My great aunt has a cabin and land, deep in a canyon. Every spring she hosts a family reunion where my mom’s side of the family gathers. It’s a time to eat, visit, catch-up on the goings on of all my relatives, and otherwise enjoy watching my kids play in the great outdoors.
I came away from the event with a few investment things to think about.
Housing
My wife and I bought our current house in 2008, just a month after our wedding. We were fortunate to miss the bulk of the real estate bubble burst and got a decent price. Housing values did fall further in my neighborhood finally bottoming in 2010, but I’m still happy with my entry. The house didn’t have much of a yard, but we didn’t need one. Also, with a few bedrooms and an unfinished basement, we had plenty of room to expand into.
Fast forward 11 years. The basement is finished, but with four kids, we could use some extra space and a yard. Time for a new house! At the reunion, I mentioned we were looking to build a home and received all sorts of unsolicited advice from my grandma.
To set the stage, my beloved grandma is the definition of frugal. When I was in high school, the fun thing to do was toilet paper houses. I grew up in Indiana, and there were massive trees in everyone’s yards. Nothing compares to the joy found in decorating 70-foot maple trees with dozens of toilet paper rolls in the dead of night. We were artists. Trees were our tapestry and TP our medium.
One time when my grandma visited, my house got toilet papered by the girl’s soccer team. Do you know what grandma did? She carefully rolled up all the toilet paper and packed it in her suitcase to take home and use.
That’s frugal.
So at the reunion, her response to my comment on building a house was,
“Are you sure you can afford it?”
I’m like, really? That’s what you want to lead with? She knows nothing of my finances. Heck, she doesn’t even know if I can afford the current house I live in.
Yes, grandma. I can afford it. I kinda sorta know a thing or two about money. At least I think I do.
Housing values have grown a lot here in Utah over the last five years. Particularly where my Grandma lives. So she tells me as much. Because, you know, I’m an idiot. And she also lets me know that she thinks housing values will decline.
I’m polite, so I go along of course. Thank her for the insights and such. In my head, I’m thinking – what’s your track record? When’s the last time you correctly called a drop in housing prices? You spend your
And that’s not a knock on my grandma.
“The fool doth think he is wise, but the wise man knows himself to be a fool.”
–William Shakespeare
It’s rare for housing values to fall year-over-year. Even rarer is the individual who can consistently forecast it ahead of time.
Even if grandma is right, does it matter? It’s not easy to time real estate values with your primary residence. If prices are high now, then I sell my current home for a high price and buy a new house at high prices. If prices drop next year, then I’ll sell my house at a lower price and buy a new one for a lower price.
Life circumstances dictate my timing, not my feelings on real estate values.
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