So our clients are asking, “Is it a good time to buy?” How many times have you counseled your clients when they ask you that question? Of course, you then determine: do they have a house to sell, do they have good credit and adequate down payment. Somewhere in there comes the question: “How long do you plan on staying in this home?”
I’d Like to Sell in Two Years, and Make a Little Bit
Inevitably, the potential buyers tell me five years. But they want to make sure they are money ahead in the next two years, ‘just in case.’ Now, I realize that we are coming off of a period of a few years where huge appreciation took place in a serious hurry…but that has now rooted in the minds of the consumer as the ‘norm’. The expectation. They should make a boatload off their house, and fast. They should be able to sell within a couple of years and not lose money, if they decide they don’t like the area, they decide to relocate, need a bigger/smaller house, etc.
I understand that people change jobs more frequently than in years past, which causes them to sell before they necessarily expected to or are prepared for. But I also think that a culture of immediate gratification has brought the mentality that because they want to move, and ‘need’ a certain selling price to do so, they should be able to have that happen, and happen now. (Plus get a fantastic deal on the buying side.)
The Party’s Over
Real estate is a long term investment. It always has been! It is wonderful when clients make a profit, but we can all see the financial mess we are in from when large profits happened in a short period of time. When you buy a house, you live in it: you have physical shelter, plus a tax shelter. You gain equity with each payment. If you maintain it well, and there is the usual, gradual appreciation over time, combined with your little chunks of equity paid each month, eventually it will grow in value. If the appreciation is faster, then that’s wonderful, and you have more options available to you: sell sooner, leverage the equity to expand, or cash out and buy a boat and sail away.
Responsible homeownership is not looking at your home like an ATM machine. Those days are over, and our industry will be picking up those pieces for a while. Now, we need to counsel our clients that real estate is real property, a real investment for the long term.
