Sell Now, or Rent?

Dear Pat,
My husband just got an East Coast job offer we can't refuse. We need to be situated in Boston by March 1, and we'd like to have our considerable home equity available to buy our next house. But with the real estate market so poor, we're considering renting our house out for now and trying to sell later, perhaps in June or July. We have friends who say we should sell now at the market price, and other friends advising us to rent it out now and sell later when prices rise again. You have no stake in our decision; what do you say?
---Beantown Bound

Dear Beanies,

Do you want me to tell you whether I think the local market will go up, or down, by next summer? Sorry, I took the pledge and swore off all prognostications for at least a year, although I expect sales data coming later this month to confirm my cautious optimism about local prices in the "traditional" market vìs-a-vìs the "distressed" (short-sale and bank-owned) market. I hope to talk more about this new two-market reality in the months ahead.

For now, let's assume that prices will stay approximately the same over the next year (that way, we can be only half-wrong). If you rent out your home now, you can:

    * probably leave town with less distraction
    * presumably collect enough rent to cover your mortgage payment
    * temporarily avoid facing the fact that your home is worth less than it was 3 years ago

But you will:

    * not have your equity available to buy your next house
    * need to hire a property manager, or impose upon the time of your friends and family to maintain the property and address the problems of renters
    * eventually, in order to sell, need to spend time and money putting the house back in the condition it was when you lived there.

Of course, there are more pros and cons than we can discuss here. It may appear that I'm stacking the deck to favor selling over renting, and perhaps I am---in some cases, renting out one's home is the only practical alternative---but I have seen too many instances where sellers or buyers let market conditions keep them from moving forward with their life plans. Your resources and fortitude in a long-distance rental situation may be adequate to the task, Beanies, but if renting out your home is only a delaying strategy to outsmart the market, you need to ask: is it worth the effort, and the risk?