Houses are just things. A home is where your life happens.
It's interesting how certain terms become popular almost overnight. With the internet, this is probably even more so. I noted before how today's young people don't drive the SUV that their parents had or the station wagon their grandparents had. but instead have "adventure-mobiles" which are basically just their hand-me-down parents' SUV, with a roof rack attached.
What is interesting to me is not the pretentiousness of this. but the fact of the term pops up all at once all over the internet. A decade ago, "Adventuremobile" would not have produced a Google hit. Today, there are websites and blogsites and discussion groups and whatnot devoted to this "trend" of going camping in your SUV. I'm not sure if this appeared on some reality show or someone's orchestrating this or what. but it became a "thing" there for a while. Myself I'd be embarrassed to call my car an "adventure-mobile" - but that's just me.
Again, the newest generation has to claim to have invented everything. While Grandma and Grandpa might retire to a "Park Model" home in Florida, their grandchildren are building "tiny houses" and that's an entirely different thing and donchuforgetit! It is like each successive generation believing they invented sex. It's just a thing people do - they want to be original - like everyone else.
These slang terms illustrate a certain mindset and a way of thinking. If you can control the terms of a debate, you control the debate, which is why political correctness is so powerful - and so reviled at the same time, even by those practicing it. Language is the business of symbology - you create words and terms and they have an accepted meaning. When you create a word - or destroy one - you change the way people think, quite literally. No pun intended.
Another term that has come to the forefront recently is "forever home." I've seen this on a number of sites or news articles or discussion groups, where people (usually young people) talk about buying their "forever home" as if they were going to live in it perpetually. I'm not sure where this is coming from - again probably one of those stupid reality shows on television, which I never get to see, which is probably a good thing.
Again, control the language of the debate, you control the debate. And who would benefit from the concept of "forever home"? Well, the national association of Realtors(R) is one, of course. Home builders are another. Heck, even the term "home" is freighted with emotional weight. They are houses, of course - buildings, shacks, shelter, whatever. But the term "house" sounds cold and impersonal, while "home" has all the baggage of Mom and Apple Pie - I'll bet she has one in the oven, right now! Let's go!
But "forever home"? Are homes really forever? The sad reality is, people move an awful lot during their lifetime. The average length of stay for typical homeowner is about 11 years for their first home and maybe 13 to 14 years if it's their second or subsequent home. (In places like Washington, DC, this can be as little as 5 years, which coincides with the election cycle). This means you may own number of homes in your lifetime, and the odds of you staying one of them perpetually or until you're dead at least, is very slim.
As I mentioned before, we've owned nine properties in our lifetime so far. Granted, one of these was an office building (now a residence, oddly enough), and three of them were investment properties. But five of them were properties that we lived in as owner-occupiers. The longest we spent in a home was about 17 years in Virginia, the shortest, about three years in our condominium in Florida. We owned our home in New York for about eight years and presently have been in our house in Georgia for about 13. So the statistics quoted above are about right.
And none of these will ever be a forever home. The only forever home you might ever occupy is a casket.
What I find interesting about this terminology is that it illustrates a certain mindset among young people, that once they buy their dream home they will live in it for the rest of their lives. You don't hear old people talking about "forever homes" as they already know the score on how short forever is. It's the sort of immature thinking that I used to engage in as a young man. I thought that once I bought a nice car, I would be set for life, as I could keep that car forever and never have to buy another one or make car payments or anything! Well, that was about 30 cars ago*. Granted, many of those were junkers, and some were hobby cars. Other cars I bought that turned out to be mistakes and I quickly sold. But even the cars I kept for a very long period of time eventually wore out. Cars are not forever.
And neither are houses, although if they're well-built they should last a lot longer than a car - 50 to 100 years or more. Although, as I've noted before, about ever 15 years, every single damn thing on your house wears out and needs to be replaced. A house is a continuing series of expenses that have to be paid in order to keep it up. If you don't, the place falls down, literally, over time.
We are seeing this right here on our island where an older couple let their house decay to the point where there's a hole in the roof about two-and-a-half feet across. They stapled a tarp across it for the time being and for the life of me I can't understand why they aren't fixing the roof. It's such a valuable investment - it seems a shame to let it go to waste.
The real danger of this "forever house" thinking is that it imparts a lot of emotional freight into what is in fact just a material thing. The material is mortal error. A house can be a trap if you let it be one. People like to think about the old family homestead where they raise their children and add measurements of the door jamb illustrating the growth of each one of the children as they grew up. A nice fantasy, to be sure, but fantasies can sometimes obscure reality.
