Cashing out of the Bay Area

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Bungo
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Re: Cashing out of the Bay Area

Post by Bungo » Wed Apr 25, 2018 10:19 am

GAAP wrote:
Wed Apr 25, 2018 9:48 am
I wouldn't bet on the future direction of any stock -- but you're effectively doing that by waiting for RSUs to vest. Would you be better off doing it now or in 2 years if the market drops 25%? How much would you lose if it goes up 25% instead?
Not sure I get what you mean by the bolded text. Even if my employer stock drops 25% before the remaining shares vest, they would still worth quite a lot (say, around $300k post-tax). RSU's, unlike stock options, are nominally a "can't lose" stock plan, unless the employer stock price goes to zero. But if my house value also declines by more than $300k during that time, then that would negate any advantage of waiting for the remaining stock to vest, and I would be better off selling now and relinquishing the unvested shares. (The actual analysis is more complicated than this because I take other factors into account, but this is the general outline.)

FoolMeOnce
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Re: Cashing out of the Bay Area

Post by FoolMeOnce » Wed Apr 25, 2018 10:28 am

You could sell to lock in your gains and rent for a few years for the RSUs. I know rents are insane, but the calculation depends on how you value the RSUs and how you feel about a potential real estate decline.

GAAP
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Re: Cashing out of the Bay Area

Post by GAAP » Wed Apr 25, 2018 10:39 am

Bungo wrote:
Wed Apr 25, 2018 10:19 am
GAAP wrote:
Wed Apr 25, 2018 9:48 am
I wouldn't bet on the future direction of any stock -- but you're effectively doing that by waiting for RSUs to vest. Would you be better off doing it now or in 2 years if the market drops 25%? How much would you lose if it goes up 25% instead?
Not sure I get what you mean by the bolded text. Even if my employer stock drops 25% before the remaining shares vest, they would still worth quite a lot (around $300k post-tax). But if my house value also declines by more than $300k during that time, then that would negate any advantage of waiting for the remaining stock to vest, and I would be better off selling now and relinquishing the unvested shares.
I meant that until those RSUs vest, they have no value. A lot can change in two years -- companies go bankrupt, people get fired, etc. When (and if) they do vest, their value is tied to stock market conditions at the time. I wouldn't plan on them having a particular value -- but I would estimate their value for planning purposes.

In general, I think you've got the idea. I would guess that if the market drops 25%, housing values may drop anywhere from 15-35%. You'll need to pick a number to estimate and then stress-test your plans.

If you're actually retiring, you will also need to consider the cash-flow differences associated with those two years.

TravelGeek
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Re: Cashing out of the Bay Area

Post by TravelGeek » Wed Apr 25, 2018 10:51 am

Bungo wrote:
Wed Apr 25, 2018 10:19 am
Not sure I get what you mean by the bolded text. Even if my employer stock drops 25% before the remaining shares vest, they would still worth quite a lot (say, around $300k post-tax). RSU's, unlike stock options, are nominally a "can't lose" stock plan, unless the employer stock price goes to zero. But if my house value also declines by more than $300k during that time, then that would negate any advantage of waiting for the remaining stock to vest, and I would be better off selling now and relinquishing the unvested shares. (The actual analysis is more complicated than this because I take other factors into account, but this is the general outline.)
The other aspect to consider is how much you value those extra two (?) years of freedom if you have “enough” today.

aristotelian
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Re: Cashing out of the Bay Area

Post by aristotelian » Wed Apr 25, 2018 10:55 am

You are definitely not selling low, that's for sure.

Bungo
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Re: Cashing out of the Bay Area

Post by Bungo » Wed Apr 25, 2018 11:06 am

GAAP wrote:
Wed Apr 25, 2018 10:39 am
I meant that until those RSUs vest, they have no value. A lot can change in two years -- companies go bankrupt, people get fired, etc. When (and if) they do vest, their value is tied to stock market conditions at the time. I wouldn't plan on them having a particular value -- but I would estimate their value for planning purposes.
Thanks for the clarification. Agree that these are all considerations. My employer isn't going to go bankrupt any time soon (it's sitting on a giant war chest of cash), but firings/layoffs are certainly possible if things turn sour, and the stock price could very easily retreat 50% or more; it has nearly doubled in the past two years.
In general, I think you've got the idea. I would guess that if the market drops 25%, housing values may drop anywhere from 15-35%. You'll need to pick a number to estimate and then stress-test your plans.

