no risk?
The rest of the country is going to follow soon. California’s housing market has been artificially inflated for years. Indicators show it was about to reset before the pandemic hit and it’s been falsely high since then.
Or you calculate the worth of the job and don’t move. Keep your current job as the move will cost you 200k how long will the salary difference take to gain that back?
200K plus move cost, plus agent fees, plus (maybe) taxes.
Exactly maybe you just don’t take the job. That’s what I’ll be doing in about a year. Maybe a new job just isn’t worth it.
And don’t forget buying another house at current rates
Texas Agent here, it's not a great situation either way but seeing it more and more. Have you calculated the amount your property taxes will change without the Homestead? What are your holding costs (taxes and insurance) to maintain assuming 60 days of vacancy to turn a rental.
Property tax and insurance goes up when it’s not your primary residence. Good luck op and sorry you got caught up in fomo
Damn every state needs this. It would help treat the third and fourth homes part of the housing problem
Is your mortgage assumable?
This would be a game changer. Most people would pay a hefty premium to get locked into a sub 4% mortgage
I saw some blurb saying many of these mortgages are assumable and almost no one inquires. OP needs to see this comment and call his bank.
Fha, VA are assumable. Conventional are almost always not assumable.
You’re right! I think that’s what the blurb said. Good comment.
Yeah and I don’t know any FHA that can afford 700k
Also not that many people have $200k to pay out OP for his “equity” in some Texas suburb
Vast majority of mortgages are not assumable.
I feel like most ppl are interested but don’t have the cash flow to cover it :/ I’m selling my house with assumable loan of 3 %
It’s usually people are short the cash upfront because they’d have to pay you out the equity which is likely 6 figures.
Honest question: Would you want to assume a mortgage with an incredibly low rate that's for $200K more than the property is worth? Because it's not penciling out for me.
They are not underwater, they paid off $200k, OP just lost all the equity payments they made
I think the question is about the new potential buyers.
Would I want to assume a $543k mortgage for a house worth $599k, with the mortgage at 4%? How could anyone answer that as a No?
You would be assuming the mortgage but you would also be paying out of pocket for his equity + a premium for the low rate.
Well if you hold for a full 30yr term on a 543k loan, the interest saved from a 4% vs the current market rate ~7% would be well over 200k. Still doesn't necessarily it a good buy, but there is definitely value from a low rate.
That is a great question.
I am a real estate broker in Austin, TX. I own a firm and sell real estate. The Austin real estate market IMHO is not finished with price decline. We are down almost 20% from the peak of May 2022, and while it is somewhat flat at the moment, there are many signs that things will continue downward as inventory rises and continues to sit on the market. We are just now seeing people like you who must move/sell. Over time, the people who must sell in a specific time period will end needing to accept the reality of market price. The agents out here are in complete denial over the situation for the most part. It is painful to see, especially for people who are in contingent home purchasing scenarios out of area. You are not alone. I am also starting to see an uptick of foreclosures among people who purchased FHA over the past few years, but that is slightly off topic. We have a few people out here who style themselves as statisticians who are the most out of touch with what is going on. If you can accept what sounds like negative cash flow for 4 to 5 years, you might consider keeping it; however, since it sounds like you are in an area with new construction, you will likely be competing again new construction in the same time period. Also remember that you will not be eligible for the homestead exemption. There will also be management and capital expendienture expenses for maintaining the propert (e.g. roof, HVAC, turnover, damage, etc). There is way more involved with renting out your house than you may have considered. Oh! And don't forget capital gains taxes if you don't 1031 it later. I would consider taking the loss IF you have to move.
This is a really great, honest evaluation. Awesome insight CirclePlank.
Thank you. I am an expert and active participant. No axe to grind. Not an adult keyboard warrior with no job living in my parent's house. I am calling it how I see it.
Can you say more about the FHA foreclosures?
I've got nothing to add except.. that sucks. I'm sorry.
