One of the biggest long-term stories I covered in three decades as a newspaperman was the housing market.
There aren’t many subjects that have had more effect on American society — or on the ever-increasing gap between top and bottom — than housing. Buying a house at the opportune time or selling at the top of the market can make a huge difference in status.
Just as buying at the top of the market or selling at the bottom can lead to economic disaster.
Paul Simon said it best half a century ago. One man’s ceiling is another man’s floor.
For everyone selling after building a large amount of equity, it’s almost like winning the lottery,
Those who buy at the top expecting prices to keep climbing can wind up with a financial disaster, especially if they bought without a decent down payment or got stuck with an adjustable rate mortgage.
Before the boom, late in the last century, the media price of a home in inland Southern California (San Bernardino and Riverside Counties) was around $180,000. By the height of the boom in 2005, that number was around $550,000. It could have done the early buyers a ton of good, but too many people kept trading up to the point where they had little equity and huge mortgage payments.
I’ll never forget the quote I got from one housing expert.
“A generation of homeowners is making a fortune,” he said. “But their children will not own homes in California.”
And in the end, neither would many of them. The market started sliding in 2007-8, and within a couple of years, the media price was nearly back to what it had been a decade earlier. People owned as much as half a million dollars on homes worth less than half that.
Entire neighborhoods built during the boom were unoccupied, their owners victims of foreclosure. Imagine a street of almost-new houses, all sitting empty because of foreclosures.
Who buys them?
You know.
Rich people with plenty of liquidity pick them up at basement-level p[rices, do something different with them and get richer yet.
Ain’t capitalism grand?
There are really only two house prices that matter to me right now — our house and my late mother’s house. Our home here in Georgia has increased in value more than 50 percent in the 11 years we have owned it. We’re not planning on selling it, and it’s 100 percent paid off. So whatever it’s worth is basically the bulk of the inheritance we’ll leave our two children.
Then there’s my family’s house in Virginia, where we moved in January 1963 and has been our family home ever since. Purchase price was about $25,000 and Zillow is listing it at about 25 times that.
Someone will buy it and if they’re smart, they’ll live within their means, build equity and wind up more to the good side of the financial equation than the bad.
The years I lived there weren’t the best of my life, but that’s less the fauly of the house or my family than it wasa my own shortcomings.
I hope it’s really true that all is well that ends well.