Although I wanted to retire in my contemporary Florida home, I am not going to miss out on the latest housing bubble as I did 7 years ago. According to a recent article by USA Today, home prices are surging in a number of states including Florida. I have noticed more than just a small rebound in home prices in the past several months. Compared to the post-bubble lows of 2 years ago, home values in my neighborhood have doubled. According to CoreLogic, home prices in Florida jumped 12.1 percent compared to a year ago. Other hot housing markets included Nevada, California, Arizona, Georgia, Michigan, Oregon, Idaho, Washington and Utah. Experts say home prices are still 17.4 percent below their bubble peak of 2006. According to an article by Reuters, one official with the Federal Reserve believes we are entering another housing bubble. My husband and I are writing down a real estate plan so we don't miss out on what seems like a new housing bubble.
Calling the top
At this time, homes that are comparable to our home are selling for about $200,000, which is twice as much as our home was worth just two years ago. Since we bought our home for $183,000 and upgraded the floors and landscaping, we would break if we sold now. In order for us to sell, we would want to get at least $300,000 for our home. We plan to ride out this current housing bubble until it peaks.
Renting a condo
After selling our home, we would rent an apartment to get used to a downsized lifestyle. We would look for rent that was the same or less than our $900 a month mortgage. While renting, we plan to put money from the sale of our home into a money market account. At that point, we will begin the hunt for a real estate bargain.
Searching for a short sale
Instead of buying a foreclosure and fixing it up, we plan to hunt for a short sale. Many of the homes in our neighborhood that were sold as part of a short sale were in good condition. The homes were occupied until the sales were finalized. However, I have observed dozens of foreclosed homes in my neighborhood that sat vacant for years with no electricity. Contractors hired by the banks did very little to fix up the properties from what I could tell.
Creating an empty-nest
Since our children will be grown and out of the house in just a few years, we hope to downsize into a 3-bedroom and 2-bathroom home. By timing the real estate market, we should walk away with enough money to pay cash for our new home. We hope to also have enough money for renovations.
If the value of our home plateaus, we will stay put and continue to pay down our mortgage. Selling during a housing bubble will simply give us the opportunity to buy a newer but smaller home before we retire. Whether we sell or stay, we plan to own a home outright within the next 10 or so years. Because we bought during the peak of the first housing bubble, it only seems right that we should sell during the top of the second housing bubble. Having been on the wrong side of the housing bubble, we know the signs.
More from this contributor:We Downsized Our Mortgage, Not Our Home
- Real Estate