Forever Seeking the Dream House

Experts contemplate the question, “Is your house still your best investment?”



Is your house your best investment? It absolutely is when you apply the old-fashioned, or back-to-basics, rules of home ownership. It is only in the last two years since World War II that market prices have plummeted. 

“Once again, we need to look at real estate, especially our home, as a lifestyle choice, a place to raise our families and enjoy,” says Jim Gillespie, president and CEO of Coldwell Banker Real Estate. “It should be viewed as a long-term investment, not like a lottery ticket as people had been thinking of their homes.”

Gillespie, based in Parsippany, N.J., is glad the high-roller days are gone. “Traditionally owning a home has always been a good investment, especially when the government allows you to write your taxes and interest payments off,” he says.

When you consider that the stock market has plunged from 12,000 points to the low 7,000 range and the National Association of Realtors’ recent national numbers show prices off by only 9.3 percent, the housing market looks downright resilient.

Now could also be the time if you are looking to move up in your primary residence and apply the rules of buying for lifestyle and enjoyment. Make certain that the numbers pencil out, however. Do you have to sell the home you are living in now to do this? Or can you afford to keep it and lease it out for five years? Tom Iovenitti, Irvine-based president and COO of Coldwell Banker Residential Brokerage in Orange County and Desert Region, says 83 percent of Coachella Valley homes sold in the last quarter went for $500,000 or less. “People are buying now because of the good values out there,” he says, not to build equity to access cash with home equity lines of credit.

With inventory high and prices down, you might be able to afford your dream house now. “In today’s market, if prices have gone down in your area, I think it is the best time to move up because of discounts in the market. But, once again, buy for lifestyle reasons and expect to stay five to seven years,” Gillespie advises. Don’t look for double-digit gains anytime soon. Those days are gone for now.

According to Gillespie, a National Association of Realtors survey shows real estate prices are expected to outpace the Consumer Price Index once market recovery begins at “the same old plodding appreciation of 5 to 7 percent annually.”

Brian Shea, senior vice president of Wells Fargo Private Bank in Palm Desert, has many clients seeking advice on the viability of real estate today. “I do believe your home is your best investment today, but not for reasons related to investing,” says Shea, who is shopping for a house in Rancho Mirage or Palm Desert.  Forget the emphasis on how much your house is worth. Today and for the future, you should focus on it as the place where your family lives.

Shea also sees great buying opportunities if you apply sane guidelines to home ownership. He’s looking at properties priced at 2003 values. “Sellers who must sell are extremely motivated and have never been more willing to negotiate,” he observes. He recently saw one property drop from an asking price of $1.2 million to $875,000 in a mere five months.

Advice to most sellers is don’t sell if you don’t have to because then you’ll find yourself competing with those motivated sellers who must play “let’s make a deal.” It’s better to rent out your house or investigate a lease option deal.

Elizabeth Leon, broker/owner of Palm Desert-based Twin Lion Inc., specializes in bank foreclosures. In her 25 years in real estate, she has never seen price-cutting and true value like this before. “Banks are very motivated to move assets off their books. I’m actually seeing 50 percent reductions from original prices,” she says. She points to a property at the prestigious Mirada community in Rancho Mirage originally listed at around $3 million and now down to $1.5 million. “It’s a great time to buy if you’re buying for the right reasons and you have cash,” Leon says.

Another back-to-basics aspect to your home’s value is its power against future inflation. “Your home will truly be your inflationary hedge when we start to see inflation rise,” says Haddon Libby, chief financial officer of El Paseo Bank in Palm Desert. “In the meantime, just enjoy it as a place to build family memories.”

That’s exactly what Gary and Suzy Walker of Palm Desert are doing. The couple purchased a 2,600-square-foot home in a gated community seven years ago for $350,000. At the top of the market, they could have snagged close to $800,000. Prices have now leveled off and are in the $500,000 range. “I do think of our home as our best investment. We’re not planning on moving and selling, so I really don’t care what it’s worth on paper,” Gary says.

Comments to this website are moderated by staff. While all comments are welcome, we encourage all to be polite and please do use this system for advertising or business promotions. Any complaint towards a business or service should be directed directly to that business and not posted here. If anyone has a complaint that a comment is defamatory, please contact me at tmay@palmspringslife.com and I will take appropriate action promptly. Thank You

Add your comment:
Edit Module
Palm Springs Life
Edit ModuleShow Tags

Related Articles

A Bigger, Better Modernism Week

Today, the city of Palm Springs touts Modernism Week as one of its signature events, stretching over 11 days in February and drawing tens of thousands of architecture and design buffs from around the globe.

Oasis in the Desert

Featuring more than 9,000 square feet on the 12-acre property, the Spanish-style adobe in Palm Springs built by Palm Springs Air Museum founders Bob and Jo Pond can accommodate up to 100 cars.

Joel Douglas Puts Former Clark Gable/Carole Lombard House on Market

Just like a Hollywood script, It was love at first sight for movie producer Joel Douglas, son of Kirk Douglas, when he saw the Old Las Palmas residence in Palm Springs.

A Stately Retreat

Modern lines and luxurious details define this La Quinta Hideaway estate.

On Retreat

This James McNaughton Movie Colony home, once part of the Barbara Hutton estate, exudes a timeless simplicity, progressing between privacy and transparency, connecting the inside with the outside.
Edit ModuleShow Tags

Promotions + Contests

Cartoon Caption Contest

Cartoon Caption Contest

Each month, we provide a vintage 1950’s cartoon illustrated by Alice Rovinsky. You are invited to submit a caption or vote for your favorite caption.
2014/15 Best of the Best

2014/15 Best of the Best

Palm Springs Life’s annual Best of the Best. Readers tell us who their choice is for the “Best of the Best” of the Coachella Valley in over 40 categories.