Author: Nick Pagano
Topics: Family, Major Life Purchases, Industry Ideas
Many of us have been taught that you can’t lose money in real estate. Really? As many of you know, Janice and I have just sold our home as we are downsizing, and even though “you can’t lose money,” we did. Is that because we were negligent in our purchase or sale process? I don’t think so. Did we not optimize the sales price or pay too much in our purchase? Again I don’t think so, with one clarifier — at the time. In hindsight, it seems we purchased at the height of the market (I guess you need a crystal ball or a long period of time to not lose money in real estate).
The latest Standard & Poor's CoreLogic Case-Shiller Home Price Index shows that while Metro Detroit housing prices are back to fall 2007 levels, they're still about 18% off the region's price peak of late 2005 and early 2006, before the economy slowed.
Sale prices are finally at or close to their pre-recession levels in most areas and fewer homeowners are underwater on their mortgages. Those factors pushed total sales for existing homes in Wayne, Oakland, Macomb, Livingston and Washtenaw counties to more than 66,600 for 2015 — the highest level since the recession, according to an extensive review of housing sales data by the Detroit Free Press.
“THEY” have also told us that our homes are the biggest and best investment we could make. Really? An investment that has a negative return is not really an investment, is it? “THEY” also told us that buying a home is the American dream. I wonder… I feel a little like Dorothy and her friends in “The Wizard of Oz.” Maybe we should look behind the curtain and find out who is back there. Is it the mortgage companies? How about the home builders? Or maybe it’s the government, which gets more tax dollars from home owners than renters.
There are a number of other corollaries to this discussion:
My advice is to take a page from Dorothy and look behind the curtain — you may find something there that you don’t expect.
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