Our house came on the market this week. Not our home, where we reside, but the house in which we raised our children when we returned to Southern California from Idaho. It has changed hands several times and this was the first time I had viewed it.
I was pleasantly surprised to find that the owners had remodeled, updated and improved it beautifully, possibly even better than we would have, if we had stayed there. It is an excellent property in a good location. It exemplifies the rule location, location, location. Its asking price is over double what we sold it for, and I know the value will continue to be strong. It is walking distance to a quality elementary school, a quality middle school, a lake for fishing and boating, a swimming lagoon, plus pools and tennis courts.
In comparing the conditions of the real estate market and attitudes when we purchased it to market conditions for today’s buyers, I realized that times are truly different. And our attitude and approach to that home purchase was different than what I hear from some of the agents and buyers today.
We arrived at a time of rapid growth, lines for new homes, and 11% fixed 30 year interest rates. We were pre-qualified by Bank of America, the preferred lender of the University that had brought us here, so we knew our price range. It took all of our savings for the required 20% down since our previous home had sold for half the price we would need to pay for a smaller home in Orange County.
Our requirements were mostly simple: Excellent schools, no more than ½ hour from work, sidewalks, a home that would not need vast fix up expenses. Plus, we wanted a home that could beat out other homes in appreciation, and/or value retention in any market. We recognized that the job security for a college basketball coach was very low, so we might need to move with short notice, and couldn’t time it with good market conditions.
Although I was a Real Estate Broker, I was not familiar with the local market so chose a great buyer broker. She helped us to quickly narrow our location from 3 cities to one favorite neighborhood. Since the market was rapidly changing, we made offers unsuccessfully on 2 houses before we finally were able to obtain an acceptance. We paid more than the asking price, and were delighted to be able to move in by the start of the school year.
The interest rates were rising. In the 3 weeks it took to find our new home, the best loan we could obtain was 9.75% interest fixed for 5 years, with a loan fee of 2 points (2% of the loan amount). The interest rate would rise to 12% in 5 years. It stayed at 12%, because rates did not return to the 10% mark until 9 years after our purchase.
We enjoyed a wonderful life in that home. We concentrated on what was important in a home and family life. We benefited from the recreation, the activities, good education and good neighbors. Never once did we look back.
Where is the difference? We never said, “ Let’s wait until the prices drop or the interest rates are lower”. We never tried to play a home like the stock market, or as a profit gamble to “beat the system”. We set goals for our family, our day-to-day surroundings and activities, and made the best possible knowledgeable decisions for short and long term under the conditions and choices that were available.
Over time, the market values dropped and came back again, the interest rates went up and then down again. And the housing choices were different on any given day. We focused on our needs, wants, abilities and made our choice within that framework.
I contend that decisions made with your needs in mind, rather than the herd mentality created by media’s opinions, are the ones that will make you the most content and will withstand the test of time.