If you're actually retiring, you will also need to consider the cash-flow differences associated with those two years.
Agree, there are a lot of factors to take into account. (Health insurance is another big one.)

Bungo
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Re: Cashing out of the Bay Area

Post by Bungo » Wed Apr 25, 2018 11:28 am

TravelGeek wrote:
Wed Apr 25, 2018 10:51 am
The other aspect to consider is how much you value those extra two (?) years of freedom if you have “enough” today.
I've tried to restrict my analysis to tangible financial factors, but of course you're right. I value freedom very highly, enough that I've always planned to retire as soon as I had enough to fund a modestly comfortable retirement in a modestly-priced city/state. The prospect of retiring NOW versus my originally planned 2-3 years from now? I don't know how to put a value on this additional time, but it's very high.

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Meg77
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Re: Cashing out of the Bay Area

Post by Meg77 » Wed Apr 25, 2018 11:41 am

Bungo wrote:
Wed Apr 25, 2018 10:19 am
GAAP wrote:
Wed Apr 25, 2018 9:48 am
I wouldn't bet on the future direction of any stock -- but you're effectively doing that by waiting for RSUs to vest. Would you be better off doing it now or in 2 years if the market drops 25%? How much would you lose if it goes up 25% instead?
Not sure I get what you mean by the bolded text. Even if my employer stock drops 25% before the remaining shares vest, they would still worth quite a lot (say, around $300k post-tax). RSU's, unlike stock options, are nominally a "can't lose" stock plan, unless the employer stock price goes to zero. But if my house value also declines by more than $300k during that time, then that would negate any advantage of waiting for the remaining stock to vest, and I would be better off selling now and relinquishing the unvested shares. (The actual analysis is more complicated than this because I take other factors into account, but this is the general outline.)
Normally I'd say it's pretty unlikely that over a 2-3 year period your RSUs AND your home price would decline 20%+. However I know that tech stocks and the housing market are pretty closely tied in the Bay Area, so it's certainly possible. Still, if you're just betting on the likelihood of that happening, I'd say wait it out.

However as you pointed out before, that doesn't factor in the cost of the additional time spent working (which is arguably priceless). And given that you have no intention to stay in that area anyway, I think my personal decision would be to go ahead and move. You'd lose the RSUs but could largely eliminate the housing uncertainty (depending on where you move). You could give early retirement a try and roll the dice with regard to an ugly sequence of returns on your portfolio in early retirement. Or you could go ahead and get another job pretty quickly to give yourself a bigger buffer and put off full retirement until after the next bear market (which will come, sooner or later). Either way your quality of life could improve substantially.
"An investment in knowledge pays the best interest." - Benjamin Franklin

onourway
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Re: Cashing out of the Bay Area

Post by onourway » Wed Apr 25, 2018 11:59 am

If you can retire with the life you want now based on your current situation and the alternative is to wait 2-3 years at which point the options are retire with either a bit more, or not at all if the markets have gone sour, I would absolutely 100% retire today, or at least take the steps to make sure I don't jeopardize my plans 2-3 years from now.

This is exactly the concept widely quoted here about 'knowing when you have enough.'

FrankLUSMC
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Re: Cashing out of the Bay Area

Post by FrankLUSMC » Wed Apr 25, 2018 4:04 pm

VinhoVerde wrote:
Tue Apr 24, 2018 4:14 am
Bungo:
I have an acquaintance who moved from the Bay Area around 2004-2005 to Columbia South Carolina to retire. Sold their California 1700sq. Ft. 1960,s era ranch house for around 600k and bought a brand new 3000sq. Ft house for the low $300's.
They miss nether the high taxes and cost of living or the traffic. They do comment on the higher humidity but that's why God made AC.
VinhoVerde
Or you could move to the booming Greenville/upstate area of SC and get a tad less humidity and a still great area to live as far as LCOL.

MrJones
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Re: Cashing out of the Bay Area

Post by MrJones » Wed Apr 25, 2018 10:37 pm

randomizer wrote:
Tue Apr 24, 2018 1:01 am
I don't know how anybody could know this. Really know it.
It's not about knowing. It's about being able to guess well enough to base an action on it. This is what most businesses, for example, routinely do.

