The Stories We Weave
I don’t believe people make rational financial decisions, contrary to what economists say. People make decisions based on marketing, advertising, ego, wants and desires – often weaving together a story that affirms their decision – whether the decision is good or bad.
It’s interesting to read about behavioral economics and how flawed our decision-making can be. More interesting is to figure out how flawed our personal decision-making is.
One of the reasons I started Homebuyer Associates was to raise questions about decision-making with clients to help them make good housing choices, as opposed to selling them something – to affirm their choice.
My advice if you are considering a home purchase? “Don’t buy the home you are told you want.” Don’t define your success in terms of others. Try to limit ego and the effects of advertising. Understand who you are and what is in your best financial interests.
Financial success is attainable…but you need a plan and the discipline to carry out the plan, be patient and create new habits. If you want to own a home and have limited savings or student debt, then create a plan to be in better financial shape in 12 months than you are at present.
Home ownership is one element to attaining financial success. Too often Millennial and Generation X potential homebuyers think their income and student debt are inhibitors to home ownership. Don’t assume, ask questions and question the answers.
If you fit the description above, owning mom and dad’s home or one of the homes featured on pornographic real estate T.V. (you know what I mean) is out of your grasp. If you are patient, disciplined and realistic, then home ownership is possible. There is a path to home ownership.
Some interesting stats:
• The average first time homebuyer is 32 years old.
• Their personal income has risen 25% since 2011 (Fed. Reserve) while the national home price index is up 48% (Case-Shiller).
• The typical single family home price is 4.2 times greater than the median household income (Harvard Housing Studies).
• Roughly 34% of Americans under the age of 35 own a home. At the same time in a Boomer’s life it was roughly 50% (PEW Research).
My bet is a good portion of Boomer wealth is the result of home ownership. It’s the reason I advocate for home ownership – it’s a forced savings account. Renting is not a savings account unless you invest the difference between renting and owning (you won’t).
A few thoughts on the path to home ownership:
1. Positive housing outcomes are hard to guarantee but you limit risk with a true Exclusive Buyer Agent working for you. Exclusive is the key word. You’ll find it in the description of our service.
2. You might contribute to your own risk by trusting the traditional real estate system. As Alex Trebek (Jeopardy) says, “People draw conclusions to satisfy their prejudices…and these conclusions don’t always coincide with reality.”
Please don’t draw the conclusion that who the agent works for or experience level doesn’t matter. That’s not reality. It matters.
Coffee talks can answer many questions. If you’d like to discuss home ownership (just last week I advised against it to a potential client) or how to walk the path to ownership, contact Seamus Holloway, Mike Dupar or me. We’ll listen and we’ll talk.
If you know someone who wants to buy a home the right way or wants to discuss housing options within their overall financial planning please forward this newsletter to them.
Thanks for reading,
Michael D. Holloway