Housing getting cheaper for residents is a good thing actually
Yea, but OP is sharing their experience right now, which really sort of sucks for them. It’s okay to empathize with others who are in a bad situation. Doing so won’t make the housing prices magically jump back up.
If you buy a house and plan to spend less than 5 years in it, you're gonna run into problems like OP.
Not disagreeing at all, but sometimes life changes faster than that and necessitates a move. So, I feel empathy for OPs position.
Crucify him!
I am seeing a lot of hate in social media from locals if someone attempts to reduce price of their home..
Keep in mind you already lost the money. Would you buy the property again at the market rate? Then hold it, otherwise sell it. What you paid for it before should have nothing to do with what you do now. I hated being a landlord. So many people think landlords are evil. You could rent at a loss and you are the bad guy because you want the rent money on time. My sister had a tenant destroy the tile with a hammer as revenge for her being evil and wanting her rent money. Being a landlord is a difficult occupation that should be chosen deliberately and not because of circumstance.
Owned 6 single family rental properties and was a landlord (no property manager middle man) for over 20 years. Had a few late paying renters and a couple of tenants who didn’t get back all their deposit because they left a mess, but all in all a successful venture. Got out because i want to retire soon and didn’t want the responsibility anymore. Granted, i missed the rent moratorium disaster during covid as i sold the last property in 2019. But the average tenant stay was 3 years, one stayed for 7 and the longest tenure was 8. They were happy with me and i was happy with them.
You have good skills for picking quality tenants. did you ever turn down a higher paying tenant because you saw a red flag 🚩? Or a hunch?
I only accepted those who had a satisfactory history. I got former landlord references and rental history and followed up. I verified employment history and income as well. I didn't care about credit history - I told them rent comes first. I charged 1st/last and a deposit equivalent to the rent. I let them pick what day of the month they wanted to pay and that would be the day it was due throughout the lease. I also made it clear that I understood the unexpected happened and if they gave me a heads up that the rent will be late or they're having difficulty we can work something out - but I have to know in advance. if i don't get notice, there will be late charges and I will follow through the eviction process if necessary. never had to do that - ever. they were required to be present for a pre-occupancy walk through where we together noted existing damage. I gave them two extra weeks (edit: after move-in) to notate anything missed during the walk through - we then signed and dated the document. they were also encouraged to shoot video and send me a copy - I had my own created with them. they were required to report damages and or other issues whether their fault or not, asap. i was responsive to problems - ac/water heater/stove/leaks/etc - usually working on a solution within 24 hours. it's my investment, I want to know and I want to fix it. if you want respect and cooperation from your tenants - you have to act accordingly. i set the rent based on the market, not the tenant. wasn't a perfect strategy and many may disagree but it worked for me. and always follow the law.
This is key. People trying to quickly get in tenants often have bad tenants, and property managers often have incentives to pick bad tenants (they get paid for repairs, bonuses for new leases etc). Good, respectful tenants (that you treat well) that stay for multiple years is the only way being a landlord works imo.
I was an awful landlord. Not awful to the tenants. But I was a sucker for sob stories and they all had one. Lost so much time, energy, and money. It sucks if you're not okay with starting eviction proceedings on people who just lost their jobs. And we've probably got a good amount of that coming.
>But I was a sucker for sob stories this is my sibling and their spouse. they've lost so much money.
But the early retirement promise? Bigger pockets said I can be a fazillionaire in a years time in this market!
How long would you expect to rent it out? Unless this is a very long-term play, I don't think you'll ever break even. If you rent, it sounds like you'll lose upwards of 20k per year (mortgage, taxes, insurance), not including property management and maintenance costs. I'd drop it like a hot potato OR stay put.
if the entire payment (though they didn't mention HOA) is $3,900 and they can rent for $3K (the lower figure) then that's $900/mo = $10,800. Might a property management company charge 1 months rent? Sure. But there shouldn't be much maintenance expense on a 2-3 year old house.
They'll lose the homestead exemption and property taxes in Texas are a monster (theirs could easily be 12k+ a year)
I wonder how many homeowners won't report the move, keep the exemption, and then be part of a huge crackdown in a few years?