Everyone understands guesses can turn out wrong.
Last edited by MrJones on Sat Apr 28, 2018 12:25 am, edited 1 time in total.

YCkid
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Re: Cashing out of the Bay Area

Post by YCkid » Thu Apr 26, 2018 4:40 am

HomerJ wrote:
Tue Apr 24, 2018 4:57 pm
quantAndHold wrote:
Tue Apr 24, 2018 10:36 am
HomerJ wrote:
Tue Apr 24, 2018 10:12 am
jpsc wrote:
Tue Apr 24, 2018 1:27 am
Where else can you get great weather, prop 13 make you keep your house longer for more efficient property tax than out of state.
Heh, you can bring up good weather, but don't even TRY to spin taxes as a reason to stay in California.

How's the traffic, by the way?
As a retiree in CA, my taxes are fine. Prop 13, no tax on Social Security. Income tax rates are progressive. My 2017 state income tax was $0, and the property taxes on my $1M+ house were $3k (we bought in the 90’s). I don’t really deal with traffic anymore, since I don’t work. So there’s that. I worked in WA for the last few years of my career and we were considering staying there. Washington has no income tax, but our overall tax situation as retirees is better in CA. WA was much better when I was making pots of money, but when I quit working, our taxes didn’t go down at all. Property taxes on a similar house in WA were 2x our CA tax and continuing to rise as property values rose, sales tax is now over 10%, etc.

Overall taxes in CA are in the middle of the pack nationwide, and the tax system is very progressive. Which helps retirees, like OP is thinking about becoming.
Ah, I stand corrected. If you bought your house many years ago and you are retired (with therefore low adjusted income), it does sound like you are getting an incredible deal. Take advantage while you can.
It's what you'll get in return after grinding out that 20 or 30 years. Ain't gonna happen in a snap, seems fair to me. And considering the opportunity/weather/things you can do it's not that bad of a grind.

YCkid
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Re: Cashing out of the Bay Area

Post by YCkid » Thu Apr 26, 2018 5:12 am

It mainly depends on how you value 2yrs' time vs the compensation you get. You said you can pull the trigger this year, so the number is there now, anymore will just be a safety buffer right? And you can view the house as a separate issue, if you are happy with the current gain and don't want any risk, sell it now and rent for however long you plan to work. Hell in the current market you will see a bidding war even with something like a 1yr rent back.

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Watty
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Re: Cashing out of the Bay Area

Post by Watty » Thu Apr 26, 2018 7:56 am

Meg77 wrote:
Wed Apr 25, 2018 11:41 am
Bungo wrote:
Wed Apr 25, 2018 10:19 am
GAAP wrote:
Wed Apr 25, 2018 9:48 am
I wouldn't bet on the future direction of any stock -- but you're effectively doing that by waiting for RSUs to vest. Would you be better off doing it now or in 2 years if the market drops 25%? How much would you lose if it goes up 25% instead?
Not sure I get what you mean by the bolded text. Even if my employer stock drops 25% before the remaining shares vest, they would still worth quite a lot (say, around $300k post-tax). RSU's, unlike stock options, are nominally a "can't lose" stock plan, unless the employer stock price goes to zero. But if my house value also declines by more than $300k during that time, then that would negate any advantage of waiting for the remaining stock to vest, and I would be better off selling now and relinquishing the unvested shares. (The actual analysis is more complicated than this because I take other factors into account, but this is the general outline.)
Normally I'd say it's pretty unlikely that over a 2-3 year period your RSUs AND your home price would decline 20%+. However I know that tech stocks and the housing market are pretty closely tied in the Bay Area, so it's certainly possible. Still, if you're just betting on the likelihood of that happening, I'd say wait it out.

However as you pointed out before, that doesn't factor in the cost of the additional time spent working (which is arguably priceless). ....
You also need to factor in three years of mortgage payments and lost investment earning.

For example in purely made up numbers if they still have a $3,000 a month mortgage payment and could clear a million dollars after taxes if they sold the house then if moved and bought a $300K house for cash then.

1) $3,000 x 36 months = $108,000

2) The net $700K could be invested and might earn 5%(a wild guess) a year which is $35K a year, or $105,000 over three years.

