Modesto California housing bubble

[Jason Moran]

I've been collecting a lot of data, researching past tends, and studying some market "guru's" who claim to have all the answers. The numbers don't look good, the trends scare the hell out of me, and I don't want to trust these "guru's" but they make a lot of sense. So here's my question: IF you believe there is about to be a market correction, do you sell the primary house, rent for a year or so, and stack up cash for the correction? Or IF you believe there is about to be a market correction, do you keep the primary, HELOC, and stack the cash?

[Kevin Yasaitis]

I'm from the Central Valley as well, Merced area. My dad bought a newer tract home in 2003 and I think the value is finally back up to what he paid for it back in '03. The rise in values was quick last time, and fell even quicker.

This effected my dad in a couple ways. He rents the home out now, with great renters who hope to eventually buy the home. However, after 13 years, he still has minimal equity because of the fast decline then slow incline.

Second, and more specifically to your question, my dad had a HELOC on the home. With a seasonal job, he would use the line through the winter and pay it off in spring and summer. When the economy crashed, they initially reduced his line by 50%, forcing him to pay down then balance. Then within months, the called the entire thing, and I believe they amortized it out.

The moral of my story, from this layman, is that getting a HELOC in the Central Valley may not be the way to go.