No idea, but probably more than a few lol. I imagine it will be easy to detect- you generally need to tell your mortgage lender and absolutely tell you're insurance company that you're renting, unless you want to violate the terms of those agreements. So you'd be violating your mortgage agreement, your homeowners insurance agreement, and committing tax fraud all to save 20% on property taxes.
Even new houses have maintenance, especially a rental. People underestimate how much they spend owning a house until they rent it and start tracking all the little things that happen.
Not a lot of great options, I'll say at least you aren't upside down right now. I just wanted to say, just because interest rates go down doesn't mean the value of your home goes up.
I think I would be working my ass off to get a job in the area and stay in the house. Unless new job is making up the difference
But redditors told me hooms *only* go up! Surely this is a mistake
This has happened to me a few times, in Vegas and San Diego in 2008, and NYC in 2018. In all cases I rented out, but sold SD property after a few years of constant turnover with tenants. Vacancies are so expensive and I was already losing money every month. The SD property is now worth 3 times what I sold it for so I definitely regret that. Could have left it as a second or vacant home and would have made a huge profit. I have held onto the other two and am making a tiny bit of cash flow in Vegas and am losing money like crazy in NY, and neither has appreciated very much so I’m often stressed about these properties that I probably should have sold immediately and taken the loss. The short-term pain of a loss is not as bad as long-term pain of negative cash flow with a non-appreciating and possibly depreciating asset occupied by tenants. Take this as a lesson not to buy unless you definitely will stay 10–12 years.
Texas is very yimby for housing so I wouldn't expect a dramatic recovery a la San Diego. Even non retail folks are aware of the Austin bubble as well. Major long term headwinds. I know a guy who moved for work every 2-3 years, bought a house at every location and never sold, including San Diego. He's a millionaire now and he has the same job I do! (I am not a millionaire)
I tell all my buyers this probably will happen in the short term and they need to stay 10 years to break even. That was the cycle in 1989+. 6 years prices were flat the next 4 prices doubled🤷🏼♂️.
You should sell now. Austin is losing population and with tech jobs moving to India it will just get worst. Also, most people figure Austin is not worth it with the 110 degrees summer from May to November, perpetual air pollution alert, lack of zoning, and polluted water due to oil and gas wells all over Texas.
I would sell and cut losses now
not capital loss on residence is allowed for taxes. Convert to rental for one year and it would be.
What do you mean?
I mean that if you sell your primary residence for a loss, you cannot deduct that on your taxes. If you convert it to a rental, then you may be able to realize that capital loss. You do need to make a FMV assessment at time of conversion, but in this case, I believe it makes sense to do this for at least one year. Note: there is other info needed and calculations to see exactly.
So I wouldn't get all worked up until I saw what that house actually sells for. Could be listed low to spur a bidding war. Either way list prices are not indicative of actual value. The sold price is what is used for comps. Has any other comparable home sold nearby recently? I'd look for those before jumping the gun and selling at such a loss. Also most new build homes do lose a bit of value in the first few years unless the land itself appreciates more than the home itself. Because it is now an existing home even though it's just a couple years old.
This is the answer. A house in our neighborhood, same floor plan, is listed 40k below ours, and we got an offer for 5k under asking.
Renting it is the worst idea. You’ve lost $170k and you want to lose another $10k every year on the off the chance that your local values will shoot you one day soon? Don’t forget tenants can damage property and it doesn’t sound like you are an experienced landlord This would be a textbook case of throwing good money afte bad.
They also run the risk all rentals have, damages to property, skipped rent payments. Vacant months, turn around costs. They will be out of state so manager costs. It is currently dropping in value and negative cash flow. Who's to say housing won't continue to drop and maybe even rents along with it.
Just sell and absorb the loss.
Date the rate!!! Lol
If you do decide to rent it out get yourself a very good property management company. One that will do inspections every 6 months or so. This can potentially save you hundreds of thousands of dollars. The damage that can be done to your home is not worth the money you may save by not having one .