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celia
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Re: Cashing out of the Bay Area

Post by celia » Fri Apr 27, 2018 4:42 am

rebellovw wrote:
Tue Apr 24, 2018 3:26 pm
Having been born and raised in the Bay Area - and left it - at age 46 - I'd say the weather is boring. If you like every day to be pretty much the same - then that is the Bay Area.

I didn't know I loved weather so much until I left - wow four seasons - monsoons - dramatic rain/thunderstorms - light snow. Now that is weather.
What?

California has weather (four seasons): Fire, Flood, Earthquakes, and Riots.
Well..., the last one has calmed down in recent years decades and is more like protests now. :sharebeer

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tennisplyr
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Re: Cashing out of the Bay Area

Post by tennisplyr » Fri Apr 27, 2018 6:56 am

I downsized from HCOL area in NY last year to a LCOL area....very happy we did. Things continue to escalate in NY but who cares.
Those who move forward with a happy spirit will find that things always work out.

ryman554
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Re: Cashing out of the Bay Area

Post by ryman554 » Fri Apr 27, 2018 9:04 am

celia wrote:
Fri Apr 27, 2018 4:42 am
rebellovw wrote:
Tue Apr 24, 2018 3:26 pm
Having been born and raised in the Bay Area - and left it - at age 46 - I'd say the weather is boring. If you like every day to be pretty much the same - then that is the Bay Area.

I didn't know I loved weather so much until I left - wow four seasons - monsoons - dramatic rain/thunderstorms - light snow. Now that is weather.
What?

California has weather (four seasons): Fire, Flood, Earthquakes, and Riots.
Well..., the last one has calmed down in recent years decades and is more like protests now. :sharebeer
I still remember my time 1991-1995 in SoCal. SoTrue. Between Rodney King and Northridge, truly four seasons in four years!

nb, I still remember vividly two made for TV moments.
1. Watching the Rodney King riots burn down a supermarket on TV. They then went to commercial for said supermarket.
2. Watching some amateur video at 3am after Northridge of somebody who was out videoing the inland empire and happened to capture the earthquake propagate across the valley.

srt7
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Re: Cashing out of the Bay Area

Post by srt7 » Fri Apr 27, 2018 6:02 pm

Bungo wrote:
Tue Apr 24, 2018 12:50 am
Any other Bay Area homeowners thinking about cashing out? It feels to me like we may be near the peak of the current real estate cycle.

Moving to a cheaper state and buying a house for cash has always been a major component of my retirement plan. I have been targeting 2020 or 2021 for that milestone, in order to finish vesting a nice chunk of RSU shares, but housing has appreciated much more rapidly than I expected. I have crunched some approximate numbers and think I can afford to pull the trigger this year. I may even come out ahead if I sell now versus waiting a few years, if a housing downturn is on the horizon.

Does anyone care to offer their prognostication? Realtor recommendations would also be highly appreciated, if that's appropriate for this forum.
What's your rollback plan if you realize after a year out of SF that you want to move back? Would you be able to buy back your house?

Perhaps a more reasonable approach would be to rent it out and go rent yourself? RE transactions are crazy expensive (as you know) and not to be taken lightly.
I can't think of anything more luxurious than owning my time. - remomnyc

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JaneyLH
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Re: Cashing out of the Bay Area

Post by JaneyLH » Fri Apr 27, 2018 9:04 pm

I left the Bay Area in 2000 and am so glad I did. Sure, the home I left would have run up but once I didn't have to work at a Bay Area location I couldn't wait to escape the traffic and congestion. I've lived in the Lake Tahoe area for 18 wonderful years and couldn't be happier. My cost of living was similar for the years when I lived at the Lake, now it is way lower in the Carson Valley where I am in a gated community and travel about 50% of the time. There is no comparison with the peace, quiet, security, lack of traffic that I now enjoy. Get out now when values are high! I did... sold my place in 3 hours for 15% over asking price.

Ron Ronnerson
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Re: Cashing out of the Bay Area

Post by Ron Ronnerson » Fri Apr 27, 2018 10:15 pm

I used to think that we’d stay in the Bay Area permanently. I’m less sure now. We bought in the East Bay in 2009 and prices have gone up quite a bit since then.

