Don't even think about buying a home if you can't live in it for 5 years

Have you ever done the math to see when and how buying a home pays off? It’s not in the first couple of years – that’s for sure. By many accounts, you maximize profit after about 10 years in a home, at which time you have built up some equity, the cost of buying and selling your home (Realtor commissions, mortgage fees, moving costs) has been spread over a longer time period. After 10 years your monthly costs slowly start to rise because all that equity you have in your house could now be put to a higher use in stocks and bonds. You can always “pull” some of the equity out at that time and invest it in your preferred investment vehicle.

Want to see how your own situation pans out? Check it out for yourself at housemath.us (check the monthly cost vs. Sell Time chart after you’ve put in your basic information).

But it’s always nice to hear the same advice from a professional minus the charts and graphs:

Some how people have gotten the idea that buying and selling real estate, frequently is a good idea, or even a way to get rich. It didn’t used to be that way. People looked at homes as a place to live.

I get phone calls from people who bought homes two years ago and are kind of thinking they might like to move. I hate to get all parental with them, but I do. Sometimes I even say no, you can’t move you have to stay where you are.

…

Don’t even think about buying a home if you can’t live in it for at least five years. I know you can move any time you want to and when you do I make some money. The truth is that it costs money to buy a home, and it costs money to sell a home and it may not be the best use of financial resources to move around for the heck of it. Again it is your money and your choice. I would choose differently.

Real estate agents aren’t a particularly well respected group of people, but a select group has the integrity and intelligence to really help their clients. We had a client ask us to recommend an agent to help him buy a Belltown condo last week and the agent we recommended showed him comps that indicated it was overpriced.

Was this good for the agent’s bottom line (or ours)?

Not in the short run, but by building trust – by letting people know that we are working on their behalf to provide knowledgeable, high quality agents and not mediocre salespeople – we can create better business in the long run.