So last weekend I was out on the west coast doing whatever it is I do on the weekends, and I noticed something interesting.
There’s this little bungalow around the corner from where we live out there. Two bedrooms, but just. One bathroom. It rests on about a quarter of an acre. Most of the front yard is scrub and driveway. Up until last week it’s been selling for $1.35 million. That’s right. You read it correctly. One point three five. Every time I passed it during the last few months I got acid reflux. How dare they?, I asked myself. And the answer came back immediately via that little, cynical inner voice that is my constant companion. “Because they think they can get it,” he said.
He’s a pain in the butt, that guy, but I generally listen to him. He’s often right.
In the last few weeks or so, I’ve noticed that the sign, which was all eager and bright and bushy tailed up until then (if a sign can be bushy-tailed), had lost one of its hooks and was now hanging askew. Also, the brochures that had trumpeted why $1.35 million was a great deal for a 500 square-foot abode were depleted, the little bin that held them gathering cobwebs.
Last weekend the sign was gone altogether. So was another one around the corner, which had been offering a slightly bigger cottage for $1.85 million.
I guess my bitter little inner man was wrong this time. Or working on old information.
I’m keeping my eye on that tiny house around the corner. The headlines are once again a repulsive stew of doom and gloom, recession battling with inflation, thunderclouds obscuring the sun, that kind of stuff.
But one thing’s for sure. For those with a little bit of actual cash in the bank, this might be getting within shouting distance of the time to start looking at that house we could never afford.
When that little shack gets to half its original value, I figure it might just be worth a look. It’s in a nice, pleasant spot. And you know what they say about location.
If “half its original value” means the after-tax house payment (net of interest and property tax deductions) equals the cost to rent, then yes, it might be time to consider buying it.
Then again, the bigger the boom, the bigger the bust… you might consider how the market usually overshoots going up AND going down. You’d be wise to wait until almost no one thinks the bottom has been reached. Historically that’s when the smart money buys. And not a moment before.