Oct. 5, 2007: You'll lose money if you buy a house? Which house?
Jim Cramer, a clownish buffoon who screams for a living on cable TV, went on the Today show last week and said, "Don't you dare buy a home now. You will lose money."
The clownish buffoons in the National Association of Realtors have no faith in your ability to discount hyperbole, so they denounced Cramer's remarks as "misleading, inaccurate, and inappropriate."
Ya think?
A steady mantra of the NAR during the housing downturn has been to insist that all real estate is local. My friend and fellow real estate weblogger Dan Green (TheMortgageReports.com) amends that obvious truth by pointing out that all real estate news is granular -- national trends say nothing about local markets, and lower overall prices in the Phoenix area are consistently belied by steady appreciation in high-demand neighborhoods. And not all bad news is bad: 2007 is the worst year in real estate since 2002 -- but 2002 was a very good year.
Here's the real truth: All real estate is particular. You'll lose money if you buy? Nonsense. The right rental home will pay for itself no matter happens to home values.
Don't buy a home? Which home? A few weeks ago I was in a trashed house that was listed at $200,000 below market. We estimated that it need $50,000 to bring it back to turn-key condition, with a four-month span of time between purchase and resale. Even allowing for errors in our estimates, the house would net out to between 200% and 300% cash-on-cash return in one third of a year. Do that three times and $50,000 capital becomes as much as half-a-million dollars in a year's time.
All real estate is particular: Which buyer? Which seller? Which house? Which ownership strategy? Which anticipated return? If you're looking for a residence you intend to occupy for less than three years -- rent. You'll almost certainly lose money buying now. But there is a ton of money to be made in particular real estate transactions right now -- provided you have sense enough to turn off the television.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
Spread the word: Click here for a printer-ready version of this column.
Or: Steal this book: I've written over 200 of these real estate columns. They are consistently one of the most popular features on our blogs. Many of them are dated and/or entirely Phoenixocentric. But many others are timeless and generic. If you want to use any of my columns on your weblog or web site, feel free. Three rules: Don't change my text, credit me as the author and give me a link back to http://www.bloodhoundrealty.com/ with appropriate anchor text. Something like this, perhaps:
Am I link-baiting? You bet. The quid pro quo is free content for your site that pulls eyeballs and excites interest.<a href="http://www.bloodhoundrealty.com/" target="_blank"> Phoenix Realtor Greg Swann</a> suggested I share this with you:
