Don’t ever take real estate advice from me.
We sold our house in December 2019. It didn’t go well, from a financial standpoint.
Zillow now shows our house — that no one seemed to want — as worth literally 2x more. 2x. I recognize this is somewhat arbitrary, and that these estimates are imperfect. And also –who cares, right? We don’t own it anymore; what’s done is done.
But now that we are sort of house shopping again it just makes me seethe, even though it is no one’s fault.
Reasons we are (sort of) house shopping:
Reason #1: I think it would be nice for each kid to have a room. And since Josh really needs/wants an office, this means a 5BR or 4BR with bonus space. Our current rental home would be a great size/layout if it had one more bedroom.
Reason #2: Our rent is going up by an annoying amount. Not an insurmountable amount, but an amount that has me completing the NYT Rent vs Buy calculator and sighing. Of course, purchase prices have gone up right alongside rentals! It’s a totally different market than it was ~2 years ago. (And not in a good way, if you are a buyer.)
All that said, we might stall 6-12 months and hope the market stabilizes a bit. Knowing us we will be wrong on that move, too!
Reason #3: I guess I have come to accept that we are probably not moving any time soon. I don’t love everything about South Florida, but our jobs and proximity to family are two factors that would be hard to replicate elsewhere. Other than perhaps someday back to NC (my parents plan on moving here eventually and my sister is there).
Reasons I should not whine about any of this
We never planned on ‘winning’ in the real estate market.
We have still done fine from a financial standpoint, and will be fine even if we have to buy a mildly overpriced house
We moved because we had to (job change that made sense for Josh), not because of a strategic real estate move
At the time we were not ready to buy in Broward because we really didn’t know/understand the landscape up there.
Financial Check-In:
We did our Q3 financial check-in last weekend (yes, even though I use Quintiles in my personal planning, we do our financial reckonings in regular quarters!) and we remain on track to meet this year’s retirement savings goal (20% pretax income, in a mix of pre- and post-tax savings/investment vehicles), plus we have built up other shorter-term savings funds as well – travel, emergency fund, 529s (still have LONG way to go with these, but I think we are now in a good routine), eventual new car fund (this is many years away, but I want to be able to buy in cash with a fund pre-reserved for that purpose!), etc.
I know that we will mess up the balance if we buy too much home, so I’m really hoping to keep our purchase (if we make one) reasonable — or as reasonable as is possible for the space we would like.
So, there you go. Don’t ever take real estate advice from me. Don’t say I didn’t warn you!
13 Comments
Ahh I feel your pain, last year we sold our house in Australia in May 2020 when the market had dropped 15%, for less than we wanted. But we thought, we are at the start of the pandemic, prices are bound to keep falling, better just sell and take the loss. Of course prices have skyrocketed since then up by 40%. If we’d only waited 12 months. But these things are impossible to predict. Good luck with your decision, and I think as long as you reassure yourself you are making the decision for family/lifestyle reasons not financial reasons it takes the pressure off to “win”. Well that’s what I tell myself anyway!
In early 2008 we decided we wanted to move out of our recently renovated 2 bedroom apartment in NYC to the suburbs. We listed out apartment THE WEEK LEHMAN WENT UNDER!!!! You want to talk about bad real estate timing! We ended up hanging on to the apartment and renting it out for about 4 years. Ultimately, we sold it to a friend without ever listing it. Now, my job is right down the street and I walk by it ALL THE TIME. Sigh…
It is definitely hard because we’ve made real estate into more than having a home. But in the end whether you rent or buy you do need a home – and you need to be able to afford the carrying cost. It feels like insanity everywhere lately! I have no idea how people are truly affording the crazy prices but i also get the sense that many don’t care if they ever pay off their mortgage so long as they can afford the payment …
I live in Toronto where the real estate market has been bananas for more than 10 years. I remember freaking out about our purchase price in 2011 and i know our neighbours thought we paid too much but 10 years later the value of a similar sized house is doubled! We did a major re-build of our house in 2011 because it was financially worth it over buying another house. So crazy. So i sit in my dining room that used to be my bedroom but doing a re-build/reno like that is not for the faint of heart.
