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Thread: Anyone selling and renting, in anticipation of a crash?

  1. #1
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    Default Anyone selling and renting, in anticipation of a crash?

    I just sold my rural property (conditionally sold). I'm downsizing and moving into the city for more convenience, and less mortgage.

    I'm playing with the idea of renting in town, instead of buying, for a while. Why? We all know the cash the gov't is printing is driving up inflation. People are currently taking on massive home debt, with the current sub 2% interest rates and panic to buy a home.
    My understanding is when inflation gets worse, the gov't will raise interest rates to slow inflation. That's when these big home loans will become difficult for people to pay. I'm not picturing anything as bad as the 80's crash, but it's on my mind.

    IF interest rates go up, renting could provide the benefits of:
    - Avoiding a correction (reduction) in the value of a home I own.
    - Avoiding a dramatic increase in my monthly mortgage payments.
    - Allowing my home-cash to be earning interest for me, likely paying for the entire rent expense.
    - Giving me the opportunity to buy a home at a lower price, post-correction.
    - Reduce spending: no property tax, home insurance, fixing appliances, etc

    The negative of renting now is this bubble keeps going up for a few more years, and I miss the opportunity of increasing asset value by owning a home. Plus "a man should own his property' stigma in my head.

    Anyone else thought about selling and renting for a while for these, or other reasons?

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    Home rentals with good (3+) garage space are slim pickings at the moment, so that doesn't help my idea of renting.

  2. #2
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    I'm not selling our property, but half my RRSP is cash right now.

    A coworker is downsizing too, and he's planning on renting when it sells.

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    /rummaging around looking for crystal ball

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    If you are good at being smarter than the people paid to predict the markets, then there's real money to be made. I am not.
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Quote Originally Posted by Buster View Post
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    /rummaging around looking for crystal ball
    This.

    We can all make educated guesses but there have been many times where doing nothing may have been better off. I personally rather "own" a home and not worry about moving around. Just don't be dumb and buy a house you can't afford.

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    Investment portfolio-wise, ask @eblend how he made out last year after the market crash and he sold everything to go into cash and DCA back in.

    I didn't buy so much property that I became house broke, so I'm ok if interest rates go up.

    I took a look at the books the other day and if we were willing to liquidate everything we had and take all the tax hits in the world, we could be mortgage-free tomorrow. There's solace in knowing that.

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    Currently bumming in moms condo unit’s spare guest room till I can afford another property to live in

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    Quote Originally Posted by rx7boi View Post
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    Investment portfolio-wise, ask @eblend how he made out last year after the market crash and he sold everything to go into cash and DCA back in.
    Not sure if this is a dig at me? Yes I sold my VGRO, and bought into bunch of other stocks that are up a ton, thanks for asking. I do have a bit of VGRO still but I took some riskier bets as well and they have paid off pretty well. I do plan to liquidate it all at some point and go into something with lesser risk, but at least I made a good amount to pad my future safer investments.

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    Nah mate, it's not a dig but while we're on the topic of taking risk off the table in anticipation of the future, it pays to bring it full circle and see how things panned out for you.

    I think it's on alot of people's mind that the market could change this year, but personally I'm determined to stick to my passive-investing style and see how it goes.

    If the market tanks, would you be repeating what you did last year? IIRC you sold right away and broke relatively even because you had just bought VGRO at the time.
    Last edited by rx7boi; 04-30-2021 at 06:54 PM.

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    Quote Originally Posted by Buster View Post
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    /rummaging around looking for crystal ball
    I feel like the magic 8 ball is more accurate.

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    Your question is anyone else doing this? My answer for myself is yes.

    It wasn't intentional though, I have always wanted to move back to Vancouver where I grew up and it just so happened that it's happening around this time. We sold our house for WAY more than what we were expecting back in December and in Vancouver we have no choice BUT to rent.

    For my own sake, I am thinking the same as you...we plan to move back to Calgary in a few years when our parents need to live with us. It doesn't look like Vancouver's market will crash any time soon, in fact, it keeps breaking records. So my hope is on Calgary, that it either stays around the same or for my own selfish sake, crashes. Proceeds from our home sale will be in the bank collecting what little interest it can get now.

    It's going to be a really nice feeling being back on the sidelines after almost 10 years of owning...HOWEVER, we could look real stupid if prices keep climbing.

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    Government can't afford rates to increase much. Inflation is the way of the future. May as well lock that house price in

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    Yep, government can't afford the rate increase on all the new debt.

    Haven't you heard how you control inflation in modern monetary theory? You tax people more, so it's drives down demand. Doesn't that sound much better than high interest rates?

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    Is there any tax downsides to selling your primary residence?

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    Not yet....

    The only tax implications could be the money you make investing the proceeds of the sale after.

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    Quote Originally Posted by darthVWader View Post
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    Is there any tax downsides to selling your primary residence?
    that's step #16 of The Plan.

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    If we didn't have young kids who went to school a few blocks away, I would sell our house and rent.

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    Quote Originally Posted by ExtraSlow View Post
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    If you are good at being smarter than the people paid to predict the markets, then there's real money to be made. I am not.
    It's been statistically proven time & time again that the people who are paid to predict the markets are in the aggregate no better than a monkey flinging poo at a wall of charts. ES, I whole-heartedly believe you are smarter than those monkeys.

    As for OP, people have been waiting to time the impending crash in real-estate markets like Vancouver & TO for 20 years and it hasn't happened, not on a wholesale level anyway. Calgary and the rest of Alberta can and often are fundamentally disconnected from pricing trends across the rest of the country anyway. If oil hits $120 BBL I don't care what the interest rates are or what else is going on in the world the price of housing here will skyrocket and if it hits $20 BBL Alberta real-estate is going to the shitter.
    "Masked Bandit is a gateway drug for frugal spending." - Unknown303

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    I am the monkey in that scenario.
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Quote Originally Posted by Masked Bandit View Post
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    It's been statistically proven time & time again that the people who are paid to predict the markets are in the aggregate no better than a monkey flinging poo at a wall of charts. ES, I whole-heartedly believe you are smarter than those monkeys.

    As for OP, people have been waiting to time the impending crash in real-estate markets like Vancouver & TO for 20 years and it hasn't happened, not on a wholesale level anyway. Calgary and the rest of Alberta can and often are fundamentally disconnected from pricing trends across the rest of the country anyway. If oil hits $120 BBL I don't care what the interest rates are or what else is going on in the world the price of housing here will skyrocket and if it hits $20 BBL Alberta real-estate is going to the shitter.
    I just feel a need to point out that oil actually went to negative and there have been mass layoffs the past few years and real estate never crashed.

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