My parents bought a modest little house in rural Pennsylvania, in the 1970s. It was orange. We had a nice yard. My sister and I have yet to realize “generational wealth” from this decision. What am I missing? Has anyone ever shown this common industry claim to be true?
I invest in the stock market. I bought my home. Was buying my home an investment in my future? Sure. Metaphorically. Do I view it the same way as my 401k? No. And I shouldn’t. When I retire and cash in my 401k, I will not need to fund another 401k with the proceeds so I have a place to sleep. That is the difference between investing and buying a house.
I’m going to take a lot of arrows for this, but: Buying a home is not an investment for the majority of people. It’s an expensive purchase that hopefully will become an asset that pays me back in the future. But that only works if I no longer need a place to live. Or, if I’m taking my equity and moving to a less expensive place.
Yes, real estate investors exist. I’m talking about regular people who just buy one house to live in. Those people are not “investing” and should not be encouraged to think of their purchase this way, unless we’re clearly distinguishing the difference between housing security and market investing returns. Even if their purchase returns double what they paid, they’re still buyers in a market whose prices have doubled. That is not investing. That is simply feeding the market, and fixing housing expenses.
I’ve already talked about my aversion to the word “dream” in housing. Many disagreed with me. But I still stand by this assertion. I think it’s hyperbole that diminishes the hard work that goes into buying a home, and the attainability of doing so in our country, where the mortgage market has matured in a way that makes it possible for more people. A dream is fluff. Buying a home is not fluff.
Freedom. We see many brokerages flying this flag as a way to wave in new agents who may be looking for an escape hatch from their 9-to-5s. It sounds appealing. But let’s be honest: Does freedom look like managing a thousand details, taking calls late Sunday evening, answering texts from clients at all hours of the day, shoveling snow off a stoop to prepare for an open house, and working weekends for the rest of your life?
“It’s like free money.” This is in reference to the days when interest rates were at rock bottom. And it’s hyperbole. I bought with an absurdly low interest rate in 2010. I’m still paying back mostly interest every year. That is not free money, by any means.
Unless you’re some kind of gangster, there’s no such thing as free money.
Why am I writing this? Because these are the little things that add up and create the collective perception of real estate people. They erode trust. And I believe your job is more important than the image this creates. You are more than hyperbole.
Words matter. We can do better.
The market is in a precarious moment. I truly believe those who boldly use fresh language and concepts others aren’t or historically haven’t are the ones who will fight their way out of this and soar.