I put my house up for sale this year. I bought it in 2001 and every time I think about putting it up for sale someone says:”Why would you do that? It’s a buyer’s market!” I don’t get the logic of this whole idea. Like, instead of making a financial decision based on what’s right for you, you have to make it based on what the environment or the media dictates to you? Yeah, I hear them screaming that Raleigh is the best place to own a home right now, the point is what will it be like next year?
I’ve been reading a lot of books on wealth creation because the universe is seeing fit to drop them in my lap for free, and I had the time this weekend to read them. Some experts argue that housing is not a good investment because after deducting taxes, interest, and maintenance, you’re often not beating other investments you could have had. Of course, you have leverage, but here’s the thing that’s we’ve all learned since the housing crashed in the rest of the country (excluding Raleigh), that leverage can work against you just as easily as it can work for you – especially in housing at this time!
So, here we are sitting pretty in Raleigh with a real estate market that hasn’t declined as much as the rest of the nation and yet I haven’t had a seller’s market since I bought this place. So, logically because this house is a loser in the sense that I am not in a seller’s market, I should hold on to it even longer and somehow think I will magically escape what the rest of the nation is going through. This is despite the fact that unemployment is up, housing prices only increased 1% over last year, and foreclosures went up 25% from last year. But, heck, I wouldn’t want to be caught ditching my losers! No, I should hold on to this very bad investment until the whole market collapses and I’m left holding the bag on the rest of a mortgage. The thought is sickening, and so much so, I am selling and moving into an apartment. I will have no maintenance fees, I will have no real estate taxes, and I have the freedom to move elsewhere at the drop of a hat. Not to mention that if I pay about the same amount of money on my rental as I did on my mortgage, I get a much nicer apartment than the house, I pull out the money that might disappear by next year due to potentially dropping prices, I pay off debt, and I’m free to concentrate on my business rather than babysit a house. And, I get to watch the housing market from the sidelines, where I am far more comfortable with the risk level.
Yep, that was one of the things I read in one of those books. The difference between winners and losers in the money game is that losers buy high and sell low (because they panic and can’t release a losing investment) and winners buy low and sell high. I will make a profit on this house and, frankly, I’m not greedy or stupid enough to think this market is about to turn into a seller’s market with the rest of the country in the housing doldrums.
*Photo courtesy of byrdiegyrl from Flickr Creative Commons