Seeking Advice: Relocating to Palo Alto - Keep or Sell My Irvine Property?

[Sergio Serra]

Dear friends,

I have been a part of this community for many years, and it's thanks to your support that I gained the confidence to purchase my first house exactly two years ago (on October 1st). Now, I'm facing a decision as I've been asked to relocate to Palo Alto. My current condo is located in Irvine and spans 1200 sqft. It features 2 bedrooms, plus an additional effective bedroom created by enclosing a section of the patio, and 2 bathrooms.

When I initially bought the condo, I secured a mortgage at a 3.2% interest rate with only a 5% down payment. According to Zillow and Redfin, the condo's value has appreciated by $150K.

I'm currently torn between two options:

1. Keeping the Irvine house and renting it out, which may result in a monthly loss of $300-500 for a maximum of 2 to 3 years (hopefully). I would then move to Palo Alto and rent an apartment for the foreseeable future. In the end, my monthly out-of-pocket expenses would likely remain unchanged (approximately $3.5K in rent plus a $500 loss from the Irvine mortgage).
2. Selling the Irvine house and utilizing the capital gain through a 1031 exchange to make a down payment on a property in Palo Alto. However, I'm concerned about the current high mortgage rates.

In terms of my salary, I'm comfortable even if I were to incur an additional monthly expense of $1K, which doesn't seem to be the case here.

I would greatly appreciate your recommendations and any additional options you may have in mind to consider alongside options 1 and 2.

Thank you for your advice,