Sell stock now for house down-payment in 9-18 months?

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SDLinguist
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Sell stock now for house down-payment in 9-18 months?

Post by SDLinguist » Sun Jun 28, 2020 9:47 pm

With the situation as it is now and my wife and I both working from home we are thinking more and more about buying a place instead of renting a 1br apartment.

We have started looking at the financials and have calculated that we could save enough for a down payment plus buffer for other costs and moving in the next 9-18 months.

The goal is ~65k saved ourselves + ~60k in gifts from parents and inlaws for a total of about 125k. We have set our top end to be around 550k as it is <3x gross but are aiming more for 500k and that would not impact our other goals.

We currently have ~46k saved but since we didn't have a goal for the money until now we just have it a brokerage account.

I assume it would be most prudent just sell the equities now and preserve what capital we do have. Even with the current down market we would still have around 4k in long term gains. My only fear is that we then decide to not buy anything and then miss out on any potential gains but if we have another 30% drop then it is a big hit to our plans.

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cheese_breath
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Re: Sell stock now for house down-payment in 9-18 months?

Post by cheese_breath » Sun Jun 28, 2020 9:57 pm

Sell it now if you'll need it in the next 9-18 months. Nobody knows what the market will do over that time, and you have no control over what it will do. The one thing you do have control over is preserving what you have now. By failing to sell you lose control over that too.
The surest way to know the future is when it becomes the past.

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Re: Sell stock now for house down-payment in 9-18 months?

Post by Scatterbrain » Sun Jun 28, 2020 10:04 pm

I am generally aggressive and would definitely sell in this scenario. Non Covid world I’d be okay with letting at least some of it ride. You don’t want to watch housing prices go down 15% and miss out on a deal by having your down payment holding you back.

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SDLinguist
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Re: Sell stock now for house down-payment in 9-18 months?

Post by SDLinguist » Mon Jun 29, 2020 2:27 pm

Scatterbrain wrote:
Sun Jun 28, 2020 10:04 pm
I am generally aggressive and would definitely sell in this scenario. Non Covid world I’d be okay with letting at least some of it ride. You don’t want to watch housing prices go down 15% and miss out on a deal by having your down payment holding you back.
I pulled off the band aid. You are right. We have to hedge the possible downside and the only way to do that is to sell and move to cash. It would suck to spend save up a bunch of extra money only to then be down on funds because of a market downturn.

striker79
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Re: Sell stock now for house down-payment in 9-18 months?

Post by striker79 » Mon Jun 29, 2020 3:00 pm

If I need money in the next year for house payment, I am definitely selling now. All the money I have in the market I don't need to touch for at least 10 years. Market has recovered nicely, downside risk is a lot more than any extra upside for this year. This is a no brainer.

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Re: Sell stock now for house down-payment in 9-18 months?

Post by geerhardusvos » Mon Jun 29, 2020 3:15 pm

SDLinguist wrote:
Mon Jun 29, 2020 2:27 pm
Scatterbrain wrote:
Sun Jun 28, 2020 10:04 pm
I am generally aggressive and would definitely sell in this scenario. Non Covid world I’d be okay with letting at least some of it ride. You don’t want to watch housing prices go down 15% and miss out on a deal by having your down payment holding you back.
I pulled off the band aid. You are right. We have to hedge the possible downside and the only way to do that is to sell and move to cash. It would suck to spend save up a bunch of extra money only to then be down on funds because of a market downturn.
In my opinion, this is timing the market. Sell when you need the money if the money is already invested. In general, I would recommend not investing money that you will need in the next 6 to 12 months, so your decision is fine here, but it also depends on your net worth and financial goals and overall asset allocation.

Now, the question arises, why are you putting anything down on the house? 🤔
VTSAX and chill

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SDLinguist
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Re: Sell stock now for house down-payment in 9-18 months?

