Dwelling Deals
If you live in California where home prices can change quickly you may be surprised that not everyone in America buys a home for the investment value. In most places around the country, homes are one of the most stable of pricing models. No pun intended. So why do people buy?
One of the most common reasons is to “get rid of the landlord.” Now there is more to this than it would appear on the surface. Eject your vision of a cigar-smoking guy in a three-day old, wife beater tee shirt. It is the loss of freedom that the term “landlord” represents, which they are shedding. If I want to put a swimming pool in my back yard, how do I go about that as a tenant? An above ground pool kills the grass in a giant circle and the landlord isn’t going to like that. The damage done by an in-ground pool is more permanent. And don’t we often hear, “I’m not going to make any improvements to HIS property.”
But, it goes deeper. So much of our lives are in the control of others. The structure of our workplace, its existence, its future, its location – all up for change. The value of our education moves around all over the place. Unfortunately, the stability of our relationships seems under attack from unfair comparisons with star athletes, super models, and the imagery of the wealthy in the media. If I can just find one thing in my life that I can control! And here is this wonderful home. I can afford it. It will be my own. If I want to paint my room Van Gough green, or gray, or MS blue, it is my choice.
That is part of why we buy. That is why it is so emotional. We can at least control one thing in our crazy unpredictable world. Our Home.
We are doubly fortunate in the USA to be able to get FHA loans and a few of us VA loans with very small downpayment amounts. In many countries around the globe you have to have a fifty percent downpayment to buy a home. Some countries do not permit loans for homes at all! So all cash or no home of your own. Families, sometimes multi-generation families, save for twenty, thirty, forty years to buy one house. We are the most lucky of all.
And if you are bad at socking away savings, owning your home is a great way to build up equity in something. The returns, which have averaged from five to seven percent over the last fifty years, are far better than those of stocks, bonds, collectibles, and hard coins.
And best of all – you get to dwell there. You can’t live inside a stock certificate. You can’t paint your Thomas Kinkade plate a different color. Collector cars, well if you can’t drive them, that isn’t any fun is it? And who ever heard of having the family over for a Gold Mine Bond Warming Party.