Traffic going into Silicon Valley is very congested (to put it mildly) but there are hopeful signs. There is construction underway to alleviate some of the traffic by adding lanes, BART is being extended slowly but surely toward Downtown San Jose, and self-driving cars may not be too far away. If, down the road (pun intended), it takes a lot less time to commute to Silicon Valley from our area, it could result in even higher home prices in our neighborhood. Maybe one day it will get to the point where it’s too good to pass up and we’ll move elsewhere.

It’s likely not to happen until retirement, though. Life here is pretty nice for us at the present. We very much enjoy the weather and activities and have lots of family close by. Our commutes are reasonable and our taxes aren’t so bad. I also like my job a lot. Those things are worth a fortune too. Individual circumstances can vary a lot. Obviously, if life is good for you, it makes moving much harder than if you’ve had enough of this nonsense.

Bungo
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Re: Cashing out of the Bay Area

Post by Bungo » Fri Apr 27, 2018 10:37 pm

srt7 wrote:
Fri Apr 27, 2018 6:02 pm
What's your rollback plan if you realize after a year out of SF that you want to move back? Would you be able to buy back your house?
There's zero chance that I would want to move back. I don't like the Bay Area anymore and doubt that I would even visit after I leave. I'm only here for work.
Perhaps a more reasonable approach would be to rent it out and go rent yourself? RE transactions are crazy expensive (as you know) and not to be taken lightly.
No, I'm not interested in being a landlord, and would rather have far less of my net worth tied up in real estate. I'm absolutely certain that I want to sell and leave; it's only a question of now versus a few years from now.

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Watty
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Re: Cashing out of the Bay Area

Post by Watty » Fri Apr 27, 2018 10:45 pm

Ron Ronnerson wrote:
Fri Apr 27, 2018 10:15 pm
....and self-driving cars may not be too far away. If, down the road (pun intended), it takes a lot less time to commute to Silicon Valley from our area, it could result in even higher home prices in our neighborhood.
Self driving cars could easily make the traffic a lot worse since it would put more cars on the road since people would be willing to have longer commutes.

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Re: Cashing out of the Bay Area

Post by LarryAllen » Fri Apr 27, 2018 10:55 pm

Lots of "ifs" up there. Let's revisit in two years and see which "if" came through.

Ron Ronnerson
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Re: Cashing out of the Bay Area

Post by Ron Ronnerson » Fri Apr 27, 2018 11:30 pm

Watty wrote:
Fri Apr 27, 2018 10:45 pm
Ron Ronnerson wrote:
Fri Apr 27, 2018 10:15 pm
....and self-driving cars may not be too far away. If, down the road (pun intended), it takes a lot less time to commute to Silicon Valley from our area, it could result in even higher home prices in our neighborhood.
Self driving cars could easily make the traffic a lot worse since it would put more cars on the road since people would be willing to have longer commutes.
I suppose that’s true, Watty. I was trying to look at things from a hopeful, optimistic lens. You’re right, though. We’ll see how things turn out when the time comes.

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Misenplace
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Re: Cashing out of the Bay Area

Post by Misenplace » Sat Apr 28, 2018 12:20 am

Bungo wrote:
Fri Apr 27, 2018 10:37 pm
There's zero chance that I would want to move back. I don't like the Bay Area anymore and doubt that I would even visit after I leave. I'm only here for work.

***

No, I'm not interested in being a landlord, and would rather have far less of my net worth tied up in real estate. I'm absolutely certain that I want to sell and leave; it's only a question of now versus a few years from now.
Sounds like if the numbers add up to FIRE, it makes sense for you to move on. You don’t know the future, but you know the present, and you know your gut.

For what it is worth, we sold out of the Bay area in very early 2000. Turned out to be a good time, but we were just going on gut. It had run up 2.5x in 6 years. Eighteen years later, our home there is worth well more than twice now than what we sold it for. However, you couldn’t pay me enough to move back there. There’s a whole world out there that is better than the congestion in the Bay Area.

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unclescrooge
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Re: Cashing out of the Bay Area

Post by unclescrooge » Sat Apr 28, 2018 12:49 am

Hulu wrote:
Wed Apr 25, 2018 10:19 am
Different land-locked coast but in Boston I missed out on the first peak, waited for years and then sold too early by 20% and two years (and counting).

