Posted on Monday, April 4, 2011
Yes, it’s a roof, and yes, it’s an investment. But it’s far more than that.
I wanted to live on our block from the first moment I saw it. I wish I could tell you that some quirky, perfect detail captured my heart, but there was no such “movie moment.” Somehow, the genteel dilapidation of its creaky row houses and elderly trees was just slightly more charming than on any other block of Washington, D.C.
Unfortunately, that was not a good moment for me to buy a house. I’d just moved to Washington after the disastrous end of a four-year relationship. My assets consisted of a few pieces of furniture and a sadly underfunded 401(k). And so I added our block to the long list of improbable things for which I experienced an intermittent longing.
And then it happened—at another imperfect moment. I was newly married, and we had just spent insane amounts of time and money on a wedding. But there was a house, you see, on the very block where I longed to live. And it was a good compromise between what my husband wanted (habitable condition, manageable yard) and what I wanted (charm!). So on a muggy morning last July, we found ourselves sitting at the dining-room table across from our broker, pretending to read the small print of our offer letter for a half-renovated Victorian with no kitchen cabinets, a huge bathtub, and a teeny water heater. Like all people in love, we were willing to overlook any number of flaws as long as the house would be ours.
Our offer was accepted. Then began one of those tedious sagas that every homebuyer will regale you with—if you stupidly let them corner you at parties. A catastrophic leak forced us to move out of our rental early. The house appraised for less than we had offered and, worse, less than the owners’ mortgage. Because we were camping in my sister’s basement, our negotiating position was weak; eventually, we agreed to split the difference. Then their renter clung to her tenancy like a deranged limpet. Finally, in October, we moved in—and realized that we’d probably already lost money.
Of course, we don’t know for sure. But right before the first-time homebuyer’s tax credit expired last spring, anyone who thought they might want to buy had plunged into the market, pushing up prices. The last of those purchases closed last June. So when we made our offer in July, we were working off those inflated valuations. Nine months later, we grimly watched similar houses sell for tens of thousands less than we paid.
Yet, we still feel as if we got a good deal. We love the block even more than I thought we would. I hadn’t counted on such welcoming neighbors. And we love the house, even if I seem to spend all my evenings on the phone, asking—like a heartsick eighth-grader—if our elusive chimney guy would please like to come over for a few hours.
Although I may spend odd moments cruising through the listings to see what neighboring houses have sold for, my husband and I agree on one thing: “Who cares? We’re not going to sell,” he said the last time I told him about a comparable house that sold for less than ours.
We didn’t buy our house for an investment; that’s what our investments are for. Our house is to live in. We bought mostly because we wanted to commit to a place, and to make it over to suit us exactly. Landlords get testy when you rip out walls and replace the stove; besides, who wants to spend money installing custom blackout curtains only to have the place sold out from under you?
Before World War II, Americans recognized that housing was a consumption good, not a savings plan. But for a number of reasons—higher incomes, zoning restrictions that limited supply, and longer-term mortgages that enabled people to afford pricier homes—postwar housing prices started rising faster than inflation. When people began retiring on the proceeds of their homes, their children and grandchildren started thinking that was the natural order of things. But for most of history, housing has been a lousy investment: expensive to maintain and hard to sell.
On the other hand, houses have always made very good homes. And they still do. If we sold today, we might get less for the house than we paid for it. But to us, it’s still worth every penny.
By Megan McArdle, New America Foundation