"how often should you move to gain the most wealth?'

DH & I don't think of housing that way at all.
Our house is our home...not a means to wealth.

To gain the most wealth, DH and I have invested in stocks, bonds, mutual funds and funded 401(k), 403 (b), IRAs, etc.

As seldom as possible. Simple answer to a complicated problem.

I would say if you are in a declining neighborhood, ask yourself why. What are the chances it will turn around in the time you are going to own it? It is very true that RE is all about location, location, location. Our house would be worth $100K more if it were located 2 miles north or east, but just as easily worth $100K less if you put it 2 miles south or west.

We moved into a lower middle-class starter area that has gradually gentrified into a nicer middle-class starter neighborhood over the past 20 yrs. I figured it would because housing prices in San Francisco were simply too high for the middle class, who would have to go elsewhere (as we ourselves did) to afford a SFH.

There are nicer homes further out. But out here, commutes are long and with the highest gas prices in the nation, the trend is now swinging back towards living closer-in, as we do. Higher gas prices work to our advantage, but nor I or anyone else foresaw it happening a year ago. So predicting a local market is a guessing game nobody's going to win.

Too-frequent buying incurs fixed costs that are difficult to surmount. RE appreciation is on average 5% per year over the last 80 years - BEFORE your fixed costs. Obviously that is considerably less appreciation than you would have obtained from a portfolio invested in diversified equities. In equities, a management charge of 3% is considered incredibly high, whereas a RE broker fee of 3% is judged very reasonable.

I hadn't considered my primary residence JUST as an investment, but I am sorry we stayed for 30 years in lower-appreciating area of our suburb. By the time we moved that had changed; the selling price for our home was comparable to the entire suburb. Would we have had more in our pocket if we'd first bought in the 'more desireable' areas, or if we'd moved to one during those 30 years? I don't know.

When we did move it was because we woke up one day and realized we were living very far below our means. It was still a 'nice' neighborhood, but nothing special. Possibly staying put was a factor in eventually *having* those means? Buying, selling, moving eat up considerable cash.

I don't know if we are in a better financial position *because* we moved to a better place and built a nicer home, taking from portfolio to do so. We pay less income tax -- and more property tax. We enjoy the house, neighborhood and town every day, which is more fun than trying to 'cozy up' to a brokerage statement.

It's a very interesting qustion!

I live in an area (Central TX) that has, on average, a 4% appreciation per year for the last 20 years. This is a very modest amount compared to other areas of the country but at least we can expect that if there is a depreciation it won't be by much. Based on this information, I would feel comfortable moving maybe once every 10 or 15 years. We did just that with our previous house (sold after 10 years) and doubled how much we bought our house for (didn't make double because of renovations, etc.). Our current plan is to live in this house for about 15 years and then downsize. As long as the appreciation stays on track we should come out nicely, maybe even be able to purchase our next property with equity alone.

Of course, this is all just pie in the sky.

I move when the home or neighborhood I am currently living in no longer meets my needs. As someone else stated above, I put my money in other investments to gain wealth.

Saying that, this is my third and last home. I am living in my forever home, which I bought 11 years ago. I will be 50 next year. Hope to be here the next 30 - 40 years.

Hmm. I've heard that you should stay in a place a minimum of 2 to 5 years (depending on the source and who's math you believe) but I've never heard about a maximum time you should stay. Personally I think the expense and hassles of moving are such that you should do it as little as possible, within reason. If the house or the neighborhood no longer fit your needs and you have the means to move on, do so.

I posed your question to an acquaintance, who answered thusly:

"The minute a new house in built in a new neighborhood that's nicer and newer than yours, you should move there. This might require moving every day, but it's worth it.
I think Buckingham Palace and Windsor Castle are kinda old, not so nice. Maybe Queen Elizabeth should move."

DH & I don't think of housing that way at all.
Our house is our home...not a means to wealth.
To gain the most wealth, DH and I have invested in stocks, bonds, mutual funds and funded 401(k), 403 (b), IRAs, etc.

You took the words right outta my mouth. That's my thinking exactly!

Hi Deanie1,

how often should you move?

