Mood of the Market
It's tax time, so those who don't own homes are seriously thinking about whether they should. And those who do are busy trying to collect up and cash in all of their deductions.
To boot, the real estate market is in year six (!) of what those who can't agree on a precise economic term can all agree to call the doldrums.
Those who haven't lost or walked away from their homes are very focused on how much theirs are worth, how much value they've lost, how much they're paying for them, and whether they can refinance.
Given these financial fixations, one would think that homes were simply a financial instrument, like stock shares or options or something.
But I recently watched a film that poignantly highlighted a number of ways in which the real estate decisions we make are very often driven by values, priorities and motivations that have little or nothing to do with money.
In "The Descendants," George Clooney is the patriarch of a family that owns a massive land trust in Hawaii. The primary plotline focuses on Clooney's character's discovery that his wife was having an affair before the accident that left her comatose (an affair with a real estate agent, no less).
But I also noticed a second, real estate-related storyline. I won't spoil it, as the film is a must-see portrait of an American family. But the upshot is that Clooney and a boardroom full of his aging cousins are facing some decisions about whether and to whom to sell thousands of acres of pristine Hawaiian beachfront that have been in their family for hundreds of years.
The biggest dollar offer is the underdog from the beginning, and, ultimately, money completely fails to trump history and relationship complexities as the decision-driving factor. (Enough said -- go see the film.)
Inspired by "The Descendants," here are four common motivators and drivers of real estate decisions -- and the decision to own a home, in particular -- that fall entirely outside of the financial realm:
1. Family. When you own your home, you have the possibility of eventually owning it free and clear -- and with that, the possibility of passing it on to your children. Homeownership also gives children stability of place, school and community that can be difficult (though not impossible) to give them while renting.
Last year, I wrote a review of a book that mentioned family legacy as one thing homeowners valued, and almost instantly after my review went live, I received a reader note saying that no one cares about legacy or passing homes down to their children anymore -- especially in the wake of the recession.
Then, interestingly enough, I received another half dozen notes from readers about how essential this was to their real estate decisions, and the New York Times published a piece about how the recession was allowing, even prompting, parents to buy homes as gifts for their children. This has all bolstered my belief that, yes, family legacy is still a valid and widely held driver for homeownership and real estate decision-making.
2. and 3. Comfort and control. They say comfort is a core human desire; certainty is also on the list. The ability to control your location, to customize your home's comforts for your own personal preferences and needs, to control your noise levels and your proximity to (or distance from) neighbors -- all these powers to dial up your own comfort levels and have control over your living situation are critical motivators for our real estate decisions.
I see comfort and control as largely overlapping factors that impact many people's decision whether to rent or to own, but they are not identical. Comfort highlights the fact that, in some areas and school districts, it is tough to find high-quality housing or larger homes for rent.
On the other hand, the control elements of homeownership also include the certainty of knowing what your housing costs will be for a very long period of time, and the power to stay put as long as you want, without being forced to move if and when your landlord wants to sell or move into the place.
4. Career. Our real estate decisions and career choices are tightly intertwined. Many people choose their home in large part based on a desire to make it easier and more comfortable to get to and from work, or even to work at home.
On the flip side, committing to homeownership in this market climate may also limit your ability to move around freely for career opportunities. And having a mortgage certainly puts some boundaries around the decisions you make about how much you work, what work you do, and who you work for.
It's tough (though not impossible) to quit your day job as an attorney and start your lifelong dream to be a full-time artist when you have a bulky bottom line to meet.
You don't have to be a land baron or a patriarch to understand that owning a home -- or opting out of homeownership, for that matter -- is not all about the Benjamins.