Mood of the Market
Mood of the Market
At the gym the other day, I read a magazine article highlighting the increase in the number of happily married couples who, even in their 20s, have decided not to have kids. Many pointed to the stress, difficulty and expense they see parents incurring to place their kids in good care, education and enrichment programs.
That same evening, I watched the first episode of the new Bravo series "Pregnant in Heels," where one millionaire mother hired a think tank and multiple task forces to help her select the baby name most likely to get her as-yet-unborn son elected as U.S. president in 2060 (I'm not kidding), and another nine-months-pregnant woman asked for a nursery that didn't look like a baby lived in it, because she and her hipster husband hate it when people make their babies the center of their lives.
Truth is, kids do make people crazy; and having them makes people do crazy things. In "What Investors Really Want: Discover What Drives Investor Behavior and Make Smarter Financial Decisions," author Meir Statman devotes a chapter to the beyond-rational value that many, many investors place on investments in their children and families, largely centered on their educations.
And I can relate. I'm approaching the $200,000 mark on what I've spent on my own kid's education, and that will just get him out of high school!
Of course, there are multiple spaces in which the value we place on our children's education and future intersects with the real estate decisions we make as buyers, sellers and even renters.
Some are obvious, like the choice of where we buy our homes vis-a-vis the quality of education available in that area. In my town, for example, the public schools are notoriously bad as a rule, especially from middle school on up. This, despite it being an extremely high-cost-of-living area.
So families with school-age kids in my city generally either (a) commit to private school early on, or (b) move into less urban, less diverse nearby towns with better private school systems when their schools of residence turn south.
With private preschool tuition in some areas You can see why homes with access to good neighborhood schools have historically tended to hold value better than those without; although homes near strong job centers do better (even if they have weak school systems), probably due to the decreasing number of households with young children.
Echoing the magazine article I was reading on the elliptical machine the other day, the National Association of Realtors' most recent "Profile of Home Buyers" report pointed out that while "a family with children is a common image of the homebuying household, more than three-fifths of homebuyers do not have children under 18 residing in the household."
This is only the simplest, least complicated of the interactions between real estate consumers' family values and real estate decision-making, and it can get pretty complicated, what with impacted schools and waiting lists, charters and privates, voucher programs and ever-shifting district boundaries.
Fact is, many parents feel that buying a home -- period -- is something they do, at least in part, to create a legacy for their children.
Beyond just opening access to particular schools, the geographic stability that goes along with homeownership, the economic advantages of having an asset against which to borrow, if needed, to finance higher education, and even the prospect of leaving a free-and-clear home to their children -- I've heard or personally experienced each of these be high on the list of arguments in favor of homeownership.
But lately, I've also seen the values of home and kids play out in reverse. I've seen underwater homeowners whose tipping point for the decision to walk away from their homes and mortgages be the fact that the increasing payment on their adjustable-rate mortgage (ARM) would stop them from being able to pay their kids' school or college tuition.
I've also started to see more and more families with children elect to have a parent stop working and stay home with the kids, choosing to forgo the second income they would need to go from renters to homeowners, prioritizing what they see as quality family time and interactions over what they see as dubious economic perks to owning a home.
Studies do show that children from home-owning households have, historically, done better at schools than their renter-household peers. But even those studies' authors suspect that some other correlate of homeownership is underlying these kids' success; maybe the fact that they stay in the same geographic location longer, on average, than renters' kids, or the fact that their parents have other stability-creating habits that are more frequently found in homeowners.
Nevertheless, our sense of homeownership as an inherently great thing for families with kids is changing, along with the rest of our cultural landscape -- as some parents choose what's good for their children over homeownership, in situations where the kids' best interests and ownership are at odds.
What's Your Home Worth?