Dm, Home Buyer in Somerville, MA

Sell now or in two years?

Asked by Dm, Somerville, MA Mon Jun 9, 2008

I have the option to lease my primary residence for two years or sell now. I already have buyers and I already have a tenant lined up who would sign a two-year lease.

WIth your knowledge of market conditions and the buzz on the street, what would you advise: sell now or lease for two years and sell then? (The tax situation remains unchanged, I checked.)

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In Cambridge, Brookline, Newton and other immediate "suburbs" of Boston the answer is a simple quality of life choice for you. I do not have any magic ball that would lead me to believe it is going to swing wildly in one direction or another in such a short time (2 years) so if you can get your money and get out now --and doing so makes your life easier or better -- I would suggest you do that. The logical fear is the market can start to really hit these towns and you'd risk a loss and I'd have to say the potential loss outweighs the possible gain. Of course, it's fully property dependent too. If you own a single family house, that market is much "tighter" and therefore provides a slightly higher likelihood of gain.
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0 votes Thank Flag Link Mon Jun 9, 2008
Good question. In my opinion selling now is the best course of action. The reason is simple: supply and demand. As of today, there are just 19 condos for sale in Somerville and 22 in Cambridge. In 25 years of selling homes in Cambridge and Somerville I have never seen the inventory so low. The demand for housing right now is great and most sellers are getting multiple offers for their property, and I do mean MULTIPLE!

Two years from now I fully expect there to be more sellers putting their homes on the market . I say this because by that time buyers needing to trade up, that purchased at the top of the last market cycle, will have more equity due to the rise in prices happening now. With those new sellers finally entering the market there will be an easing of prices. Prices will still be rising two years from now, but not anywhere near the current pace.

Now here is something else to consider: what will be the condition of your place after being rented for two years? Most tenants are responsible but typically not to the same extent that an owner living in their home would be. You may need to put some money into your loft to get it ready to sell. If the tenants have moved out in two years you will most likely have to paint as well as have the place staged.

Hope this helps!

James
0 votes Thank Flag Link Fri Feb 28, 2014
I would suggest you wait if you have the time. I don't think the values are going to go down anymore. Maybe it won''t be such a buyers market in 2 years.
0 votes Thank Flag Link Mon Jun 9, 2008
If you don't need to sell now then you should wait. But if you think you need to sell within the next two years then you should definitely sell today. Also, be prepared because some areas prices have gone down quite a bit. Its gong to take time for the market to stop moving downward and then some more time for the market to makeup for what they lost and move further on; so you may be looking at 2-5 years before prices go higher then where they were at the peak in 2006.
0 votes Thank Flag Link Mon Jun 9, 2008
Well DM! If you do not need to sell to buy something else, I think it is a good strategy to wait because you are right, a loft in Kendall Square is a great location and Google relocation will help greatly!
As a real estate agent, I love for you to sell but I always tell my seller that if they don't need to sell, it is better to wait. You may not see better in 2 years but I doubt you will see worse!
Good luck!
Veronique Mendelson
0 votes Thank Flag Link Mon Jun 9, 2008
Thanks for your responses, very helpful as always.

For tax purposes we would need to sell within three years, so we thought we'd get that commercial lease for two years and then we'd have a year in which to sell. We don't need the proceeds to buy our next primary residence, that's why we have this dilemma. The property is a loft in the Kendall Square area, currently said to be undergoing a commercial boom with Google and Microsoft having just moved their Boston headquarters here.
0 votes Thank Flag Link Mon Jun 9, 2008
the current market in metrowest of Boston continues to be in a slow decline. I believe it is flattening out, but even at that, the best you could hope for is the same value in 2 years and more likely a little lower. Maybe its different in Cambridge.

John
0 votes Thank Flag Link Mon Jun 9, 2008
I think it depends on what you plan to do in the next several years. Are you planning to purchase another home somewhere else? If so, and you need the proceeds, then now might be the best time for you to sell. If you have no need for the net proceeds from your current home, and you like the idea of rental income (or being a landlord), then renting the home may be better for you. Only you can answer which scenario is best for you.

One thought (not meant to sway your decision in any way): Real estate is illiquid (not easily sold like stocks). If you wait for two years (and you have a deadline in which you need to sell (1031 exchange as an example), you may have problems down the road selling in the timeframe necessary. Given that you have a ready, willing, and able buyer now, you may wish to think long and hard before making a decision.

Nobody can predict what will happen in the market, but if I had to wager a guess, I'd say the market may remain flat (as a generality, since I don't work inyour specific market). Best recommendation would come from someone in your specific market area. Just my $0.02

-Daniel
0 votes Thank Flag Link Mon Jun 9, 2008
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