Dream House or Nightmare?

It's reports like this with a short term mentality that causes this country to panic. What will the views of Roger and his wife be 5 years from now? The housing market always goes up and down. If you don't like what you're seeing today, just wait a couple of years and re-evaluate your view. If you only invest for the short term, you're going to get a heart attack eventually.

I have to side with the majority of the commentors here... What exaclty is your point? You married into money, you have a huge house worth a ton of money (still), and have all sorts of upgrades in place, you are not concerned about making your mortgage payments. You sound like a spoiled little kid and need to get over yourself. No one is weeping for you buddy.

Professor Robert Shiller of Yale forcefully argues that the long term real rate of return on houses dating back to 1890 is near ZERO after factoring in inflation, interest, repairs, taxes, etc. The past few years have been a bubble and like all financial bubbles (think dot.com stocks in 2000), it is ending badly. Shiller argues that returns will eventually regress to the mean and that the process will be long and painful. He thinks the decline we are now experiencing could go on for many years since real estate does not move as quickly as stocks do. One must also consider the fact that aging baby boomers will not want to maintain and pay taxes on all of those McMansions that have been built across the country and will be trying to unload them over the next few years as they enter retirement. I'm curious: Did people like Roger and others that bought into the boom really think these kinds of returns were going to last forever? How could that ever be? Who would be left that could afford them? Unless one is a professional real estate investor and has a knack for buying undervalued property and rehabbing it to make money, a house is a place to live and nothing more. You should have bought a basket of index funds with that inheritance, Roger.

One word sums up what was lacking; pragmaticicism

Roger. Your an idiot. Great way to blow an inheritance. If you want to look at it as an investment....guess what there will be risk involved. I don't feel for your situation at all. Way to put your whole family eggs into one basket. Its called diversification, would a 350K house not suit your family? I hope your broke.

I really don't see the point of this story. You emphatically state that you are not selling it. So how have you lost any money? You still own what you bought and you haven't lost a cent. Granted if you had to sell today your value you would get would be less than what you paid but that doesn't appear to be your situation. Had you borrowed with some crazy mortgage you might worry but you look like you did everything right. cvdvcdsfvsdfgvdgvfvfv


dwddcyclic. Your house could sell for ridiculous numbers

I really don't see the point of this story. You emphatically state that you are not selling it. So how have you lost any money? You still own what you bought and you haven't lost a cent. Granted if you had to sell today your value you would get would be less than what you paid but that doesn't appear to be your situation. Had you borrowed with some crazy mortgage you might worry but you look like you did everything right.


dwddcyclic. Your house could sell for ridiculous numbers

Dream House or Nightmare? I really don't see why this is a Nightmare. Roger and wife have an amazing home that is basically paid for by an inheritance. He is not getting thrown out on the street like many other subprime borrowers in adjustable rate loans. This guy who obviously isn't too investment savy made a bad investment decision. He should of borrowed the money to build the home and diversified the inheritance elsewhere. He would of gotten a large tax deduction based upon the mortgage interest and earned interest of the money he invested. Additionally as a contractor Roger made some poor decision as to what was put into the home that didn't add value.
Bottom line....I don't feel bad for this guy what so ever. What type of story are we going to get next, how a hedge fund manager will only made 40 million this year instead of 400 million b/c of the mortgage meltdown? Who cares?

Enter Your Comment

I'm saving my money to buy Roger's house for $500,000 next year, when he is really down and out, and will live happily in it for 7 years before making a killing on it :)

We are in the same boat. Built our home in '05 for $750K and completed it with an appraisal of $1.2M or so. Now we're talking $800 - $900K. We have no house payment and are not in a rush to sell. So, what are we left with? Wait the 5 years or so for it to reach a better price, if we ever do sell.

The real issue isn't these poor people, it's those that truly have no other investments and count on the value of their home. However, don't we all believe that in time, this market will turn around? If not, live with what you have!

By the way, we do love our "HOME".

I am in a similar boat. Built a custom home for $750K, completed in 2005. At peak, we expexted it worth 1.2 - 1.5 million, now we just have to accept that it's closer to $800k. Poor us. No really, isn't a "home" an investment in more ways than one? We don't have a house payment and don't need to move. So, if we wait the 10 years or so, the value will climb again. I agree that in the scenario painted in this article is not worthy of a story. People have lost real money in this market that cannot afford such hits.
By the way, we do love our "HOME"!

This article shows what a rift in classes we have here the USA. Roger and his upper class wife bought the house as a speculative short term investment. They guessed wrong, and prices are going down in the short term. This is not the American tragedy that the article seems to suggest - most likely Roger will be "stuck" with a 3,500 foot dream house and will have to ride out the long term market instead. Horrors! This article makes it clear that Roger felt entitled to have his house earning double digit income for him, and "Roger isn't alone"? Are we supposed to feel sympathetic with these people? That attitude is a little sickening. If they wanted a guaranteed investment they should have invested in bonds, money market funds, or T-bills. Instead, they gambled on real estate, but unlike most investors, get to reflect on their mistake while lounging in a 2.8 acre mansion. Nighmare indeed!

Did anyone notice in his quote how he referred to the structure as a "house" instead of personalizing it and calling it their "home". This isn't a story about building your personal dream house. This looks to me like he got caught in the Florida real estate investment rush, and instead of getting in on the early action, was too late and is getting caught holding a bad investment. I live in Atlanta and know lots of people who invested in Florida real estate hoping to make a quick buck. Right now they would all be thrilled to "only lose" a $100K. If he had built a "home" then he would have a much longer view towards market appreciation.

We live in Sedona AZ our House appraised for $430k 2yrs ago now it appraised for $470k not all markets are down! Why do the media report only negative news? Is it just to keep the market down? You guys have a big influence on peoples atttude......why not help ghange it?

Why suddenly are we worried about what the upperclass is paying for investment homes. Yes, he and his wife are living there, so why is he worried about the value of his house today?
We have had a similiar problem in South Central Texas. California moved into the new "Silicon Valley", and have driven housing prices through the roof. Prices are stabilizing. End of conversation. He should be happy he has a house he can afford.

Enter Your Comment

The past few years of the housing boom has shifted people???s mentality toward the belief that appreciation is the sole purpose of their home. Due to the current housing market, home owners need to shift to the thought that a home is a place to live and create memories with your family. If you are interested in making money from real estate you???re best to purchase an investment property. I believe this concept is well summarized in the following article by George Hale, http://woodhillhomes.net/blog/woodhill-homes/the-case-for-buying-a-house-now-when-do-you-know-when-weve-hit-the-bottom/