Post by SDLinguist » Mon Jun 29, 2020 10:02 pm

geerhardusvos wrote:
Mon Jun 29, 2020 3:15 pm
SDLinguist wrote:
Mon Jun 29, 2020 2:27 pm
Scatterbrain wrote:
Sun Jun 28, 2020 10:04 pm
I am generally aggressive and would definitely sell in this scenario. Non Covid world I’d be okay with letting at least some of it ride. You don’t want to watch housing prices go down 15% and miss out on a deal by having your down payment holding you back.
I pulled off the band aid. You are right. We have to hedge the possible downside and the only way to do that is to sell and move to cash. It would suck to spend save up a bunch of extra money only to then be down on funds because of a market downturn.
In my opinion, this is timing the market. Sell when you need the money if the money is already invested. In general, I would recommend not investing money that you will need in the next 6 to 12 months, so your decision is fine here, but it also depends on your net worth and financial goals and overall asset allocation.

Now, the question arises, why are you putting anything down on the house? 🤔
It would be our first home. Wife and I are both 30, would be 31 once the time frame really hit.

Our part of the down payment would be about 75-80% of non-retiernment/non-EF funds by the time we have in our plan.

Retirement funds are currently at around 240k across 401k,hsa,Roths. With 19.5k x2, 6k x2, 7k yearly contributions respectively. Also have been saving ~12k/ via espp, though the plan has changed this year and is much less attractive and then around 1-1.5k a month extra on top of that. We have looked and with currently being stuck at home spending has decreased by ~1k. Current total assets are just north of 300k including EF

Total comp is right around 200k combined the last two years. Wife is finishing up some schooling which will bring a small increase in the next 6-12 months but not basing the decision around that.

With 20% down and <550k purchase price, by my math PITI comes to at or just a little less than renting an equivalent place. There is still the extra overhead for maintenance though that needs to be considered.

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Re: Sell stock now for house down-payment in 9-18 months?

Post by Clever_Username » Mon Jun 29, 2020 10:06 pm

In Spring 2016, I decided I was going to move to another part of the city I lived in, rent for a year, and buy a house. I ended up closing on said house Memorial Day weekend 2017. I sold my taxable stocks (not really relevant why that was my taxable account; I had no taxable bonds except Series I, which I kept) in March 2016. No regrets, even knowing what the market did in the intervening time.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.

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cheese_breath
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Re: Sell stock now for house down-payment in 9-18 months?

Post by cheese_breath » Mon Jun 29, 2020 10:21 pm

geerhardusvos wrote:
Mon Jun 29, 2020 3:15 pm

In my opinion, this is timing the market.... 🤔
In my opinion this is not market timing. Market timing is when your buying or selling is influenced by a suspicion or opinion about which direction the market will move. OP hasn't expressed any such opinions. In fact he's admitted he doesn't know which way it will go. This is a simple risk reduction move to protect his down payment assets.
The surest way to know the future is when it becomes the past.

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Re: Sell stock now for house down-payment in 9-18 months?

Post by whodidntante » Mon Jun 29, 2020 10:43 pm

It does not make sense to anchor. The chips in front of you are the ones you have. If you keep playing, you might be up or down in an hour. Do you want to keep playing, friend? The game is good, but the best game I ever played was still gambling.

You've got houseitis so my guess is you're going to buy. The question is when. If it's 9 months, sell. The stock market is a not a 9 month CD.

TravelforFun
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Re: Sell stock now for house down-payment in 9-18 months?

Post by TravelforFun » Mon Jun 29, 2020 11:02 pm

SDLinguist wrote:
Sun Jun 28, 2020 9:47 pm
With the situation as it is now and my wife and I both working from home we are thinking more and more about buying a place instead of renting a 1br apartment.

We have started looking at the financials and have calculated that we could save enough for a down payment plus buffer for other costs and moving in the next 9-18 months.

The goal is ~65k saved ourselves + ~60k in gifts from parents and inlaws for a total of about 125k. We have set our top end to be around 550k as it is <3x gross but are aiming more for 500k and that would not impact our other goals.

