Did I miss the memo?

Real estate – two words lots of emotion. Some folks swear by it, some folks fear it and the rest of us just live in it. My interest in real estate is not exactly new, my father was big into real estate in terms of long term investment with certain tax shelters. That all makes to me, because in the scheme of things, the planet only has so much land, we can’t exactly make more, so it seems like a good idea. Buy land, build something on it, and rent it out to others who don’t want to own anything.

Recently, in these trying times of war and stock market fluctuations and the hangover from the dot.com era we all are aware of why things go and up down. Its usally something as simple as supply and demand. Throw in interest rates and things get a little confusing for me. Here’s my beef.

I feel like I earn a decent living, and based on census data I’m in the upper single digit percentile of salary earning in the United States. I consider myself middle class, and pretty fortunate for what I have. I live in house modest house that cost less my yearly income which in most parts of the country is considered pretty affordable.

Recently, I’ve reentered the house market because I’m moving, transferring to another city. So I’ve been looking at homes in various communities to see what is out there. Well, luckily there is a lot of choices for home buyers. Rates are low, land is available in the right areas and people love to own homes. What is baffling my mind is the cost of these homes are 3-4 times what my house costs, and the folks buying them are making less than I make now. I am aware of the equations the banks use to approve mortgages and such but still. Not only are these houses 3 to 4 times the cost, they selling like hot cakes. Did I miss the free house memo?

Our agent in the city we’re moving to sent us a bunch of homes via internet which we liked very much. We narrowed it down to about 20 homes that we wanted more details on. By the time the agent went to check on the 20 homes, only 10 were left. That was shocking to me, but I guess it’s the norm. By the time I flew down there to check them out, out of the 10, only 6 were left. It’s like suddenly people are flocking to buy these homes that range between $350,000 and $450,000 – something I consider a pretty penny. So I’m fumbling through this, just getting that part through my head that it’s normal for people to snap up these homes like their giving them away.

I’ll keep you abreast of our house hunting experience because I know you’re all itching to find out how we do. I’ll just say its been an eye opening experience for me. The general North American public has tremendous buying power which really drives both Canada and USA in terms of the economy and home ownership is one of the pillars. I guess you can’t have one without the other. Can’t have a tenant without a landlord.

Rock on.