Mood of the Market
Mood of the Market
Recently, I took a brief, self-imposed retreat to work on some involved, important and frankly, neglected, projects. I left a tad bit late, which put me right in the worst of the commute-hour, end-of-week traffic, which is particularly bad in the direction I needed to drive.
It turned what should have been a two-hour drive into a three-hour odyssey. But I noticed how, right at the two-hour mark, my route took me onto one of the most scenic of California's coastal highways. So I spent the last hour (the extra hour that had been tacked onto my trip unnecessarily) watching the sky turn from bright blue to golden, auburn-ey red-oranges and purples as I saw the sun set over the Pacific Ocean.
When I checked in, the concierge asked me how my drive was, and I told him, "Longer than expected, but I'm glad that it was because it gave me the chance to see the sunset that last hour driving down Highway 1." He sort of looked at me strangely and said, "Wow, I've never heard anyone say they were grateful about traffic," shook his head and carried on with his work.
The fact is, I'm rarely unencumbered enough, in terms of obligations on my time, to see a sunset, so I was particularly aware of how fortunate I was. And this is common: Since the time I broke my foot, I'm ecstatic to be able to work out and run. Mark Nepo, a famous poet and one-time cancer patient, has written about how grateful he is to see the lawn keep growing back in order to need mowing -- something he once perceived as relentless, and a reason to complain.
All this came to mind when I was having a conversation with a couple of homebuyers recently around the subject of trade-offs. It became crystal clear, during our talk, that they were struggling to reconcile their conflicting wants and needs between themselves, but, more importantly, within themselves, creating an internal war and state of being stuck when it came to committing to a firm direction in which to proceed with their house hunt.
As I explained that everyone compromises (no matter whether they are spending $50,000 or $50 million on their home), it became apparent that these folks really just needed some help seeing the upsides of some of the seeming compromises they were contemplating.
Here are a few of the most overlooked trade-offs and hidden benefits in real estate:
Older construction → maturity of home and neighborhood. Some people like old homes, while others like new ones. My personal preferences tend to run to older homes, but I grew up in an area where no one buys anything but brand new, if they can avoid it.
The advantages of a newer home are pretty obvious: modern conveniences and construction, among them. But most people think older homes are a purely aesthetic indulgence. What they overlook is that older homes and the neighborhoods they are in have already settled, so that their mature state is clear to the buyer to be. That may mean they have already physically settled, surfacing any condition problems so that what is unknown is minimal. And with respect to older neighborhoods, the trees have matured and the nature of the area has as well, so you find less dramatic shifts with older neighborhoods than you do with new ones.
"Inconvenient" locations → quiet and privacy. Living right in the mix of things has obvious advantages, in terms of convenience of commute and nearby amenities, plus the energy downtown runs at a higher vibration than elsewhere. But having lived right in the heart of a bustling quasi-commercial district and having lived in the way-out hills has made clear to me the upsides of living in a less convenient location, namely peace, quiet and privacy.
A buyer's desire for these qualities can evolve as he moves through the stages of life.
When I first got out of college and apartment living, I craved quiet and was willing to drive a ways to get to the grocery store to get it. After a few years, though, I was ready to be closer to other people and activities.
In any event, it's critical to understand the multisensory trade-offs of picking a super-convenient, commutable or even highly walkable location or a less convenient locale, in terms of noise and serenity.
Mortgage interest → tax deduction. At the depth of the trough in home values a couple of years back, most homeowners I know busied themselves refinancing their home loans at all-time low rates and appealing the assessed values of their homes to have their property taxes lowered. What many failed to realize until a year later was that these numbers they had reduced were also the basis for their largest income tax deductions: the mortgage interest and property tax deductions. Long story short, as these costs went down, their income tax liability went up.
This is not to suggest that anyone should pay a single cent more than they need to for mortgage interest or property taxes -- that would be foolish. However, when the thought of paying mortgage interest or paying property taxes gets you down, it bears reminding that these costs of homeownership are also the basis of the pretty amazing tax advantages that come with this version of the American dream. And that can make signing those checks just a little bit more palatable, sort of like sitting in traffic as you drive down the coast.
Tara-Nicholle Nelson is a real estate broker, attorney and the author of two critically acclaimed books on real estate. Tara also speaks and writes on the art and science of life transformation at RETHINK7.com.
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