These are difficult decisions.
Options including your own observations:
1. Rent it and raise rents later if market turns
2. Rent as a seasonal furnished rental, may pull in more dollars
3. Short sale, Arizona is a non deficiency state, will affect your credit rating
4. Sell, take the loss and move on
5. Help someone in the family out and provide them a place
6. Refinance the loan at a lower interest rate and reduce your expenses
7. Ask for a loan modification program with an adjustment in principal
8. Put flyers up in the clubhouse and see if your neighbors have family members that would like to move in
9. Put up a rent with option to buy. Credit a portion of the purchase price torwards a future purchase. Many buyers that have a home lost in a foreclosure will find this attractive. Also you can charge a higher rent with this option..
Just some ideas. The decision is yours as you know your personal financial situation and I do not. Talk to your Realtor, I am sure they can give you some more optons since they know your property better than anyone else.
May I wish you the best with your decision.
Jeff Masich, Realtor
Arizona Homes and Land
It may be possible to short sale the property if you can show the bank that you have a hardship such as job loss. That means the bank would accept less than it is owed and call it even.
Renting has problems associated with it. Owning has problems, selling has problems. This is one of those things that you have to make a bet and hope you figure things out right.
Some think house prices will fall more through 2013 or later. This is based on foreclosures coming from bad loans resetting through 2012 which will likely take 1-3 years to clear that inventory.
Some thing prices will drop as interest rates rise which takes away buying power. Some think prices could go up as inflation drives prices up due to massive government printing of money recently.
Below is one price prediction site. It shows what they expect to happen for the rest of THIS year.
Your time horizon could change the end results. Perhaps 10 years from now (or 15 or only 3 years) prices increase once more. You end up selling breaking even. If you sell now you lose out. On the other hand if you sell now maybe you avoid a permanently much lower housing price that lasts for a decade or longer similar to what happened in japan in the 90's.
I can see downward pressure on house prices due to new foreclosures coming through 2012. It may take a year to clear them through the legal channels. That would be 2013. Give it 2 more years to clear out the excess inventory levels that is 2015. Perhaps at that time they begin jump through the roof and prices recover quickly. Prices would drop all of that time. And then are likely to go higher. A lot depends on how much you want to deal with the problems (and possible expenses) that renting brings compared to how much you want to wait a lot of years to break even.
The best answer is elusive. You could look at it from a different perspective. If you rent the property and have the renter pay most of the mortgage cost that means you are buying a property that will one day be paid for and do it for only 1/4 of the cost per month. Do you want to do that? Are you willing to do that? It is your choice to make.
Below is a house price prediction site. Consider what it says when making a decision.
Improving home sales triggered by lower prices, near record low interest rates and the federal governments first time home buyers tax credit are slowly setting the stage for a recovery in Arizona housing markets.
However, Arizona will have to work through the over-supply of homes on the market and another tsunami of foreclosures that will hit in the early part of 2010. The new round of foreclosures is already in bankers' pipelines as more homeowners walk away from mortgages. Lenders will slash the prices on foreclosures to get rid of the excessive inventory, sending housing values lower before a recovery can get underway.
In Tucson the inventory of homes has been cut by eager first time buyers taking advantage of the government's tax incentive. But more homeowners who are losing their jobs and others who have lost any incentive to hold on to their homes are being foreclosed as the values of their homes plummet.
Tucson is a market that is making strides towards recovering from the downturn, but with more foreclosures prices are forecast to fall in the New Year. Tucson is forecast to sustain average housing deflation of 8.3% in 2010.
You are in the same situation many people are, owing more than your property is worth in current market conditions. It is a hard situation to be in but here are some things to think about.
Why are you sellilng? Do you HAVE to sell or do you WANT to sell? There is a big difference in today's market. If you have to sell because you are relocating or for some other reason you cannont control than you need to figure out the best option for you.
I know the out of pocket to close sounds like a lot of money but run the numbers. How many more mortgage payments and HOA fees will it take to pay out the same amount of cash? Would you be better off to just take the hit and move on?
If you rent the property, can you rent it for enough to pay your monthly expenses? If not, you are still going to have to come out of pocket every month to keep the payments current and how many months will it take before you are out of pocket the same amount of money? You also risk damage to the unit if you rent it and there may be restrictions in the CC & R's about rentals too.
Finally, if you really do have a hardship situation you cannot control than you should talk to you lender about the possibility of a Short Sale. If it has been a primary home and you have reason to NEED to sell the property, your lender might be open to selling it for less than is owed. You will take a hit on your credit but it should be less of a hit than if you lose the house to foreclosure. Talk to your agent about that possibility, he/she should be able to help.
It sounds like you need to make some tough decisions and your agent should be able to guide you through the decision making process.
Check with your agent in regard to the rental option.
It's a hard call............no one can say where the market will be a year from now.......you may have to use the rental option for a number of years to make up any deficit.
Do you want to be a landlord? Will you be living in the area, or moving far away?
All of these are things to consider.............
Personally, I think this is a buyer's market, and so, I'd rather be buying than selling. I'd also rather be holding rather than selling.
It seems to me that you're trying to avoid paying someone $14,000 to buy the place when you can rent it out and only have it cost you $250 a month plus a month's rent every year or so between tenants.
Then, again, I don't know anything about Tuscon except that Linda Ronstadt grew up there.
All the best,