personal observations from a potential buyer

[mking]

hi

i have been seriously looking for a home in east hill or renton for about 7 months now. i work in bellevue and live in tacoma. sucks. decided to move.

brief history. bought a house in federal way in 1990. got divorced and sold it in 1997 for a 5% gain over 7 years. that was the market price, not a fire sale. bought a house in tacoma in 1997. bought another house in tacoma in 2002, a house we really like and want to keep. kept the first tacoma house as a rental. sold that rental in July 2007 after a week. priced it fairly. took 3 different buyers before one stuck, 2 offers failed inpsections (it was an old house in generally good repair, but had old plumbing and old wiring the first two buyers didnt want to deal with).

had planned to use the $ from the rental as a downpayment, and rent the other tacoma home (b/c we like that house, its well built and has a view and a nice lot, we want to retire there, we have a 4 3/8 15 year fixed rate loan that will be paid off in 2019, and we will rent it for just about what our holding costs are).

we have been watching prices fall in renton. 6 months ago there were no homes we could see ourself in for under $350k. now there are plenty for $300k, even a few as low as $280k that were not perfect but better than most rentals. but it looks like prices might keep dropping, so we decided to rent a really nice home in renton for a year and see what happens. the home we are renting was bought in 9/2006 and remodeled. we will be the first ones to live in it. for about the same monhly expense, we have a nicer house, $ in the bank, and security if home prices drop. seems a bad time to own two houses.

[biliruben]

Sounds like you are making some good decisions.

[rose-colored-coolaid]

[mking]

i have thought about the best place to park it. the rate on the house we want to keep is 4 and 3/8 (thats a fixed 15 year conventional loan; talk about timing!!!). the money market the cash is in now earns about that. i have a CD thats earning a bit over 5%. there are some benefits to keeping the mortgage on the other home, at least until the interest is paid down to where i lose the interest dedection.

given what i see as potentially troubling signs in the economy,i am happy to have some liquidity. i have a retirement plan thats mostly in stocks, and i cant really do much about that. i have a house i like that will appreciate if the market goes up, and if the market goes down i still like the house and wont feel burndened to keep it. so i am spread almost equally in RE, stocks, and cash.

if house prices do PLUNGE, it would be nice to have good credit and a pile of cash.