The Big Move: I dream of moving to San Diego, but it’s so expensive — even with a $300K down payment. Should we wait for the market to cool?

We are open to condos, townhouses, etc. But do we really want a homeowners’ association? I’ve never had an HOA, and friends keep telling me to avoid it like the plague.

We have considered selling our home and waiting out the market and in the meantime, renting. Also, you would think the mobile home parks would be more affordable, but the lease rent is what I pay for a 3 bedroom, 2 bathroom home in a ski resort town! How do people afford it making much less?

Do we wait for a market crash or jump ship, sell while the market is a seller’s market and make the move now? 

Sincerely,

Mountain Girl

‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Jacob Passy at TheBigMove@marketwatch.com.

Dear Mountain Girl,

I really appreciated your letter because I feel like you did an amazing job of articulating the challenges a lot of homeowners right now are facing. Sure, it’s a seller’s market, and in many parts of the country you could expect to get a record-high price for your home if you sell. Most people, like your family, are destined to turn a decent profit from doing that.

But many sellers are also buyers. This is the Catch 22 that many families like yours are facing today. Selling is the easy part. The bigger challenge is then finding an affordable home to move to — either one that’s larger and meets your needs perfectly, or one that ensures that not all of the profit from the previous home’s sale is immediately sunk back into another property.

There’s also the underlying anxiety and fear of missing out. If you don’t sell now, will you miss the opportunity to sell if the market crashes? (And on the flip side, if you buy a new home, are you buying at the top of the market and putting yourself at risk of being quickly underwater on that home?)

None of us have a crystal ball, and it’s no fun living with the constant unease of second-guessing every financial decision. I don’t mean that you should throw caution to the wind, but I do think you should approach this decision from a different perspective. Yes, a home is an investment — but it’s also a utility. We all need, and deserve, a roof over our heads for safety and comfort.

Real-estate economists will warn you that you shouldn’t base the timing of a home sale or purchase on when you think the market is going to tank. To be clear, there’s no immediate cause for concern to suggest that the market will indeed bottom out. There might be an uptick in foreclosures in the coming year or so, but nowhere near the level seen during the Great Recession. That’s a testament to the efforts on the part of federal regulators and lawmakers to avoid a similar cataclysm because of the COVID crisis.

From what it sounds like, your current home and the area you live in aren’t suiting the needs of you and your children any longer. I think that’s plenty enough reason to begin considering putting your home up for sale.

That said, I would first think about where you would relocate — and I’m not sure if San Diego is the best destination for you. Research shows that renting is more affordable than buying a home in San Diego, according to real-estate analytics firm Attom Data Solutions. But it’s only affordable in a relative sense: The average rent on a three-bedroom home would eat up 55% of the average weekly wage for residents of San Diego, whereas housing payments would consume nearly two-thirds of average weekly wages for homeowners. The good news is that wages are rising faster than rents in San Diego.

A separate study from the American Enterprise Institute, called the Carpenter Index, compares the average wage for a carpenter to the price of an affordable home to see what percentage of workers in that field would be able to afford the homes they help build. In San Diego, 6% of carpenter households in San Diego can afford an entry-level home, according to the most recent version of the index based on 2019 data.

If what you’re searching for is a larger metropolitan area with beaches, warm weather and outdoor activities the whole family can enjoy, San Diego and Southern California aren’t your only options. I’d also consider looking at communities in the Southeastern United States.

The Gulf Coast of Florida might surprise you, for instance. Cities like Sarasota, Tampa and St. Petersburg have wonderful downtowns with bookstores and music venues, just a stone’s throw from some of the best beaches in the country.

Another option could be the coastal communities of Georgia, South Carolina and North Carolina. Cities like Charleston and Savannah are known for their amazing restaurants, museum and miles of beautiful coastline. While perhaps not as affordable as other parts of their states, those cities easily have cheaper costs of living than Southern California.

With you and your husband working in professions that are in-demand nationwide, it would be worth expanding your search to make sure you financial and lifestyle needs are being met by wherever you decide to move to. Since it sounds as though your family is not opposed to renting, at least on a short-term basis, it wouldn’t be the worst idea to test drive wherever you move to, so you can be sure it’s everything you want it to be. By then, you’ll have successfully sold your Arizona property — if you don’t touch the proceeds from the sale, you should have a decent down payment to make buying your next home all the more feasible financially.

I hope your family ends up in a place that makes you all happy — please write back to let us know where you all end up.