For those who aren’t regular readers, here’s a brief back story. I bought a condo in the Boston suburbs in 2005. A few months later, I proposed to my (now) wife and we moved in together. In 2006, she got an unbelievable job offer in San Francisco, so we moved out west. It didn’t make since to sell the place because of the drop of real estate at the time. So I rented it out and continue to do so today.
Every 3 or 6 months, I decide to do a quick review of my net worth. Yesterday was my first look in 6 months. Though personal finance gurus are divded on the subject, I consider the equity in my home as part of my net worth. And my net worth took a big hit. Over the last five years, I’ve become accustomed to the drop. After all, I’ve seen it go from the $287K price I paid to $240 in that time. This time the Zillow estimate was… $193K… Ouch!
I’m sure there are a few of you reading this thinking, “Zillow isn’t an appraisal.” You are right. However, considering my condo is one of many, Zillow’s data on past sales has historically made it very accurate for me. So while there is likely some wiggle room the estimate is probably close.
Rather than dwell on the negative, I’m going to focus on what I learned from the experience. In 2004, I listened to the media. I listened to a lot of people who said, “If you don’t buy now, you’ll never be able to buy. Prices will just keep going up and up forever.” So the lesson I take from this is: Don’t necessarily listen to the crowd. Sometimes they are right and sometimes they are wrong. Gather all the data and think for yourself And now I’m a smarter for having learned that lesson… right?
… well I’m not so sure. The market in San Francisco looks more and more like a “you’ll never be able to buy” situation. Even with prices coming down over the last couple of years, the median home price in my area is around a million dollars. If you listened to the right people in 2000 or 2001 you could have bought in at a more reasonable price and cashed out with a good chunk of money (as long as they are willing to move to a lower cost of living).
What’s your take? Let me know what you think in the comments.