Stop thinking of 'investment strategy' and instead think of 'a home'

In our parents' day, and really even in the days when my wife and I bought our first single-family home, it was considered an "investment for the future." That was our classic axiom - your home is your "largest investment." Buy a house and "invest" in your future. Back then, stories about homes as an investment abounded. My parents bought their home for $60K, lived there for 20 years, sold it for $500K, and used that money as a major part of their "overall retire- ment plan." In the 21st century, such stories are not going to be found, at least here in the Northeast. The cost of retirement is huge, and for most people you'll either need to have a pension from work, or need to have accumulated 2 to 3 million dollars in your retirement account in order to live off of those monies once you retire. The home you purchase today for $425,000 may go up or down in value over the course of the next 20 years, but its effect on your ultimate retirement will be pretty minimal. In other words, the home is not going to go up from $425K to $900K, nor will it drop from $425K to $200K. Neither will make a real dent in the overall schema of funds that you'll need in order to comfortably retire and be able to pay your bills. If that's the case, then the question is whether or not it's accurate to refer to a home as an "investment." Perhaps instead we should refer to it as a commodity, much like the other things we buy and sell each and every day.

Who among us has ever viewed buying a car as an "investment"? Not me, that's for sure. We buy a car because we need something to get us around. Doing so requires us to pick the car that best meets our needs, at a reasonable price, and will keep our families comfortable and secure for a long time. Then, when for one reason or another it no longer meets our needs - or when we're bored and want a change, we sell it and get a diff erent one. People wrack their brains looking at homes and think- ing of them as an investment vehicle, when in reality they may be far better off just finding something they like that meets their needs. Buy it, move in and enjoy it. If it goes up $50K over the next two years, great for you. If it doesn't - well so what? Either way … are you going to retire based on that particular investment? No way.

Deciding when to buy should no longer be about market timing, but about your family's personal needs and requirements. If you do choose to step in now, you may very well make a profit … but remember - that's not what it's all about. The famous quote is that it's "always darkest before the dawn," and that's never been more true than it is in the current real estate market. Fortunes are rarely made by people who buy anything, homes, stocks, corporations, when things are rosy. Far more commonly, riches are to be gleaned by those who step in at a time when all logic dictates that they should run away. These people are called "contrarians," those who go against the grain and do exactly the opposite of what everyone else is doing. Four years ago, when everyone was talking about the hot stock market, I put everything into CDs. Now, on the heels of the disappearance of Lehman Brothers and Merrill Lynch, with the stock market plunging, and oil prices rising, I'm now starting to dip into the market again. In the end, all of these cycles repeat themselves again and again, and those who profit are the ones able to somehow summon the courage to step in at the bottom, when fear abounds all around you.

As I look at the homes that are out there on the market right now, and those that have recently sold, the prices are just mind-boggling. We're seeing homes right now, in many cases, priced at 2002-2003 prices or less. Clearly that's far beyond just lopping off the 10 to 15 percent increase we saw at the peak of the market. Finally, we're starting to see buyers step up to the plate, and twice this week we had multiple off ers on a property again. Yes, it was well priced to begin with - but still it was great to see that kind of "action" out there again.

All in all, the issues going on out there in the economy make this a phenomenal time to buy! There are some amazing deals out there to be had, and once we get through the muck of the market, you may see a nasty spike in prices and/or rates that will leave you wishing for these dog days of summer.

Looking for more tips for success? I've put together a suite of online videos that you might want to check out. There are five or six diff erent videos that you can watch right online which cover a huge array of diff erent topics. You can access them right off the home page on my website at www.stevelevine.com by clicking on the Video link.

Remember, as we get into the primary season and head towards the main election in November, to get out and exercise our right to VOTE. If you don't like what you see going on in the world, then do something about it. If you don't vote, though, then you no longer have the right to complain.

Steve Levine is president of Steve Levine Inc., and an agent at REMAX First Choice. He's been ranked as the Top REMAX Agent in New England for nine years, and can be reached online at steve@stevelevine.com or by phone at 508 735-4663.