To buy a home or not to buy? That's the question

Q: I am a 70-year-old woman who is in good health and is still working full time. My third-floor walk-up condo is worth about $155,000. I have about $155,000 in a 401(k) etc. I have a Long-Term Care insurance policy. My credit is very good. I could presently get a great mortgage interest rate.

I have family in another state who would like me to move there. They would help me find a condo in the $100,000 range - and prices will be going very high in the not-to-distant future.

My predicament: I am still working and do not want to leave my job just yet (am still healthy), however, if I wait condo prices in the other state will be out of my reach.

Should I purchase a condo for $100,000 in the other state now, keep working for a while, sell my place here - and then move out of state?

A: NO -- I understand that you want to hedge your bets -- but owning two homes is overextending. Why not suggest your family purchase the condo, and that you will rent it at exactly enough to cover their costs (maintenance, mortgage and taxes) IF they get a fixed rate mortgage now (which will be lower than later). They can have the upside. YOU can sell your place later, keep the cash and use it to pay "rent" to them!

Q: I'm a 54-year-old police detective and have been saving my money to buy a house. It has just occurred to me that the city is going to retire me in nine years. So now I'm wondering if I should just maximize my Deferred Compensation contribution and buy a house when I retire. That is the ultimate goal. To move south where the weather is warmer and the cost of living lower. My current rate of return is 6-10 percent. My rent is currently $510 a month and I could easily stay here another nine years. I'm also completely debt-free and gross around $75,000 a year. Any advice would be greatly appreciated.

A: OK -- so here's what you're really asking: Can I earn a better return on my deferred comp (which will come out as taxable income at whatever rate is then in effect, certainly not lower and probably higher) -- than I can on buying a house now, and selling it later, where the gain is likely to be tax-free (up to a certain amount --$250,000-- assuming current tax law stays the same)?

So if it were that simple, I might suggest that you buy a house at "depressed" prices now, and sell at a profit later. BUT -- and here's where it gets tough -- there's no way to be sure you can sell later at a profit, because the economy might be in such a bad place that it will be hard to find a buyer at any price, when you're ready to move. (That could be because of a severe housing recession that continues, or because inflation returns and brings with it higher interest rates, putting home ownership out of reach, and thus depressing prices.)

So -- the REAL question is: How much do you value your flexibility??? That is, you know you can move at any time, and can buy or rent in any spot, if you have the money for a substantial down payment. In short, you have that "peace of mind" that comes with liquidity. You're not overwhelming yourself with the cost of rent in the meantime, and you're comfortable where you are.

Now YOU make the decision!