We currently have ~46k saved but since we didn't have a goal for the money until now we just have it a brokerage account.

I assume it would be most prudent just sell the equities now and preserve what capital we do have. Even with the current down market we would still have around 4k in long term gains. My only fear is that we then decide to not buy anything and then miss out on any potential gains but if we have another 30% drop then it is a big hit to our plans.
You got 3 options:

1) Sell them now and you'd know exactly how much you'd get. You may have regrets or reliefs 9-18 months from now depending on how the market does.

2) Sell them 9-18 months from now and you could have even a bigger down payment or you may have to wait longer to buy a house.

3) Sell them 4-9 months from now and you would be midway between the two options above.

No one can tell you which option is best for you.

TravelforFun

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geerhardusvos
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Re: Sell stock now for house down-payment in 9-18 months?

Post by geerhardusvos » Tue Jun 30, 2020 12:05 am

SDLinguist wrote:
Mon Jun 29, 2020 10:02 pm
geerhardusvos wrote:
Mon Jun 29, 2020 3:15 pm
SDLinguist wrote:
Mon Jun 29, 2020 2:27 pm
Scatterbrain wrote:
Sun Jun 28, 2020 10:04 pm
I am generally aggressive and would definitely sell in this scenario. Non Covid world I’d be okay with letting at least some of it ride. You don’t want to watch housing prices go down 15% and miss out on a deal by having your down payment holding you back.
I pulled off the band aid. You are right. We have to hedge the possible downside and the only way to do that is to sell and move to cash. It would suck to spend save up a bunch of extra money only to then be down on funds because of a market downturn.
In my opinion, this is timing the market. Sell when you need the money if the money is already invested. In general, I would recommend not investing money that you will need in the next 6 to 12 months, so your decision is fine here, but it also depends on your net worth and financial goals and overall asset allocation.

Now, the question arises, why are you putting anything down on the house? 🤔
It would be our first home. Wife and I are both 30, would be 31 once the time frame really hit.

Our part of the down payment would be about 75-80% of non-retiernment/non-EF funds by the time we have in our plan.

Retirement funds are currently at around 240k across 401k,hsa,Roths. With 19.5k x2, 6k x2, 7k yearly contributions respectively. Also have been saving ~12k/ via espp, though the plan has changed this year and is much less attractive and then around 1-1.5k a month extra on top of that. We have looked and with currently being stuck at home spending has decreased by ~1k. Current total assets are just north of 300k including EF

Total comp is right around 200k combined the last two years. Wife is finishing up some schooling which will bring a small increase in the next 6-12 months but not basing the decision around that.

With 20% down and <550k purchase price, by my math PITI comes to at or just a little less than renting an equivalent place. There is still the extra overhead for maintenance though that needs to be considered.
Ever think about how you could retire way earlier if you don’t buy this house? Why not just put that 20% down into VTSAX and continue renting a nice place? Do you plan to have kids? Will one of you stop working during that time? A $100,000 income with a half a million house doesn’t sound like a great formula to me, which is what’d you’d be if one of you stays home with kids. If you don’t plan to have kids, why would you want to be tied down to the house?

You’re on a good path, but you are not ahead of the game in terms of investing given your income range. If you want to house, you will buy it, but just know it’s likely not a good investment. If you are going to buy, first time home buying with 0% down is attractive when looking at the math and risk
VTSAX and chill

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geerhardusvos
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Re: Sell stock now for house down-payment in 9-18 months?

Post by geerhardusvos » Tue Jun 30, 2020 12:11 am

cheese_breath wrote:
Mon Jun 29, 2020 10:21 pm
geerhardusvos wrote:
Mon Jun 29, 2020 3:15 pm

In my opinion, this is timing the market.... 🤔
In my opinion this is not market timing. Market timing is when your buying or selling is influenced by a suspicion or opinion about which direction the market will move. OP hasn't expressed any such opinions. In fact he's admitted he doesn't know which way it will go. This is a simple risk reduction move to protect his down payment assets.
I get what you’re saying. My beef is more that they should just not sell the stock and wait until they have the desired down payment with new funds. Or put less down... Less than ideal planning and house-bug-syndrome more than market timing I give you that
VTSAX and chill

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SDLinguist
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Re: Sell stock now for house down-payment in 9-18 months?

