…is more than an investment.
A home is not an ATM or a hedge fund. It can be an excellent and safe long-term investment that, more importantly, is also the roof over our head and the backdrop of our memories.
The current real estate market is one that is slow for sellers and offers buyers plenty of choice. Part of the reason the correction is taking a while is an idea that is fairly new to the thought process behind buying a home: the idea that buying a home for its investment value is more important than finding a place that fits your lifestyle.
It wasn’t always this way.
Certainly purchase price is important. All home buyers need a starting point for their search. It’s pointless to look at half-million-dollar homes when the most one can afford is $5,000 down and a max $1,500/mo house payment. But once we get to a comfortable-payment range, our questions as real estate agents and home buyers need to turn to lifestyle.
What’s important for the way you live?
Cozy or spacious?
Contemporary lines or traditional spaces?
Near a coffee shop or bus stop or park?
Walls for art or windows for gazing?
Sophisticated entertaining spaces or utilitarian spaces for a home office?
Bathtub or shower?
We all need shelter. The amount of money we can make when we sell a home in two, five or ten years isn’t going to improve the quality of our life today.
A 2007 report looked at the top 50 markets nationally, over a 20-year period, and found the longer one owns their home, the more predictable their return will be. In other words, losing a great home over $5,000 or $10,000 today won’t matter when you treat the purchase as a home instead of an investment. The same report showed if one owns their home for 15 years or more the annualized rate of return never drops below zero.
Experienced investors understand market volatility, and if they sell quickly they are taking a risk. If a homeowner chooses (or is forced) to sell quickly, they should understand the same.
Investors buy houses. The rest of us buy homes, and owning your home day-to-day is so much more than the profit it’ll bring in the future.
