Never is a promise: Avoiding concepts of eternity when buying real estate
Sales pitches for expensive items - either expensive in money or expensive in time needed - are designed to make you think about concepts of eternity. "A Diamond is Forever." "You'll never have to replace your windows again!" "Believe in this deity and you are guaranteed an eternal afterlife full of kittens and chocolate!" "Will you be comfortable passing this home on to your kids?"
When we make major choices, like our spouse, our home, our car, we tend to think that the object we are buying is the last one of its kind that we'll need. "I have problem," we think, as we enter the store, "and this item will solve that problem forever." However, in focusing on solving our big problems, the smaller ones of day to day life get swept under the rug, only becoming apparent after our major purchase is finished. This leads to the feeling of "buyer's remorse" that we all know so well.
It happens to us in the real estate market as well.
Landlords will spend a lot to upgrade an apartment and find a new tenant, forgetting that the tenant will move on in two, three, ten years and they will need to go through it all over again. Or they will spend a month chasing down a tenant for back rent, and then seem surprised when they have to do so the next month, and the month after that, etc ad nauseam. However, according to City Data, the average tenant stayed in their Chicago apartment for just 4 years.
Homeowners fall into the trap too. Referring to that same City Data survey, the average homeowner in Chicago stays in their home for about 12 years. But when you're in the process of buying a home it's easy to forget that one day you will need to sell it. Home buyers - especially those on their first time through - will seek out extremely particular housing that suits every single one of their current needs. Space to play their favorite video game. Space for their desktop computer and home office. Space for their current set of living room furniture.They think that by solving their current problem 'forever,' no future problems might crop up.
Four years is a long time in someone's life. 12 is even longer. Think back to what you were doing 4 years ago. 12 years ago. Think about what was popular then, what you liked to do, who you hung out with, what you were doing for a living. Now think about how you used your own house during the four years you were in high school, or the 12 years you were in school altogether. It changed, didn't it? I'd bet it changed a lot.
Living situations change over time. Housing needs to be able to adapt. Home buyers, if you purchase a home that's very specific to what you need or want in your life right now, you're blinding yourself to your own future and limiting your potential growth. (You're also investing in something that will likely have a very limited pool of potential buyers when it's time to go.) What happens if you suddenly inherit all of Aunt Lucy's old furniture? What if desktop computers finally go the way of the dinosaur and are phased out like dining room tables were in the 1990s?
Landlords, if you renovate your apartment in a style that's popular now, you are condemning yourself to have to spend more cash in just a few years to update all over again. Certain upgrades to the basic structure of the building are worthwhile - new wiring, new windows - and other basic cosmetic repairs are necessary like fresh paint. Keep up with technology and make sure your tenants can use it in your rental. But don't cave in to the trend of granite & stainless, floating sinks and side-by-side fridges.
Across the board, if you find yourself using words like "always," "never" or "forever" when making a purchase or major life choice, stop and reconsider. No item will serve your needs forever unless it is incredibly adaptable and extremely durable. Instead, replace those words with "until," or "for the next several years," or maybe "for as long as I need it." Don't feel bad about purchasing what seems like a very generic home. It's what you do with it that matters. Choose a home where you can be in control of your life, instead of having your potential limited by a very particular style that someone else created for you.
A final barometer for these big decisions: we cannot look into a crystal ball to see what we will need a few years down the road, but we can look backwards. Instead of trying to imagine where you will be ten years in the future, think back to where you were ten years ago. If the item you're buying could have served you just as well back then, it might be worth your investment.
Do you have any stories about making a "forever" investment that came back to bite you later? Share it in the comments!
Hourglass image by Jamiesrabbits on Flickr.