We did the rebuild in 2017 – we joke that our second kids was VERY expensive!
Doubling in 10 years seems much more reasonable than 2 !!!
For sure! Super hard in your case to see. I think our particular market just hasn’t had any down swings and has barely spent any time even flat – so it’s just up up up up! This past year alone 14%
I always appreciate your posts and feel like you give a very realistic approach and I love hearing about how you manage finances.
I can relate as I bought a condo back in 2005 and then the value decreased by 50%. I rented it out for several years and then sold it in 2018. I was able to break even since I’d been paying the mortgage down for 13 years at that point, but just barely and it was still down 15%. But I was buying at such a cheaper level that that decline was something I could stomach. I reminded myself that people w/ much larger and more expensive homes took much larger losses!
I think the lesson I learned was to not view my home purchase as an investment. That is probably contrary to what a lot of people think when they buy a house, though. I think about affordability above all else, and would only buy a house if I could very comfortably afford it and live there for 5-10 years. The ownership time frame is because the cost of selling a house is very expensive. When I worked in mortgages, they estimated that it costs about 10% to sell the home between the realtor fees and other expenses. There are times when that 10% gain in market value is a cinch. And then there are other times when it isn’t – especially over a shorter time period and with higher priced homes which tend to appreciate less than first-time home buyer homes since there is a smaller market for them. We got lucky and bought our current house in 2019 before the market heated up. At that time my husband thought prices were too high but we knew we needed more space (had a 1300 sq ft home w/ 2bd/1.5 bath). He did well on the sale of his home that he bought in 2015 because first time home buyer houses were selling well at that time. That house has now appreciated even more. Like all investments, it’s nearly impossible to time the market – it comes down to luck really. At least in my opinion! So between the 2 of us, we’ve bought 3 homes and sold 2. We did well on one sale and poorly on the other – so 50/50, hence my belief that it all comes down to luck. Our current house has appreciated quite a bit, but I don’t believe the market value estimates on Zillow. Plus, the market is really softening here in Minneapolis, so that may be the case in South Florida too?
Good luck with the house shopping experience! I bought my first home as the result of what I felt was a ridiculous rent increase. That ended up being the worst housing decision! So it’s good that you are taking your time and not rushing into a purchase! Hopefully in 6-12 months, the market will look a bit different!
I actually wrote a post about the decision to buy a home shortly after buying our last one!
http://lisasyarns.blogspot.com/2020/02/finance-friday-what-i-learned-from.html
Ugh. I hear you. I’ve had some of each. We bought our first house in 2009 when it was a perfect time, but then sat on it for a year in 2013 and took a loss, but honestly I have no regrets. We have lived a lot of places and made the decisions that made the most sense at the time for our family. I’m glad I didn’t let the real estate market dictate our lives, but it is super annoying sometimes.
I also feel your pain! We sold a condo in Boston right by Harvard in 2014 and made money having owned it for only 18 months, but I don’t even want to look at Zillow now! We moved to western Canada (Calgary) for a job opportunity we could not replicate elsewhere (two tenure track jobs), but ouch! It doesn’t help that friends and family in Toronto and Boston have all seen their house prices double over the last 10 years, while ours out here have not… Oh well.
I think real estate decisions never work well for anybody 😥 whether we sell or buy at any time, it feels we are on the losing side, when we look only at the financial aspects.
However, like you have pointed out, we can only make our decisions based on what’s best for our families, our jobs, at any given point of time.
As long as the house serves the purpose of being the most appropriate among available options, within our budget, and can become a safe haven that we and our children will fondly remember, it is probably a great buy.
Here’s wishing you and your family to find a wonderful house, that fulfills all your needs and wants.
Try to think of a house as a place to live, primarily, rather than as an investment. It will make the process less fraught and hopefully you will find what you need. Real estate here is insane, and whenever we see something it feels like a major downgrade compared to the place we are renting, and I have no desire to spend a million bucks (literally) on a house. So we will be renting for a while I think.
Me neither (also literally!). Yeah I agree it’s definitely a place to live and I’m not even very into having some picture perfect home. I just find it hard not to look back and have retrospective FOMO. (That’s not even a thing, but you know what I mean)!