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Right after I blogged about whether my family should sell our Aspen condo (Jan. 17th entry), I sat next to a fellow on an airplane and we ended up talking about—you guessed it—real estate. It turns out he had just sold his beachfront home in La Jolla, Ca. six months ago—at what he thought was the top of the market. His return: A whopping 110% a year for three years.
Let’s put it this way, at 44-years-old, he doesn’t have to worry about college for either of his two teenage children or his retirement. Now, he and his family are renting a beautiful home in the La Jolla hills overlooking the ocean. The kids didn’t even have to change schools.
My new friend figured the real estate market in the San Diego area is a 12-year-cycle—up six and down six. He’ll rent for the foreseeable future until the market drops enough to warrant buying another home.
He used the same logic to encourage me to sell our Aspen condo. His rationale, similar to one of the readers who commented on my blog, is that Aspen (like La Jolla and every other building-limited locale) market will slide, we could invest the sale proceeds, and then buy another condo in Aspen after the market softens.
I appreciated his free real estate advice and told him so. But I realized that for some people, real estate is more than an investment, it can be an emotional experience. For this fellow, who grew up moving every few years while his parents made money selling their family homes, it wasn’t hard for him to sell his much-loved home on the beach to bank the outsized returns on his investment. For me and my sisters, real estate property is for keeps. Sometimes, I wish it weren’t, because I sure would like to be set for retirement, too.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.