Dwelling on Dwelling Prices

Quote of the day:
“Dude, there’s those dried peas in there. That counts.”
--John Loeh, a college student subsisting mainly on Cup-O-Noodles, reacting to a suggestion that he might need some vegetables.

Current candidate for most overused and annoying phrase of emphasis: “first and foremost.”

Average number of minutes into the TV shows "Flip That House" and "Property Ladder" that the word “granite” is first used: 2.5.

Average number of times that the word “granite” appears in one of these programs: 7.

Quote of the day No. 2:
“[Realtor Patti] Jelley blamed a slowing market on news media concentration on local real estate’s downward trend.”
--Roger Showley in today’s "San Diego Union-Tribune." His story reported a 4.4 percent year-to-year decline in San Diego home prices in September.

Patti, that’s called shooting the messenger.

We homeowners all take delight in watching real estate prices rise. And we share disappointment when they fall. In both this delight and disappointment, we are a tad irrational.

The reason we are irrational is that most of us plan to continue to be homeowners, so the rise or decline in prices will have little real effect on us. We will stay in our current home, or we will move to a different home here or in a different city.

The people at risk in this situation are over-leveraged investors. If you bought an investment house or a condo a year or two ago, anticipating a quick profit, your profit may have evaporated. If you borrowed more than your house or condo is now worth, you likely will not make any money if you sell it now. If you are not financially prepared to hold on to the property for a few years or more, you have a problem.

Here’s a rational note. Do you know what the average annual appreciation of real estate is, nationwide, since records have been kept? 6 percent. The reason so many people have done well is that they buy in, live in and stay in.