Buying a House or Buying an AlbatrossJune 4th, 2009 at 12:26 pm by Anne Schieber under News
A home is the biggest investment you’ll make. Unfortunately, it is the most emotional one which is never a good ingredient for making a wise money decision. In any case, it may not matter in Michigan.
Have any of you applied the 6% rule mentioned in my story last night? (your house is suppose to gain 6% in value every year, 2 to 3 percent from plain old inflation, 2% due to normal population growth, and 1 % from other factors like changes in local personal income levels). It can be pretty shocking.
My house should be selling double the price I paid for it 14 years ago. I’m lucky I could get 27% more than I paid, and I’ve owned the home 14 years.
It’s an big problem if you have to leave the state. I looked at this issue once before in 2007 and heard from a former Pfizer executive who moved to California to take a high paying executive job. Because this person was unable to sell their Kalamazoo home at a break even level (or sell it at all!), this person was renting, paying twice as much as the mortgage payment in Michigan. This person could make it work because they were getting paid a lot. Not everyone is in this category, and I’m afraid as more jobs continue to get lost, people will start seeing their Michigan homes as an albatross.