What to do with your Primary Residence before the bubble burst?

[Account Closed]

Like many others in the Bay Area we were lucky enough to buy a home at a good time and capitalize on the increase in prices over the past few years. However with thoughts that this bubble may burst in the near future what would should one do with there primary residence with all that built in equity now. If the market does crash and prices drop all that equity will disappear. But low and sell high seems like the easiest answer, but we still need a place to live. Do we go back to being renters? Curious to know what everyone thinks the smart thing to do would be?

[Arlen Chou]

@Account Closed I am with @Abhay K. on this one, get cash out and ride the wave.  

I literally know half a dozen people who thought they could "time the market" and sold their primary homes before/during the past downturn.  They had planned to park their money and rent for a while until the market "hit bottom" and then buy again.  Guess what, ALL of them are still renting... Some ended up investing the proceeds from the sale of their homes because they did not want to leave the money sitting.  Then they started to worry about paying short term cap gain taxes so they became indecisive and then got priced out.  Others, slowly spent their money thinking they had time to make it back and then got priced out.

Basically, once they got out of their property they could not get back into a home!  The market either shot past their entry point or they did not have the access to capital they had planned to have.  Also many people found that they were now competing against cash buyers, so the fat deposits they were planning to use were of no use.

The BA is a different beast all together so plan your strategy accordingly.

-Arlen