You read all the time in the paper about people whose homes are atop a toxic waste dump or located in placed like Flint, Michigan (I am being redundant, here). "I can't move to where there are jobs, opportunities, and a decent Wal-Mart!" they cry, "this is my home!"
Home is where you hang your hat, and that can be anywhere. A house is just a structure that you can make into a home, but the wall studs and sheetrock are not your "home" but just the structure you live in. This emotional baggage clouds reality and clouds the debate. During the real estate meltdown ten years ago (when I started this blog - it has been that long?) people whined about "losing their home" when in fact, the mini-mansion they mortgaged to the hilt was something they bought only a few short years ago, not some inherited manor handed down since the time of Moses. It was just a thing, but many folks cashed in their 401(k) and IRA money to hang on to these "things" - which was utterly idiotic and self-destructive.
There is a danger in this "home" thing, and doubly so with this "forever home" nonsense.
As I expounded on in the myth of the family homestead, very few of us live on Walton Mountain, on land handed down for our great-grand-pappy, in the house that we built with our own two hands. We don't have the warm homecoming or people arrive by horse-drawn sleigh to have a Norman Rockwell turkey dinner with all the relatives around the table.
Sure, some of these things can take place at some point in your life, and of course these are wonderful things. I still remember going for a winter sleigh ride in Madison County back when I was 12 (it was more of a sledge, but let's not get technical). Few can say that, today. And I remember family gatherings at our home on the lake - and yes, even pencil marks on the door jam annotating our growth (quickly painted over before the house was sold, of course!) But staying in a house for emotional reasons can be a real trap. Particularly as you get older, my house can be harder and harder to keep up.
And houses can be haunted, too - even when people are living in them! Especially when people are living in them.
So what's the harm in all of this "forever home" nonsense? Well, to begin with, it can blind people to the fundamental economics of this transaction. It is like selling sports cars to divorced men - you sell the sizzle, the emotion, the image - and people pay through the nose for that. The same is true for the young newlyweds - they get it in their head that life would be "perfect" if only they owned this expensive thing - a status symbol in part, to be sure. An emotional anchor, perhaps. Maybe this will save the marriage?
But as an investment, well, not so much. In a normal market, it takes five years just to recoup the transaction costs. And if you move every 11-13 years, you are not "cleaning up" on home ownership. Throw in maintenance, repairs, insurance, property taxes (thousands a month in some places!) and renting starts to look pretty competitive. All practical things to consider - all blown out of the water by "forever home" talk.
So why buy a home? Why did I buy nine? Well, if you do stay somewhere for a few years, it may be cheaper than renting. And over time - a long, long time, you may build equity. Like I said, in a "normal market" (do those exist anymore?) you may recoup your transaction costs in about five years or so. After another five, you may have some positive equity. Don't add up all those receipts from Home Depot, though - you may end up weeping!
And of course, today, we have "abnormal markets" which means not only will houses not necessarily appreciate linearly over time, but they may skyrocket in value - or plummet. We've been fairly lucky, riding the skyrocket a couple of times (and getting off before it blew up) and not getting too badly hurt on other occasions when we sold at a loss (hey, what's $100,000, right? If that sounds like a lot of money to lose, maybe you should re-think home ownership!). Our current house is, after more than a decade, worth maybe 10% more than we paid for it. Don't ask about those Home Depot receipts. I may weep.
But getting back to our subject, does any of this really matter? Yes, and let me explain why. When I was growing up, young people talked about getting a "starter home" or their "first home" with the understanding that a house is just a thing and not a lifetime commitment. Today, it seems just the opposite - young people are talking about "forever homes" at a point in their life where nothing - their jobs, their marriages, their careers, are forever. It is selling a dream, and dreams turn into nightmares when you wake up to harsh reality.
You want to buy a house? Great. Go for it. Provided you are in a stable market and not one of these balloons that is about to burst. Provided you plan on staying "forever" for at least five years or so to recoup the transaction costs. Provided you budget for new appliances ever 15 years or so, new furnace and A/C, hot water heater, roof, driveway, and so on and so forth. You'd be surprised how fast 15 years go by and how things wear out. By the way, that microwave door handle repair is holding up - but the lights under the microwave are getting flaky. Nothing lasts forever. It ain't broke yet, but you can see the end signs - once you've been through this a few times.
But getting caught up in emotional arguments about "forever homes" and whatnot - well that is how the salesmen get to you. And that's all real estate agents are - salesmen, selling a product. If it is a product you need, want, and can afford, then great. But don't let emotions dictate your financial life - it will surely lead to woe.
A "forever home" is just a place to park your "adventure-mobile"!
* 30 cars - subject for my next posting.
* 30 cars - subject for my next posting.