The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CRSA, CSP, GRI, ePRO®,REALTOR ®, RealtySouth
The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.
Is Homeownership Still Worth It? (part 3)
Continuing our conversation from the last two weeks… In part 1, I reviewed the value of home ownership as an investment and then in part 2 we reviewed the counter position to the statement that: “Buying a home is really just renting.” If you missed either of those conversations, be sure to visit my blog at www.DavidParrishRealtor.com/myblog if either of those topics interests you.
For the moment we are still going down the list of reasons given for why home ownership may not be worth it.
Reason number 3: Today’s generation is nomadic; owning a home for many is just an unwanted anchor.
Of all the arguments posed this one will probably resonate with more than any other… I know that I certainly understand and appreciate the sentiment expressed. To quote one of my favorite poets and songwriters: “Times they are a changing.” What’s changing is perhaps not so much the yearnings of youth as the opportunities for them. It seems we have always been a nation of opportunists… a people looking for a better life… and let’s face it: life almost always looks better someplace where you are not.
Then there is simply the desire to explore and discover. I know that all three of my children have had that wanderlust and have acted upon it… they remain scattered across the country! There is also the fact that many elect to postpone marriage and putting down roots until much later in life than did my generation… That too is probably a good thing.
In the end the vast majority end up settling down in some place… It may not be the place from which they started… but it is their place… a place they call home. Our challenge is to create a place with opportunity and an inviting environment that someone would want to call home. To the extent we are willing to commit ourselves to that end, we create communities that can weather the storms of changing times. So I see this statement as a challenge to do just that; not a reason to abdicate the principle essential to building neighborhoods and communities.
Reason number 4: If you can’t sell it, it’s not an investment.
So we’re down to that last point… Sounds very similar to the first. But, let’s look at it again.
You’ve heard this here before… even so, I will repeat it. Every home will sell for the right price! If you can’t sell it, your price is too high for what you are offering to the market. The market makes the price, the seller doesn’t. You may decide you won’t sell for less, but if that is more than the market is willing to pay, you won’t sell… but that choice not to sell was yours. This really is the case with all investments.
Take for instance the purchase of stock in a corporation. Let’s say you purchased 100 shares of Goldman Sachs in September of 2007 the price would have been around $180 a share give or take a dollar depending on the time of day. Now let’s say you decided to sell this stock in October 2008 (just a bit over a year later)…. Let’s say you were holding out for your original investment… Do you think you would have been able to sell it when everyone else was selling for under $20? Was the stock selling then? Did the stock continue to sell? Is the stock selling today? (Answers: No. Yes. Yes. Yes.).
Did your purchase cease to be an investment just because it was loosing money? No.
Did you loose money? Only if you sold then… If you continued to hold the stock it would have recovered a good bit but not all of that ground… At market close on September 3 the price for a single share of Goldman Sachs was $147.29. I am hoping you see the irony here!
The point is that an investment does not cease to be an investment simply because you can’t recover your investment at a given point in time or at all.
One more stock market example: I mentioned in a previous conversation something about 20,000 shares of Bruno’s stock. Brunos (the company that purchased this thriving business not the family) went into bankruptcy, re-organized to stay in business and left thousands of shareholders like myself out in the cold… The stock could not even be sold… there was no market. In real estate, you own a real asset not just a symbol of an asset. There is almost always some residual value, because it is real.
To the extent that your purchase of real estate is an investment, it is your duty as an investor to watch and understand the market and make the decisions that are appropriate for your family and that investment. In the realm of real estate that will include your care of the property and the community in which it resides.
Historically, real estate has been among the most forgiving of investments and simultaneously offered shelter for our families and security to our society. It is really only one a few ways that most people can participate in our Capitalist system other than as a consumer of goods, so that the system works for us. We are in a down market… there are investors, homeowners and those who wish to be homeowners ready to take advantage of that market.
May the Market be with you.
