Taking a risk is part of life. Making decisions that have a long-term effect like marriage, having children and getting a new job are difficult and always risky. Up until this past COVID year and a half, buying a home involved the typical risks associated with the biggest purchase of most of our lives. We were told to proceed slowly, have professional inspections and choose a lender carefully. However, most if not all of what was typical has changed since March 2020.
Home buyers are being forced to seize the moment as soon as a home comes on the market that they are even remotely interested in purchasing. According to the National Association of Realtors, home sales between July 2020 and June 2021 sat on the market for a median period of one week before going under contract. Assuming it takes at least a couple of days to get into contract, the time frame is reduced to about 5 days or less.
The market is moving so fast that buyers are waiving their rights to terminate a contract because of unfavorable inspection and even a low appraisal. This is the exact kind of risk we were warned to never take when buying a home. Long gone are the days of reflection after touring a home and figuring out the placement of your furniture, measuring for window treatments and calculating future renovations, which, of course, you can’t afford anymore since you’re paying top dollar.
The one good thing is that buyers can now virtually tour homes online, which can, of course, help them feel their risk is somewhat mitigated. In addition, house shopping during the holidays frequently is a buying asset since the competition from other buyers is somewhat reduced. The flip side of this is that after the holidays the pent-up demand will rear its ugly head, making the competition even worse. You have to pick your poison and your level of risk.
Nevertheless, there are very practical and financial reasons to own a home. Owning a home goes back to our founding fathers, who linked property ownership to security and happiness, which endures today as the cornerstone of the American Dream. A home provides emotional and financial stability and historically, with a few exceptions, is the most dependable way for middle class Americans to achieve wealth through their home’s equity. And the family memories created in a special home will last a lifetime, especially this time of year.
Navigating your tolerance for risk, especially during these turbulent times, will be one of the most challenging decisions you will make in your life. Risk can be a good thing, but crossing over to irrational is a bad thing – figuring out the difference is the goal.
I’ll leave you with this poem celebrating a new home I first remember hearing in the iconic holiday movie, “It’s A Wonderful Life.” I included it in my Christmas column two years ago and boy oh boy, do we need to read it again this year. Good wishes for a happy and healthy holiday season.
BREAD: May those in your home never go hungry.
WINE: May you always have joy and never go thirsty.
SALT: May there always be flavor and spices in your life.
HONEY: May you always enjoy the sweetness of life.
OLIVE OIL: May you be blessed with health and well-being.
