I know a guy who lived in a small apartment in Manhattan for years. He had a great job, and could afford a much nicer place, but just couldn’t bring himself to give up a rent-stabilized apartment. Eventually, his job took him to Europe for a few years, and he had to give it up. When he returned to New York, he bought a fabulous condo.
Recently, I talked with clients who are living in a house that really doesn’t work for them anymore, but because they have a mortgage with a very low interest rate, they resist buying another house.
I also know some folks who are hanging on to a house that is empty. No one has lived in it for years! Because it belonged to their parents, they don’t want to give it up. They pay the taxes and for yard maintenance, but derive little benefit for the expense.
Do you see a common thread here … ?
Money and lifestyle choices both factor majorly in real estate decisions, but in all three of these examples, one factor is out of balance with the others.
So, how do we do real estate for the right reasons? We get needs, wants, and ability into proper balance. And other decisions get surprisingly easy.
Ability first. What can you afford? For most people that’s based on monthly expenses, because most people need a mortgage to buy a house. When shopping with cash, the decision becomes how much of your liquid assets are you comfortable living without – at least for the time being.
Next look at needs. What do you need in a house to make life comfortable and good? I work with a lot of downsizers and one-level living is a big need among this group. For others it might be a given number of bedrooms, or a detached garage, or maximum commute time. Anything that makes your life reasonable, comfortable, and do-able needs to go on the list.
Finally, look at wants – the extras that bring you joy. What would make your life not only livable, but fun every day? What would bring you joy?
When these factors are in balance, the ups and downs of interest rates become less important. The type of house and the choice of location snap into focus. Finding and landing a deal in today’s market can still be a tough process, but clarity on your desires and abilities makes it easier. And it gives you permission to make a move.
Last week I was out showing with a client, and as I dropped her off at her house, she asked the question I get so often, “Is this really a good time to buy a house?” My answer, “Of course it is! Look for what you need, want, and can afford, and the other considerations will take care of themselves.”