Why I think it's time to rent

I've had several people 'look askance' at me when I say I'm selling my house and renting a small place for awhile. Several have said things like "you're making a big mistake".

I really don't think so.

Part of this is the process of getting rid of all the 'stuff' that's accumulated over the years. To get a sense of lightness and not feel like I'm owned by the things I own.

The other is just marshaling your financial resources wisely. If the timing is right, and other life priorities line up, hell, do a little profit taking.

The guys over at eFinance Directory (a guide to home mortgages, mortgage refinancing, home equity loans, home realty, housing and all personal finance matters) have an article up you should read before saying I'm making a mistake getting out of home ownership right now.

It's called: This is why I rent: Median incomes do no support median home prices.

I bought my house a little under 10 years ago. It was my 'divorce house'. You know, the one you buy after you get divorced; usually smaller and usually low maintenance. Mine's a 'patio home'. Perfect for someone who doesn't want to mow the lawn and have the HOA take care of everything.

It's also more than doubled in value in that time.

I was able to find a buyer who's paying close to my asking price and on a a 5% of the value of the house 10 years ago down payment, I get a return of about 18x my initial investment (plus a lot of nice tax right offs over the years).

Not a bad investment.

And according to pretty much everyone I know that knows this industry (and the link above goes into some detail on), there's going to be a serious correction in home prices over the next 5 years and we're just at the start of it.

I live in Boulder, CO which traditionally is insulated from any decline in valuations of homes.

The general consensus seems to be 20% decline nationally and some say as much as a50% decline in home valuations over the next 5 years is very possible.

Maybe in this downturn Boulder prices will hold, again. Maybe not.

I do know one thing though: if I'm going to de-materialize and simplify my life, there's nothing wrong with a little profit taking at the high end of a market that's got a multi-year correction ahead of it.

And last, having money sitting in reasonably safe investments that are growing without much attention paid to it is much simpler than all the hassles of owning a home and having to worry about the potential of a downward equity spiral in the damn thing's value.

Simplify, simplify, simplify.... and simplify some more.