My doctor says at LEAST once a day... else, a mug of warm water & metameucil can do the trick!

Oh... that's not what you meant?

I have a general question regarding moving--if there are no outside forces making you move from your home--how often should you move to gain the most wealth?

Never. Moving doesn't increase your wealth.

For example, let's say you live in an average neighborhood in an average suburban town. Your neighborhood, like most others, gets older, and newer nicer neighborhoods are being built all the time all around you. Should you leave your average home on a regular basis and "move up" -- or -- should you try to stay in your current home and pay down your mortgage with the goal of owning your home outright, despite the fact that your neighborhood is not as nice as it once was?

FIRST of, eliminating your mortgage does nothing for increasing your net worth. It merely moves cash from one bucket (your investable cashflow) over to a different bucket (your non-growing real estate equity.) The interest rate you "save" in the elimination of your leverage is generally far less than the combination of investment interest/returns lost, and the costs of the risks you incur by exposing your equity to market loss in the real estate.

NEXT, whatever home you live in is a CONSUMPTION expense. You are "digesting" the useage of the square footage, the bedrooms, the bathrooms, plumbing, roofing, etc. etc. of that particular asset with no income stream coming to you.

You *HAVE TO* live SOMEWHERE... which means that "consumption" is not an option it is a requirement.... HOWEVER, your degree of expense *IS* controllable.

The less of your investable income you consume (digest, burn, flush away, etc.) the more of that income you have to put to work in growth investments.

Counting on residential housing as a growth investment only, without any cashflow income stream coming from it in the way of rents, is a poor poor gamble, in my opinion.

If you are going to personally "move up in housing" try to make the absolute greatest leap you safely can at one time... don't take "baby steps" because every time you buy/sell you lose from 10-15% of the "ground" you had previously gained because of transactional costs, moving costs, diversion and distraction.

Luck!
Dave Donhoff
Leverage Planner

People who make money by moving are the ones who make corporate moves and know their house will always be sold and that they will make a profit because their company takes care of it. Moving from the North to the South on the east coast is another way you will move up in the housing market--we see that all the time in South Carolina. Now there are people in Florida moving North to get away from the hurricanes--a lot of them can buy a better, bigger house.
Moving is such a stressful thing to some people that maybe it is not worth it to do it unless it involves a job change.

I live in the land of movers - Southern California.
People can and do make considerable financial gains (increased wealth) buying and selling their primary residences.
The actual time in each house varies on the market, having a set number of years isn't the formula, it is knowing your market. Obviously now if not a great time to sell, but if a property is desirable one can sell at a good price, and with good shopping pickup a good priced replacement.
It is varies on individual goals.
Several years ago, we wanted a larger house, we knew the larger ones were appreciating faster than our small house, therefore, we were losing ground in the market, we moved quickly.
Don't forget the benefit of a $500k tax free gain if married. One needn't reinvest that money in their house, it can work for you elsewhere.

"I have a general question regarding moving--if there are no outside forces making you move from your home--how often should you move to gain the most wealth?"

Like the others posted, your house is a home, not an investment vehicle.

You don't buy a house just because some self-proclaimed expert on CNBC or whatever says "it's a good time to buy", etc.

The OP makes an assumption that neighborhoods decline in value and desireability as they age. I don't think that's always the case. My neighborhood is 30 years old and has held its value very well. We moved here about a year ago and specifically chose this neighborhood over newer neighborhoods nearby because of the huge trees, non cookie-cutter homes and stability (many of our neighbors have been here over 15 years).

As other people have said, buying and selling homes costs money and eats into profits. And even if you live in an area with rapid appreciation, you still have to live somewhere. We bought the nicest house we could afford and plan to stay here until retirement, unless we get involved in another corporate relocation.

kgsd, I definitely agree. In our area, older neighborhoods actually command higher values than most of the new neighborhoods, in part because new developments are a dime a dozen (this is in California!) and older neighborhoods of Craftsmans or Mediterraneans can't be re-created--there's a limited supply of those homes, especially the ones in pristine condition.