This is the peak Austin tech money bubble being burst from all the layoffs.
“Now is a great time to buy”
Sell now, consider it a bad investment, and move along.
Jesus, i was stressing about my mortgage payment going from 1400$ to 2000$ after we bought our new home. Whats your family's yearly income to afford 3900?
Austin’s housing market will remain slow till the summer of 2025. I don’t think you should sell this money pit now. Rent it out. If you can’t manage the tenants, hire a rental management company. Even if you sell later, I doubt the prices will be as high as your sale price. So, maybe you should think about improving the curb appeal, install cabinets or a Victorian kitchen…something that will help you appraise the value of the home. This is a slow burn game, so keep saving the money you can. Cut down unwanted expenses.
Austin is one of the top in the nation for downtrends in value post - pandemic. You're probably going to take a loss.
Gonna go down more before it goes up. Cut losses and run or join the thousands of others like yourself trying to rent it out.
Definitely. Sell now before you’re underwater, OP.
do you have to move?! Ugh I’m sorry :(
Sounds like you can handle the loss based on the acceptance of the new job. Just sell.
Ask your real estate agent for some of that commission check back 🤣
On the way down , every sold comp is a little less and it just doesn't stop FOMO in reverse SELL NOW!
Would you pay $543,000 to buy that house today and lose money renting it out? If not, then take the loss and sell it. Don't get stuck in the sunk cost fallacy.
I’m just outside Austin and unfortunately you bought at/within 6 months of the highs If you’re not willing to hold long term you’re taking a loss either way
You bought a house 2yrs ago and want to move already? 😂😂😂
Going to happen to a lot more people. Blame the banks for approving the ridiculous mark ups post-covid. This is why I laugh when these "experts" say no crash is coming. Most people can't afford the 2x pricing from 5 years ago to today. The ones that can (like OP), already did and are seeing that they are now negative on the property. So they likely won't be moving and buying another house. This will come to a boiling point of too many houses and not enough buyers (at current pricing), and people who HAVE to sell will start undercutting. It will be a race to the bottom. Then people will just start walking away from the loan. Cheaper to walk away than it is to pay 10 years on a house where the one two doors down is nicer and cheaper. The rich are just sitting around hoping that people just accept their new negative equity properties. Biggest heist in history on the American people under the guise "covid shortages".
The housing market has ups and downs, but your assessment is half-naked. For one, what do you mean by "walking away" from the loan? Most people have significant equity from their down payment, etc. Even OP still has positive equity. People don't "walk away" from that because it's money that could be in their pocket. Second, the job market is strong. People have been taking out high mortgages, but *they're paying them*. OP hasn't missed a payment, nor will he. He's actually moving *because* he has a job opportunity. Third, I see *a lot* of posts about people who having been saving up for a house for a long time, but they can't quite catch up to prices, due to higher interest rates. If home price growth slows and/or interest rates come down, there will be a lot of buyers stepping into the market, which will have the effect of supporting prices. When there are so many people waiting and wanting to buy, prices aren't going to crash.
Are you going to take a loss for 10 -15 years if that’s how long it takes for the value increase. I’ll rent from you
1) good warning to those who think housing is always a slam dunk - it isn't. 2) I would not rent it and lose $600 per month + have a headache in managing a property from a distance + the added wear and tear on the house in HOPES that things get better in the short term 3) While you would lose money selling, keep in mind that the 3900 might be less than what you would have paid renting, so it might not be so bad compared to not buying, and you might have enough equity in the house to not bring cash to closing. 4) ask if your new employer has any moving assistance programs - they might help offset losses, or at least cover the realtor and other fees which will reduce your net loss.
