Home Again-A Place To Hang Your Hat
REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR BUYERS
September 22nd, 2009
California property owners became accustomed to viewing their homes primarily as an investment and secondly, less importantly, a shelter to keep the elements at bay. Today, nearly 1 of 4 mortgages are “underwater”, meaning more is owed than the market will bear, causing many to re-evaluate home ownership.
Over the years I have tried to emphasize to my clients that buying a home should be viewed as gaining control of your future by allowing you to call the shots. Renters are always at the mercy of their landlords. Rent can be increased, you can be asked to move with little notice and making improvements to your abode benefits the landlord.
California’s climate and natural beauty has attracted residents from other states and all over the world wishing to live here in the land of endless summers. The side effect has been ever-increasing real estate values that, until recently, we took for granted. I try to explain that this is not the case in many other states.
My brother moved to Dallas Texas in the late 1970’s. He rented out his condo in Novato, knowing he would return to California some day. He bought a home in the Dallas suburbs for $85,000, lived there for nearly 20 years before selling it for slightly less than he paid for it and moved back to California. His condo in Marin County, which he bought for about $70,000 new, sold for more than $500,000 after minimal updating. The more than 6-fold appreciation windfall was not all that uncommon here in the Golden State.
Times have changed. Reality is setting in for many that saw their homes as cash cows to be milked whenever extra funds were needed. College tuition, a new car, boat or RV were purchased or paid for using equity extracted from homes that appreciated substantially despite the owner not lifting a finger. Home equity lines of credit (HELOC’s) have been frozen or canceled, credit tightening has made cash-out refinancing difficult and equity evaporation has made it impossible for many to lay their hands on needed cash.
Californians must change their attitude toward home ownership. Priority needs to return to it being a shelter and a tax writeoff. Even if market prices stabilize, I would be surprised to see double-digit appreciation return anytime soon. Banks will be stingy with loans, builders will be cautious building new homes hoping someone will buy them and the business climate has become so toxic in California that new jobs and industry will move elsewhere. Demand will be held in check and supply will be ample for those that desire home ownership.
I believe this is all for the best because it has made people look at home ownership differently. Buy because you want a place of your own, not because it is going to make you rich!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
