A home for the holidays

Posted: Dec 06, 2006 5:56 AM

Think back to your first home where you celebrated the holidays in your style. Not the house you lived in with your parents, not the hovel you shared with some other college students, not the first apartment when you were on your own, but the house that you bought, you decorated and you loved. That's the house that started your adult life and made you feel hopefully as good as I did at age 27. Those who follow my columns know that when I bought the first house, right after I got engaged, I forgot to check the bedroom count and I had a huge sigh of relief when the Realtor told me the next day that it had three bedrooms. Wouldn't it be nice for you to have a home of your own for the holidays (well, at least a home that you and the bank own)? The only one stopping you is you, but we'll get back to that in a while.

We have bought and sold over a dozen homes since that first one, and never have I been less than ecstatic the day my wife and I get the keys to the new place. My kids on the other hand look at the houses we buy and simply say, why? Then they wait to see the plans and are as excited as we are after the remodel is done. We just have problems buying someone else's dream - we prefer to create our own. We created a winter wonderland in Lake Tahoe, taking a 3 bedroom house and making a two bedroom rustic retreat, complete with log accents and a deck off the master bedroom that put me into the forest with a two person hot tub. At night after a nice winter snow had fallen, I would go out and sit in the tub, my dog by the side of it, animals and snow covered pines just off the property, and I would stare at the surroundings and feel peace that I had never felt before. My wife, who grew up in New Jersey, was not a fan of snow. I, on the other hand, had grown up in Southern California and found it mystical and thrilling, not cold and wet.

We sold the house several years ago and moved on, but it just takes a crisp breeze in the late fall or early winter for me to return in my mind to my favorite forest and be back into the spell I had been in on my deck. This particular house wasn't the most expensive we have ever owned, nor the largest, but it was easily one of the most memorable. Size, cost, design, and function are integral parts of every house, but far from the essential ones. As far as I am concerned, the unique experience of owning your own dwelling, being master of your castle and knowing that you are beginning to build your future on a sound financial bedrock is the real reward to home ownership. It can't be done while renting. Our forefathers didn't fight the good fight to come here and rent!

What's holding you back? Let me tell you what is told to me. "I am afraid I won't be able to make the payments." No one ever says that when they are going to rent an apartment or house. With the tax advantages of deductible interest payments and property tax, in most cases the mortgage payment isn't any larger, on a net basis, than the rent payment.

"The prices are too high and I am waiting for them to come down." Good luck! Most people haven't the knowledge to determine the cost of housing, and even if they did know, it is hard to know the exact right time to buy until it has passed. Housing has three specific areas of cost: labor and materials, land, and governmental costs. The cost of land in the most desirable areas is always going to continue to rise as the demand for the land becomes stronger. We aren't building more land so what we have is all we have. Materials are extremely expensive since China decided to come into the 20th century and buy up as much of the world’s supply of all the materials needed to build as they could get. Once again demand is forcing prices higher. Labor generally doesn't rise as fast, but must keep pace. Governmental fees keep increasing as the need for schools and roads keeps pace with the building of houses. Which of these components do you think will come down?

Buying at times when everyone is concerned about the future of real estate is always the best time. You do not get deals when any market is going up, only when they are in trouble. The large inventory of unsold homes that is reported almost daily is shrinking, and great deals are making it happen. Many homebuilders are holding their prices but giving incentives such as six months’ mortgage payments given to the buyers at the close.

Why aren't you shopping for a deal?

Another factor that is a plus for our housing industry is the currency market. As the U.S. dollar has grown weaker in relationship to other currencies, foreigners are getting a large discount on our real estate. The Euro, Europe’s major currency, at one time was valued at less than the dollar. Today the Euro is worth $1.33. Consider when the Euro was worth a dollar, real estate was the same for Europeans and Americans. Now that the Euro is higher they can buy a $400,000 house in America for $300,000. Euros giving them a discount that isn't available to Americans. This has also caused a buying surge on the East Coast, especially on the high-end condo market.

Our government is now trying to force China to revalue their currency. The numbers that are being talked about could lead the Chinese to a 50% discount on our real estate, which will have a significant effect on the West Coast of our country. Will it happen? I can't say, but I believe that in the next few years the Chinese will devalue to some degree.

Leave the excuses behind, get yourself pre-qualified and start looking. It is always a great time to buy real estate, and generally speaking, today's price will be less than tomorrow’s. It could be the best thing you have ever done for yourself.