CRAZY

The real estate that seems expensive now, seemed expensive then

I’m no psychologist, but so many cognitive biases seem to crop up when it comes to buying, owning and selling real estate over time, especially our own home.

When a young friend of mine bought an apartment condo in Squamish two and a half years ago for $309,000 some people thought he was crazy. Until someone crazier bought it off him recently for $557,000. And instead of seeking therapy, he turned around and moved up the ladder, to a townhouse in Squamish for $800 a square foot. Time will tell how crazy my young friend is.

Sure, it’s been a crazy three years for real estate in Squamish. In the Sea-to-Sky Corridor. In Greater Vancouver. In the Lower Mainland. In BC.

But you can zoom out the price graph, too…five, ten, fifteen years and more. Yes, there were dips, and the economic pain which some of us felt firsthand during each one. And there will be more dips to come. Who knows - we may well be starting to dip now, and big-time. But by and large, the line on that graph has been inching up for a long, long time.

Fifteen years ago, you could buy a house in West Vancouver for $557,000. Not just an apartment in Squamish, but perhaps an entire apartment building? And fifteen years seems more recent to some than others. Why the mind games?

Because unless you’re speculating or until it’s time to move, a home is just where life goes by.

Our home is not a ticker symbol, which we bookmark in our browser and check every weekday afternoon. There’s no monthly account statement in the mail, no quarterly call from an advisor, that constantly reminds us precisely what our home is worth.

Instead there’s maybe a mortgage payment, a rent cheque from the tenant downstairs, an annual Assessment, and taxes after Canada Day. There's a lawn sign down the block, there’s gossiping with the neighbours. Door-knocks and newsletters from our local Realtors. And there's the news: changes in prices, changes in sales, and the larger forces of the time that are acting on them both. Periodic, not constant, reminders of the financial aspect of homeownership.

And in between, there’s life. Laundry, a leaky faucet, and friends coming for drinks on Friday. It’s an asset we live in. Sleep and exercise in. Celebrate and worry in. Pencil higher and higher lines on the wall, that mark the tops of our kids’ heads.

Time just passes – sometimes a lot of it – until it’s time to sell and buy again. Then, the value of our home transforms from anecdotal, to real. That’s when some of us tend to “remember when,” and shake our heads. The real estate we thought was so expensive at the time, seems like a bargain now. And the real estate within in our budget today, seems like a rip-off.

If it’s any consolation, many tend to conveniently forget that real estate seems expensive at the time, no matter when the time. Just ask your parents, your older relatives and friends.

“Your father and I knew this place would make us millionaires. We would’ve bought five houses at the time but we couldn’t scrape together the money”...said how many parents, ever?

Instead, we hear: “back then, we could’ve bought a cabin in Whistler for less than a Volkswagen, but your FATHER said Noooo.”

I once asked the question: If you could go back in time, bump into your 20-year-old self and say ONE THING...what would it be? And a Realtor I’ve known since we were kids replied, “show fewer houses…buy more.” Perfectly put. 20/20 in fact.

So many of us suffer from it. I still catch myself doing the math on properties I thought I sold well at the time, when I could have done much better by…doing nothing. Just letting life go by. But it’s never that simple. Sure, time passes and graphs go up; but we know it's actually life itself that brings those forks in the road.

So…this is not a war-cry to buy and hold real estate, even though history has certainly been on the side of that decision. It’s more of a reminder – to myself if nobody else – not to take for granted the effect that TIME has had on the value of your SPACE. If you take it too much for granted, you’ll go crazy.