…it’s about getting a return of your money.
Did you get swept up in the housing market and assume you’d be making alot of money off your house someday?
If so, don’t feel bad; alot of people did.
It’s incredibly common human behavior.
That’s how the whole Behavioral Finance field got established; studying how we make the economic choices we make and, more significantly, why.
Whatever home you found yourself owning after the Housing Market Musical Chairs stopped ~ 4 years ago, you hopefully didn’t buy beyond what you could afford.
If you bought more than you could afford, this post will bring you little comfort.
But if you bought within your means, yet are discouraged by the initial assumptions you had regarding the home purchase, it’s just a function of resetting your expectations.
Did you buy the home as an investment or as a place to live?
I suspect most people, if they are honest with themselves, bought it as both.
Yet having to now adjust to a diminished hope regarding how much money we might make off our home purchase can be a difficult task.
What you need to remember, though, and now realign to is this truth: Your house isn’t about getting a return on your money.
It’s about getting a return of your money.
And therein lies the distinction.
If you expect to make a fabulous profit off your house whenever you sell it, I encourage you to talk to a realtor to gauge how realistic your expectation is.
However, if you expect to someday get a return of your money, you are in better shape.
Why? Because while it’s unrealistic now to assume you can sell at a profit, it’s not unrealistic to assume you will sell recovering your costs, even if just a portion of those costs.
Granted, if you bought at the peak of your market, or bought in a market with little hope for economic recovery, you will have a tougher go at it.
But, if you bought a house where there is scarcity, you may do just fine, assuming you aren’t planning to sell in the near future.
If you are in a market where there is economic viability, new industry, and quality employers; even better.
Deciding when to hold onto a house and when to sell is a complex decision that should be made dispassionately with respect to sale price.
Acknowledging your expectations will keep you from making rash financial decisions that don’t lend themselves to your financial future.
So, while your house likely won’t net a return on your money, you likely will still get a return of your money, assuming you didn’t enter at the peak, plan on keeping your house through the recovery, and are in a market with built-in scarcity.
(Disclosure: I am a Fee-Only Financial Planner. My website is here.)