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Bubble Sitting Sounds Too Risky

Posted By Jim On 08/11/2006 @ 1:44 pm In The Home | 2 Comments

Bubble sitting is to houses what shorting is to stocks, you sell your house and rent an apartment with the hopes that you can buy your house (or a similar one) back later at a lower price. With all the lists of overpriced home markets out there, you’d think this would be a killer strategy. The only problem is that all those same publications with those overpriced lists probably had pundits claiming real estate is safe when the bubble was expanding. Home prices never decrease! They’ll plateau but they won’t fall because people can always continue living in their house! (I believe that reasoning on a personal level, I don’t know how true it is from a macro perspective)

There’s a CNN Money article about bubble sitting [3], they advise against it, and so do I. There are so many quality of life issues when you talk about going from a house to an apartment. Sure you don’t need to check on the sump pump and your electricity bills are slimmer but you also don’t have all the space. Plus, selling a house is not like selling a stock, the process is expensive and extremely time consuming.

It just seems way to risky for the payoff.


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[3] CNN Money article about bubble sitting: http://money.cnn.com/2006/08/11/real_estate/bubble_sitting/index.htm

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