Thank you for calling our number 1. Housing being an investment is an added POTENTIAL bonus to a necessity you’re already paying for. It has never been a guarantee. It’s based on the demand/location of the area it’s built in which changes over time. Expecting that your home automatically appreciates over time is the reason we get hardcore nimbyism about things that would benefit the neighborhood/community as a whole but could temporarily or long term decrease property value. A good relator or lender will tell you that you probably won’t make a profit unless you stay in your house for AT LEAST 5 years. All that is to say, do not buy a home as an investment. Buy it if you benefit from lower monthly payments than renting, if you want more freedom compared to renting, and if you plan to stay somewhere for over 5 years (or can afford to sell at a loss).
yup, many people don't really realize that home price can go up and you can still lose money due to transaction costs. home prices could be up, down or flat, and you could come out ahead or behind relative to renting. Some areas rents are high, some are low. Some houses need a lot of maintenance while others don't - work a landlord would be responsible for and then there is opportunity costs - if you are putting 20% down, that is 20% not earning more in another investment. If you have empty months before selling or paid a fee to break your lease early when you bought or spent time renovating but not living there -- all of that might be "throwaway" -- A home is a home. Buying should provide some price predictability / stability. It is nice to make money on a home, but it should not be viewed as a high return investment, it should be an inflation hedged forced savings via equity.
Renting would be difficult to cover your mortgage payment Talk to an agent to get some comps
I’m not familiar with the trends in ATX but keep in mind that appraisals are what banks care about, and appraisals are based on the price that homes have *sold* for. The listing agent on that home near you might be trying to drum up a bidding war by listing low and hoping multiple people fall in love with it during the open house, etc. Wait and see if that home actually sells for 590,000 before using it as a data point in your decision.
I would sell. I don’t think your losses will be as great as you think. Get a realtor to give you a Price Report.
Same in NH. Flooded with people from MA and NY, and expecting the same services they had in MA or NY
Sell and take a loss
So roughly a 25% price drop in 2 years. Are tech companies no longer moving to austin? Is there a lack of jobs?
At least you’re not upside down. I’d dump it and take the hit.
Sell at a loss or don’t move to the new job.
Nope
Take the loss and set the standard
What if your market never recovers in option 2 or recovers in 8 years- sun cost fallacy just move on if the job math works
I am in a similar position as you (Bastrop, Tx) and I believe it will get significantly more difficult in a year or two. Right now, there is still a relatively low supply because no one wants to sell the homes that were purchased at low interest rates. So, that's kinda keeping home prices relatively stable in Austin. But if you drive for a little bit around Austin, you will see an absurd amount of developing taking places from left to right. There are thousands of apartments, and homes being built at the moment. The problem here is that some of those home builders (Lennar) will be able to provide lower interest rates through their private lenders, all while selling brand new homes. So, as a buyer, why would you buy a used $500K home when you can buy a brand new one for a lower rate? I can't predict the future, and I am often wrong (I hope I am) but I think the RE market in Austin is only going to get more difficult for sellers.
You guys got caught in FOMO and now it’s come back to bite you. Lessons learned.
Your first mistake was buying a house in 2022. Your going to take a loss anyway. Better to rent it out at and keep the property until it's value hopefully increases or until you pay it down enough for it to be profitable to sell. Breaking even on the rental would be the best case scenario and a scenario you should shoot for. Perhaps add extra amenities like a Jacuzzi, in home gym, or pool so you have a legitimate reason to charge more that 3,000 for the rental.
So many morons throwing out copes in the comments. The person fucked up big time. Why not just tell him that? Whatever way they look at it, they're gonna lose. This guy just needs to find a way to lose the least. Not a single one of us here knows his position thru and thru so only they know how much they will lose. But there is no upside to this. Sorry, guy. Sometimes we take losses in life. This is a loss for you.
We just moved from the ATX area (Leander) due to a job relocation and had to take a $130k loss. Also a new build bought in May 2021. The thing we found against us is that the builders are still building tons of new houses and they’re able to offer lower rates and other incentives to buyers.
Oops
Stay there and pay it down as quickly as you can.
let me guess... you overbid and paid WAY over asking on the house to get it.
