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Got EquityAfter several long, painful years of being “under water” in Silicon Valley, your home now is in the black, that is, you’ve got equity.  You’ve been wanting to move up, or downsize, or relocate – but couldn’t really budge until now.  With the new market conditions, and the freedom to now sell, the question now is whether or not that’s what you want to do.

There’s not an easy answer or a one-size-fits-all response for this, because there are so many variables.

  • If you are moving within Silicon Valley, it’s important to also consider the market for the next home – is it easier or harder to buy a property there? You ideally do not want to sell one place and find yourself unable to buy the next one!
  • If you are making this the last house you’ll own, and are moving to a rental retirement community, it’s much less complicated.  Your main goal may be to sell before the next correction happens so that you get the most possible for your property without risking a market downturn.  Right now it’s good in most of the San Jose area. Will it continue?
  • If you’re selling an investment property or a rental home, it’s a different kind of math problem.  You’ll want to know what the net income and return on investment will be for the condo or house you’re selling vs the one you’d like to buy.  Some markets are ultra hot right now (Menlo Park, Palo Alto, Mountain View, Sunnyvale, Cupertino) and it can be difficult to purchase there, but the rental rates are very high since these are work hubs.  It will be challenging to sell in Morgan Hill or Gilroy and buy in Palo Alto or west San Jose with Cupertino Schools

In many cases, making the decision to sell one home and buy another for any reason (schools, commute, downsizing) will involve analyzing from several angles.  Sometimes it makes sense to pay more but to have a much improved quality of life.  Or it may make sense to get a lesser home in a better school district because you place a premium on education.  In many cases, it’s not about the money, it’s about your goals.   Because it’s a multi-faceted question, often it takes a year or two or more to make the decision after becoming “un stuck” with the reappearance of equity.

But that’s a good problem to have!