To me timing stocks is different because you can't rent or build stocks if the price to buy is too high. But it's really hard to predict. I look at how in line house prices are with rent and building costs. If all three are up then it's more sustainable. Rents are more sticky than prices in turns of down trend. However if rent vs cost to own are out of line then I'd say that buyers will turn into renters which decreases demand.

Also, the new tax law of doubling the standard deduction will drive up the cost of owning for people with low mortages as it's better to take the deduction for a ton of folks. Not sure home buyers care or realize this.

Also foreign investment is a huge factor that is often not considered. To me, that's the hardest thing to predict in your area.

And as someone mentioned, the zoning laws need prediction as well.

Home building innovation could also be a game changer if anyone figures out how to build homes more efficiently. Hard to believe the current model is still in operation. Imagine if we built cars the same way.
Blu homes creates amazing modern, prefab homes. I was looking at them, but then they closed all locations to focus solely on SF in California, and doubled the pricing.

Apparently all innovation profits flow to the builders. :annoyed

ClaycordJCA
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Re: Cashing out of the Bay Area

Post by ClaycordJCA » Sat Apr 28, 2018 4:24 am

We are in the Walnut Creek, Concord, Clayton area of Contra Costa County. We just had friends sell their 3300 sq ft house for $1.17M. They bought a 2 acre lot in the foothills (Sonora area) and intend to build a 2500 sq ft house for about $450k.

We are thinking of retiring in the next year or two or three to Chico or the Sacramento foothills. Tired of the traffic and Acosta of living. Will stay in CA to take advantage of CalCOBRA. Don’t see staying in the Bay Area - can’t justify tying up $1M or more in a house.

random_walker_77
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Re: Cashing out of the Bay Area

Post by random_walker_77 » Sat Apr 28, 2018 2:38 pm

Misenplace wrote:
Sat Apr 28, 2018 12:20 am

For what it is worth, we sold out of the Bay area in very early 2000. Turned out to be a good time, but we were just going on gut. It had run up 2.5x in 6 years. Eighteen years later, our home there is worth well more than twice now than what we sold it for. However, you couldn’t pay me enough to move back there. There’s a whole world out there that is better than the congestion in the Bay Area.
You got out at a good time then. Consider this: it'd better have gone up at least 2x. At 7%, and nearly 20 years, you'd expect the same money in the stock market should be up about 4x.

Heck, 18 years of inflation means that merely doubling isn't all that exciting...

4nwestsaylng
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Re: Cashing out of the Bay Area

Post by 4nwestsaylng » Sun Apr 29, 2018 1:18 am

Just remember that the Bay Area punishes those who '"cash out" at the supposed "peak", move to another state and at some point miss the weather and want to return. The punishment is usually a prohibitive rise in home values.

My sister and her husband had a very nice home in the Lost Altos Hills area of the Bay Area, they decided a few years ago that they wanted "out" of the Bay Area , sold their home for what they thought was a great price, about $1.8 million, and bought a much more luxurious home in the Northwest for $1.1million.

Now, ten years later, they are tired of the winter rains up North, their home in the NW is worth about $1.5 million after all these years, and the home they had in Los Altos Hills now is worth about $4 million, thanks to the continuing wealth engines of upstarts like Facebook, which did not exist when they lived there. They can't even go back and buy a nice condo for $1.5 in that area now, let alone their previous home.

You may want to leave the state for many reasons, but I would suggest you rent your California house out for a couple of years and move away, then decide if you really want to stay away. The downside risk is minimal; Bay Area real estate has always looked ridiculous, I remember reading articles in the 80's about the outrageous Bay Area real estate values.

Something to think about.

randomguy
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Re: Cashing out of the Bay Area

Post by randomguy » Sun Apr 29, 2018 8:59 am

aristotelian wrote:
Wed Apr 25, 2018 10:55 am
You are definitely not selling low, that's for sure.
How much would you bet on that? If houses are 50% higher in 2 years, he sold low😁

Cashing out when you meet your number is fine. You can even keep your job and rent while those RSU vest

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Re: Cashing out of the Bay Area

Post by abuss368 » Sun Apr 29, 2018 9:04 am

Bungo wrote:
Tue Apr 24, 2018 12:50 am
Any other Bay Area homeowners thinking about cashing out? It feels to me like we may be near the peak of the current real estate cycle.

