Is this sell and rent strategy happening nationwide? I can tell you that this is my personal strategy - sold in July 2005 for 100% gain, and rented vacation rentals since for 50% or so of the cost of ownership.
I really think this is going to be important for the soon-to-retire baby-boomers. Could you sleep at night knowing that 80% of your net worth was in one asset (your house)? That'd be like 80% of your net worth being in copper, or Cisco.
Two things - do this calculator from CEPR on owning vs. renting. The key variable they're using is the assumption that housing reverts back to the mean (which of course one day it will). But do the calculator - it's freightening if correct.
Next, here's the article from the Arizona Republic today on this sell and rent strategy. Read the whole thing. I don't believe the media is causing the crash, but I do believe that awareness via stories like these plants seeds of doubt, and also seeds of wisdom.
Kurt Nishimura is taking a calculated ride on Arizona's real estate wave. He sold his home in the Willo neighborhood, believing its value has topped out, and is renting an apartment in the Arcadia area for a year, hoping to buy something after the wave has crested.
Nishimura is not alone. A few people are cashing in, some for good, others to sit it out for a while, hoping to beat the market.
They're betting on a crash, on the belief that the market will soon cool, and there will be bargains for the picking.
The idea: Get your money out near the top and, if you're near retirement, keep it; if you're not, wait until the market drops to get back in.
January 15, 2006
Posted by blogger at 1/15/2006