That said, I remember my grandmother exclaiming how wonderful it was that she had lived in a home for 30+ years and raised her children there, and now, after all that time and use she'd gotten out of it, someone was going to repay her for what she had spent on it over the years. It's a refreshing view: housing not as an investment strategy, but as a piece of your life. Consider your mortgage payment not as an investment, but simply as a cost of living. Are you able to (and comfortable with) making that monthly payment in exchange for having this place to live each month? If so, you'll be in better shape to weather the ups and downs in the market, because at the end of the day you're investing in a community, not in a commodity.

And another reason newer isn't always better is that those new developments are often sitting empty or half-empty nowadays, and the builder might even go bankrupt and not get around to doing all the little finish things that make things nice (landscaping, etc.)

Plus, so many new houses are built like crap. I'll take my 1950s w/ the mature oak trees any day.

Besides, moving sux. I'd rather have dental surgery.

kgsd -- Thanks for catching that the OP seemed to think that all older neighborhoods decline. I missed that part of the reasoning.

'Old' can be very, very good for appreciation. So far at least (!), I can say that nothing ever loses value in the established neighborhood where we built (teardown). This area was subdivided around 1900; is close to town and train; has highly rated schools and great public services (including a forestry department).

let's follow warren buffett's example

live forever in the first house you buy

he's a pretty rich guy too!!

Every time we are in a place for 2 years I start to think about cashin' in. We have moved 4 times in 10 years, and deposited (after all costs) at least 50K each time tax free (75K was best). Not too shabby for a few days work, and I really love fixing places up. We live in Texas, so there was no bubble advantage here. The key is ALWAYS at purchase; you really need to pay below market as you will never sell above it. I know we would still have massive credit card debt if we hadn't started moving.

My first thought was also Warren Buffet. He seems to be reasonably adept at maximizing wealth.

I am in Ontario and Hubby and I bought our starter home within a year of our wedding for 171K, we sold it 7 years later for 298K and bought in a trendy downtown neighbourhood for 299K we have been here for 5 years and have just sold for 435K and have just bought our (maybe) forever home for 420K and now we are completely debt free. For us it was about moving up the real estate ladder and be in our dream home by the time we were in our mid thirties...we have arrived.

Around 1980 a new couple moved into our neighborhood. I soon learned that they were 'in real estate' in a very personal way. They moved in, did some cosmetic work and added a bathroom. Two years later they put the house on the market and moved again. I noticed thay had very nice furniture which certainly impressed some buyers -- this was long before 'staging' was talked about. Neither of the pair had a job; they bought and sold real estate and avoided capital gains. They always lived in very nice North Shore communities -- just in many different houses, and always in a construction zone! I wonder where they are now?

One of my neighbors does this. He builds houses himself, lives in it for two years, sells (asking for a 6 month rent back and he says he usually get it!) and starts to build again. He purchased three lots side by side and plans on just moving down the line.

I thought moving every 2 years would be a wash if you factored in increased expenses for utilities on bigger house, higher taxes, moving costs, changing utilities possibly needing deposits and any needed decorating items. Do you put down all the money you "made" on the next house? And do you really make money above and beyond the costs of above. It sounds exhausting but then after moving for my husbands job cross country several times I'm glad to be in my home now for the last 19 years.

My vote is for not moving. Realtors and bankers profit on your move - but you're not guaranteed any positive return on your money. Some people do profit handsomely, and that's great. You should keep in mind that the realestate "losers" are not likely to share their story.

scdeb424,

I guess it could be a wash if you don't do it right, but avoiding full realtor commisions helps. Decorating is the fun part, so I don't mind spending some of the profit for a lifestyle upgrade. Also, my current new 3700ft house is about 25% MORE effeceint than my last 2500ft house that was 17 years old (by kilowatt usage, although it was actually hotter this year). Now taxes are another story, but at least you get a bigger deduction, right?

Move when your closets are full. When you want a new couch. When the only way you can justify a 42" LCD tv is to have a tv room with 11' to the couch. When you are finally ready for that craft room. Tired of his project vehicles in the driveway. Need a bigger garage. And ready to take the capital gains exemption to pay for it all.