Moving to a cheaper state and buying a house for cash has always been a major component of my retirement plan. I have been targeting 2020 or 2021 for that milestone, in order to finish vesting a nice chunk of RSU shares, but housing has appreciated much more rapidly than I expected. I have crunched some approximate numbers and think I can afford to pull the trigger this year. I may even come out ahead if I sell now versus waiting a few years, if a housing downturn is on the horizon.

Does anyone care to offer their prognostication? Realtor recommendations would also be highly appreciated, if that's appropriate for this forum.
Hi Bungo -

I have never let market conditions influence whether we continued to own or live in our home. After all, everyone must live somewhere. That said, if you have plans to relocate, then in my opinion you may have a valid reason for letting the market influence a decision to sell your home.

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Watty
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Re: Cashing out of the Bay Area

Post by Watty » Sun Apr 29, 2018 9:25 am

4nwestsaylng wrote:
Sun Apr 29, 2018 1:18 am
The downside risk is minimal;
When people say things like that it is a red flag to be concerned about a bubble.

4nwestsaylng
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Re: Cashing out of the Bay Area

Post by 4nwestsaylng » Sun Apr 29, 2018 2:19 pm

This is not the Inland Empire S. Cal, Phoenix or Vegas, all of which had major drops in the real estate bust, due to the fact that they were desert areas with abundant land and overbuilding. The Bay Area also dropped,but from insane prices down to simply ridiculous prices, due to limited land and a completely different economy. Ok, if hi tech goes bust, Apple declares bankruptcy, Facebook disappears, Google goes under, etc., then maybe a major drop.

My point is that unless one is completely, irrevocably sure that they are never going to return to the Bay Area, a safer bet would be to rent out the house.
The downside risk for someone who bought many years ago is minimal, unless one plans to time the market at the "peak" and get out. Which, when it comes to stocks on this forum, is regarded as unknowable.

Don't count on a bubble and crash to be able to return to the Bay Area if you leave.

Bungo
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Re: Cashing out of the Bay Area

Post by Bungo » Sun Apr 29, 2018 2:40 pm

4nwestsaylng wrote:
Sun Apr 29, 2018 2:19 pm
My point is that unless one is completely, irrevocably sure that they are never going to return to the Bay Area, a safer bet would be to rent out the house.
The downside risk for someone who bought many years ago is minimal, unless one plans to time the market at the "peak" and get out. Which, when it comes to stocks on this forum, is regarded as unknowable.

Don't count on a bubble and crash to be able to return to the Bay Area if you leave.
Several people have made similar comments. To emphasize for the record:
  • I am absolutely, 100% certain that I will never want to move back to the Bay Area. I have no family ties here. It is severely overcrowded, overpriced, and overrated. I don't even like the weather that much (not enough variety, not enough rain, summers too long, air pollution bad and getting worse). There are literally dozens of places where I would rather live.
  • I don't want to keep the house and rent it out because (1) I have zero interest in being a landlord, and (2) I don't want so much of my net worth tied up in housing.

TravelGeek
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Re: Cashing out of the Bay Area

Post by TravelGeek » Sun Apr 29, 2018 3:00 pm

Bungo wrote:
Sun Apr 29, 2018 2:40 pm
Several people have made similar comments. To emphasize for the record:
  • I am absolutely, 100% certain that I will never want to move back to the Bay Area. I have no family ties here. It is severely overcrowded, overpriced, and overrated. I don't even like the weather that much (not enough variety, not enough rain, summers too long, air pollution bad and getting worse). There are literally dozens of places where I would rather live.
  • I don't want to keep the house and rent it out because (1) I have zero interest in being a landlord, and (2) I don't want so much of my net worth tied up in housing.
My thinking was similar when we left a few years ago. I don’t have particularly negative feelings about the Bay Area (enjoyed my 20 yrs there), but I knew I wouldn’t have to return for job reasons because selling and moving got me beyond the “enough” threshold. And there are plenty of other places where the quality of life is IMO better, especially for FIRE people.

Friends suggested to hold on to the house and rent it out. I had the same reasons to not opt for that choice that you listed. So far I don’t regret that decision.

I have been back several times for work and once to visit friends. Still like it. SF will always be a special city for me. Still don’t regret leaving at the end of a trip to go home, though.

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