Editor’s Note: Inman News is pleased to introduce "House Keys," a new weekly column about homeownership by veteran real estate writer Marcie Geffner. "House Keys" offers a fresh look at today’s changing images and perceptions of homeownership through current news events and personal stories. For information about publishing this column on your Web site or in print, contact Elaine Baker: (510) 658-9252 ext. 128.
"When did you buy your house?"
That was the question my friend Marilyn Stotts asked me during a recent gathering at a local restaurant. Not, "Where is your house?" "Do you like your house?" "How big is your house?" Or even the open-ended conversation starter, "Why did you buy your house?" But instead, "When did you buy your house?"
People have always asked where you live or where your house is because they want to pinpoint where you are in the world. Here, in Los Angeles, the possible answers might include an upscale enclave, beach community, desert or valley between the hills. But whether your answer is the Westside or the South Bay, the San Fernando Valley or the Inland Empire, it’s all about location. And location is all about your socioeconomic class, how far you commute to work and your access to top schools. In short, you are where you live.
During the housing boom, people asked another question, which was how much did you pay for your house? This query wasn’t so much about the cost of the house per se, though of course, that was part of it. Rather, the question was about the extraordinary rise in home prices. It was a way of saying, "Wow, aren’t houses expensive these days?" And while how much might once have seemed an invasion of privacy, it became instead a way of asking an even more intrusive and incredulous question: How could you afford to buy this house?
"How much" was about your income, your debts, your credit score, and the machinations or deceptions to which you’d stooped to afford such a home. And while your answer might have avoided any disclosure of your personal finances, the whole subject inevitably led to the observation that anyone who hadn’t bought a house was too blind or stupid to know a sure-bet when he saw one. …CONTINUED
But now comes this intriguing new question: When did you buy your house? That’s not about location or affordability. Instead, it’s about timing.
Just as "where" divides a city by communities and "how much" splits a city into smug homeowners and risk-adverse renters, "when" separates those homeowners who are probably safe from those who more than likely aren’t. What the question really means is: Did you buy your home when prices were affordable and a mortgage meant 30 years at a fixed interest rate? Or did you buy your house when prices peaked and mortgages were creative, toxic and exotic? Do you have equity or are you underwater? Have you made a paper profit or lost your shirt? Are you a stable homeowner or are you just cycling through homeownership on your way back to renter status? Were you smart and lucky, or stupid and cursed by the house gods?
The data support this fixation on timing. A report by First American CoreLogic found that as of December 2008 nearly 20 percent of people who had a mortgage owed more than their home was worth. That figure equates to rough 8.3 million homeowners. Nevada may be a desert, but more than half the homeowners in that state who had a mortgage were underwater. The other usual suspects — Michigan, Arizona, Florida and California — also ranked high on the list. And the fact is that many of the people who were underwater found themselves so because they bought their homes near the height of the housing boom only to watch home values deflate at a rapid pace.
I don’t know Stotts very well, so it’s quite possible that she didn’t have this great divide between those who bought soon enough and those who bought too late in her mind when she asked me when I had bought my home (2003, if you must know), but her seemingly simple question still suggested a profound shift in societal thinking about homeownership.
So, when did you buy your house?
Marcie Geffner is a freelance real estate reporter and former managing editor of Inman News.
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