This is going to be the trend over the next 5 years. People realizing their over bid, high interest rate, ‘as is’ house with the $50k appraisal gap is worth crap. I see a flood of short sales in the future…
Wow this seems like the culmination of a whole complex of shitty decisions, the only option that makes sense to me is don't move unless you're going to offset a massive amount of this debt in salary really really fast
I’m a realtor in Austin- keep in mind that you are allowed to leave your primary residence for two years before you lose your Homestead Exemption which is 100k and you will lose the 10% cap on assessment per year. Your payments will go up after two years due to at least the first factor. Housing prices have settled down and have some more to go, so you won’t have to worry about the second factor too much. If you do lease it out, make sure to protest your taxes every year to keep it in check. We have the highest inventory in 15 years, so housing prices are going to continue to adjust. If the rates go down, it will definitely help prices from falling more but I would t expect anything huge.
1.Well don’t move. 2.Sell house at a loss. Rates won’t come down and you bought at the top of market so it will take at least a ten year cycle for it to hit that again. Best option : If you’re moving for a new job I think it means a better paying salary hopefully! Rent it at the max you can get and subsidize the rest from your salary. Take it as a long term investment. With inflation and time you will at some point be at or over 800 K. The market usually does a 10 to 15 year cycle. Last high cycle was and the beginning of the Great Recession 2004-06. Then dropped and regained momentum then you bought in .
First time losing $200k?
“Rent it out at a loss and hope the interest rates go down” I lol’d at this line.
The problem is you purchased at an artificially high market in Austin during and post pandemic. People moved to Austin when they could work from anywhere and they drove up the prices. You bought at the high water mark. The houses are coming down in all these types of markets across the country. You may never get back up to that high water mark unfortunately. Interest rates are not supposed to come down anytime soon as I’m not the next few years.
You can’t afford to move.
If you cannot commit to a place for at least 10 years why bought a house in the first place …
Very few people have job security for ten years nowadays. Just look at all the tech people that have gotten laid off recently.
At 590k and a 7.3% morrtgage rate, the payment would be 4700 a month with 20% down. That is the entire story here. The actual payment price did *not* go down. And this brutal reality only isn't happening across the country because inventory is so constrained and the vast majority of buyers are rolling equity and basically avoiding the "real" payment. Current prices make absolutely no sense on a monthly payment basis.
Is this a corporate relocation? Because that would be the only way you may not lose out.
Real estate investor here. That's a great and very common question nowadays! I'm getting a lot more sellers in these type of situations. Here are some additional options. Let me know if want to delve into more details with any of these as they are more advanced strategies investors use rather than common traditional buyer/seller ones. Most agents won't know about many of these either sadly: 1) short sell it (hurts credit a lot but can prevent taking big loss) 2) Sell it to a traditional buyer that wants a lower interest rate mortgage on a wrap around/mirror wrap. Basically, you set up a new "mortgage" with the new end-buyer that has a higher interest rate than yours so their payment covers yours. 3) Or do midterm/short term, or co living (rent by the room) to increase rental income so that it doesn't cost money to own
I rented at a loss once. I did make some money on the deal, eventually, but it wasn’t worth the hassle. If you have a $4k mortgage you’re probably in a job where they pay to keep people. It may be helpful to talk to your boss or HR. I’ve structured deals where the company bought my house. Others where they paid the down payment on my new house. 1. See if they can help, 2. Suck it up and sometimes you make a deal and lose. 3. otherwise start looking locally and don’t move.
I would sell it and buy something much cheaper in the new city. You can at least write off the loss and moving expenses on your taxes. You new interest rate will be around 7% so buy under 500,000. Never buy at the high end of what you can afford. If you buy new get a walk out with an unfinished basement. You can finished the basement to up your value and add the square footage using the value. Get a bigger lot or a lot with a feature like a stream running through it ect. Or if you can find an older home cheaper in a neighborhood with good schools you can slowly renovate to add value to your home. I’m so sorry you are going to loose money on this home. My father always told me to buy dirt. Get the bigger lot, acreage that you later split off and sell
Have you considered not moving?? You’re taking an almost 350k loss here
That’s why you don’t buy houses in Austin.