A healthy antidote to Someday-I'll-Make-A-Fortune Syndrome.
The other day I was standing in line at the bank, something I enjoy about as much as you do. But this time it wasn't the line that was bugging me. It was this line, on the cover of a bank brochure hawking home loans:
Someday I'll make a fortune.
This homely sentiment was scrawled on a sign held by Mr. and Mrs. Thirtysomething, standing proudly if anxiously before their new McMansion. What's my problem? I'll endorse the idea that homeownership builds wealth over the long term, and sometimes even over the very short term. And I can't blame a bank for implying that home loans offer a guaranteed return (can I?), especially in an area where home prices went up almost 50 percent in five years.
But experience tells me that fixating on the homeownership "goldmine" is a snare and delusion to the unwary buyer. It turns homebuying into a pets.com-style carnival side show, with would-be speculators frantically trying to light up the housing market as if it were a giant pinball machine.
Luckily, speculation has been a very small part of the market here. Astronomical prices seem to have kept out most of the flipper wannabes. And I've found that the more focused a buyer is on making a killing in real estate, the less likely he is to actually buy real estate. It's as if an alarm goes off in his gut every time he's close to snatching the bait.
Not helpful is the typical economist's attitude toward real estate as just another financial market, driven solely by the profit motive. It's not true, but nothing else fits his algorithms.
Wealth creation is on the mind of virtually every homebuyer, but the successful ones know there's more to homeownership than the big bucks. Recently I was witness to a gratifying demonstration of this, one that reaffirmed my belief in the intrinsic goodness of homeownership.
A few months ago I got a desperate call from a renter, a father of six kids, who'd been asked by management to leave his apartment as soon as his lease was up. He had two weeks left and was frantically looking for another rental as homelessness loomed. But with a big family and a tight rental market, he knew the odds of finding another rental were slim. He was open to the alternative, buying, but a bad experience (yes, they happen) years ago had left him gun shy. And to get the down payment, he'd have to raid the 401k he was funding for his kids' education, losing half of it to taxes and the early-withdrawal penalty.
I gave him tips on finding a rental, but also told him about a few houses for sale in an affordable neighborhood in his kids' school district. After looking at them on the 'net, he enthusiastically called me the next day to tell me that three looked perfect. The following afternoon we looked at them. He liked one, made a conservative but realistic offer and was in contract, four days after he first called.
I know what you're thinking and, no, this homebuyer isn't naive or impulsive. Rather, he's the methodical, analytical type for which Silicon Valley is famous. And he knows the downside of real estate: he's lost big money a hush falls over the crowd and he can read the headlines saying the market is slowing.
But he was motivated to find a home for his family. Note that key word—motivated—because it removes every stone from the path of the qualified homebuyer.
His wife, who'd been home ill while we looked, and five of the kids hadn't yet seen the house. I encouraged them to look at what might be their home for many years to come, but I was nervous when I met them at the house. We were in the contingency period, the transaction would fall through if the house didn't pass their inspection, and then homelessness would be just a week away.
But it was quickly obvious I needn't have worried. The smiles on the faces of those kids—even the teen-agers, always hard to impress—was more than a relief, it was an affirmation of what their father and I had accomplished in big block letters the size of "South San Francisco, The Industrial City". This would be their home, their home, light, bright and cheerful; not a cramped, dismal apartment any cranky manager could boot them out of, but a place they could live in as long as Dad made the payments.
If this storyline blared at me from a Re/Max TV commercial, I'd accuse them of shameless emotionalism. But for me, and for the loan agent who worked with us, it's what homebuying is all about.
It's not about grabbing the brass ring. It's about home.