Post by SDLinguist » Tue Jun 30, 2020 7:32 pm

geerhardusvos wrote:
Tue Jun 30, 2020 12:05 am
SDLinguist wrote:
Mon Jun 29, 2020 10:02 pm
geerhardusvos wrote:
Mon Jun 29, 2020 3:15 pm
SDLinguist wrote:
Mon Jun 29, 2020 2:27 pm
Scatterbrain wrote:
Sun Jun 28, 2020 10:04 pm
I am generally aggressive and would definitely sell in this scenario. Non Covid world I’d be okay with letting at least some of it ride. You don’t want to watch housing prices go down 15% and miss out on a deal by having your down payment holding you back.
I pulled off the band aid. You are right. We have to hedge the possible downside and the only way to do that is to sell and move to cash. It would suck to spend save up a bunch of extra money only to then be down on funds because of a market downturn.
In my opinion, this is timing the market. Sell when you need the money if the money is already invested. In general, I would recommend not investing money that you will need in the next 6 to 12 months, so your decision is fine here, but it also depends on your net worth and financial goals and overall asset allocation.

Now, the question arises, why are you putting anything down on the house? 🤔
It would be our first home. Wife and I are both 30, would be 31 once the time frame really hit.

Our part of the down payment would be about 75-80% of non-retiernment/non-EF funds by the time we have in our plan.

Retirement funds are currently at around 240k across 401k,hsa,Roths. With 19.5k x2, 6k x2, 7k yearly contributions respectively. Also have been saving ~12k/ via espp, though the plan has changed this year and is much less attractive and then around 1-1.5k a month extra on top of that. We have looked and with currently being stuck at home spending has decreased by ~1k. Current total assets are just north of 300k including EF

Total comp is right around 200k combined the last two years. Wife is finishing up some schooling which will bring a small increase in the next 6-12 months but not basing the decision around that.

With 20% down and <550k purchase price, by my math PITI comes to at or just a little less than renting an equivalent place. There is still the extra overhead for maintenance though that needs to be considered.
Ever think about how you could retire way earlier if you don’t buy this house? Why not just put that 20% down into VTSAX and continue renting a nice place? Do you plan to have kids? Will one of you stop working during that time? A $100,000 income with a half a million house doesn’t sound like a great formula to me, which is what’d you’d be if one of you stays home with kids. If you don’t plan to have kids, why would you want to be tied down to the house?

You’re on a good path, but you are not ahead of the game in terms of investing given your income range. If you want to house, you will buy it, but just know it’s likely not a good investment. If you are going to buy, first time home buying with 0% down is attractive when looking at the math and risk
How does zero down math work out better? I would like to see those numbers. Not being facetious, really interested.

As to kids, 5 years ago I would have told you I want three little ones running around and my wife would have said no way no kids ever. Now I am along the lines of not seeing kids in our future, for many reasons that don't really belong here and her attitude has changed to 'maybe, but not really'.

For the last 4 years we have been renting an 850sqft 1br for about $300 under market rate. The fact that we were paying a good chunk under market and that we spent very little time there made us inert to moving to something bigger. Now that both our jobs have moved to WFH (by job opened the office for one day Monday this week only to just go back to fully WFH the day after) and will probably remain so in the future (wife's company most likely going to just close the office and move everyone remote) or at least be 90% WFH makes a one bedroom not really work anymore. Looking at renting a 3 bed room (two offices) place vs buying something pretty much came out to a wash my math. Though I admit my math could easily be wrong.

We were thinking of moving out of state to a lower COL area already before this but after reflection my wife is just unwilling to move that far from family so San Diego County is really the only place.

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