Archive for August, 2010

I Believe in Home Ownership

Color Houses You’re probably saying “Of course he believes in home ownership. He’s a real estate agent!” Well, that is true, but the reason I am a real estate agent is because I believe in home ownership, not the other way around.

No doubt, the news about the real estate market has been pretty bleak lately. There is much discussion of how and why it will probably get worse. My friend Rob Hahn warns his readers in the first paragraph of his recent post to read on at your own peril. Time Magazine dedicates pages this week arguing the case against home ownership.

No matter how bad it gets, no matter what benefits of homeownership are taken away, everybody still has to live somewhere, and there is no better way to provide this basic need for you and your family than to buy a home.

rent vs. buy

It is an old axiom. Whether you are a renter or a buyer, you are buying a home. The difference is who gets to own it.

The discussion about “sustainable homeownership” and the notion that not everyone can own a home is valid. The American dream had almost become the American entitlement. Home ownership should be something to aspire to and to be achieved.

I remember when I was a young adult I wondered how I would ever achieve the dream. There was a time when I did not have the qualifications or the resources to own a home. Eventually, my wife and I were able to gather the resources to purchase our first home. I’ve moved several times, bought and sold several homes, sometimes at a profit, sometimes not so much. Each move has been a step up in our quality of life, we accumulated a little more wealth. But, most of all, we have the unique sense of security, pride, and prosperity that is unique to folks who own our homes.

Home ownership stimulates the economy

Hardly a weekend goes by that we don’t drop a hundred bucks or two, (frequently more), at our local Lowe’s hardware store. We buy furnishings, electronic gadgets, and appliances. We hire craft people, trade people, and technicians, to do those projects we are not skilled enough to do ourselves. Whether we are doing some maintenance project or a home improvement project, we spend a lot of money on our home. We like our home. We like to fix it up, add new features and keep everything in good working order. We have no regrets about investing in our home. We don’t do it to enhance its future value. We don’t do it to stimulate the economy or out of patriotic duty. We do it to make our lives more enjoyable.

I have clients who own investment properties. They rent those properties to people who live there. My investor clients have a different objective than we do. Rather than cheerfully spending money on their properties, they try to avoid spending money. They are trying to maximize ROI, spending only when absolutely necessary and trying to find the least expensive solutions as possible. Their tenants don’t spend the money either. They are not enthusiastic about spending money to improve someone else’s property.

Homeownership as an Investment

I’ve invested in many things through my life. Equities, bonds, business opportunities, real estate, etc. Sometimes, the investments have been lucrative, sometimes not. Sometimes, the difference between a good and a bad investment has been a simple matter of timing. Sometimes, it was a bad idea right from the start.

We haven’t made a profit from every house we ever bought and sold. Sometimes, We’ve sold them at a loss.

Current economic circumstances have left us in a bear real estate market. Typically, real estate investments are for the long haul though.

I know, I know… there are some folks in a really tough spot right now. Some of your friends and neighbors may be unable to make it work anymore. They need to sell but can’t. I am not immune, we are underwater on our mortgage as well. We are quite fortunate that we don’t need to sell and we love our home. We’re not going anywhere.

But, if you’re in position to buy a home, there are some real bargains to be had and interest rates are at levels that would have been unheard of. If you are looking to purchase a home to sell next month at a profit, you probably should look for someplace else to invest your money.

No matter what happens in the housing market, no matter how much real estate values plunge, that piece of earth will be yours and it will always be worth more than a stack of rent receipts.

What’s Next?

Some argue that government policies have made it too easy to buy a home. Some say that greed and imprudence in the finance sector caused the housing market to melt down. All of that may be true. Perhaps not everyone can or should be able to purchase a home without adequate effort and resources.

I think that’s a good thing. Perhaps owning a home is once again the American dream and not an American entitlement. It was constantly drummed into my head in my early life that I could have and do anything I want if I am willing to work for it.

Homeownership is once again a goal to be achieved. It is and always will be a desirable and worthwhile goal. It is the basis of our prosperity and the cornerstone of our greatness. So yes, things are tough. This too shall pass. One should never believe that homeownership is a bad idea. It is the basis of our prosperity and the cornerstone of our greatness.

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Joe Ferrara

image I had only met him a couple of times. I had only a few very friendly, but brief conversations with him. He was someone I had hoped to get to know better. Now that won’t happen.

But, I know Joe Ferrara. I know him because of his body of work. I know him because of the profound influence he had on those who have such a profound influence on me.

Many of those folks will converge on Yardley, Pennsylvania this evening to say goodbye. I will be there to join them, to pay my respects, to comfort my friends who are anguished by his loss, and to celebrate the life of a guy who shared so much passion and brought much joy to those privileged enough to spend time with him. But mostly I will be there as an expression of thanks for the enormous contribution he made to our industry. I know Joe Ferrara, and many more who have never met him will know him too.

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