Hello Mr & Mrs Reyes,
I am reading over your question very carefully before replying with my answer...
I would imagine that you purchased your second home in Moorpark in 2004, just as the market was approaching it's peak. The local real estate market hit a plateau in late 2005 and early 2006. I would also imagine you utilized the equity you realized from selling your first home to buy the home you are in today.
My consultive question(s) to you, if we were sitting across the table from each other would be the following:
1) Are you concerned about the "margin of equity" you have "shrinking away"? Actually, all homeowners share in the same "plight" -- which is nothing more than an overdue market correction. We are generally returning today to values equating to levels last seen in 2003. If your particular neighborhood is fairly stable -- not a lot of sales from '03-'07, then you pretty much do not have to worry about losing a lot more equity.
2) If the market was different, for instance rising gradually or even stablilizing, would you feel differently about selling now?
3) Do you need to sell? Can you afford your payment?
4) Is your present home satisfactory?
5) Do you need a "larger home with more land"?
6) I am reading what you are saying and have a suggestion ONLY if you answered YES to Q #5:
Sell now, take a hit. RENT for as long as the market takes to recover, possibly until the year 2012. Then, when you do buy back into the market, I am certain your property tax basis will actually be lower. As you say, you are hedging your bets. If you buy and sell in the same market, you do not truly take advantage of the market. However, if YOU feel prices and the trend in market values will continue south, you should get out and wait for the market to show signs of bottoming out. I realize this step make not be practical for various reasons -- family, kids in school, etc. So, you still have some homework to do as far as studying the market and determining your best "move" (or no move at all).
Read The 2009 California Real Estate Market Forecast ( 134 pgs./October 15, 2008) attached below - it may take a moment to load.... It's a REAL (estate) EYE OPENER:
I will be happy to email you the LINK to Leslie-Appleton Young's (CAR Vice-President and Chief Economist) recent videotaped speech on the forecast for 2009 and beyond.... Stay informed!!