Q: Help me out here. I bought a condo in 2006. It’s way too small for me, and I didn’t really love it, but it had some things going for it. It’s in what was supposed to be an up-and-coming area, but it’s pretty industrial and commercial still and a number of the big businesses in the area have gone out of business, so there are lots of boarded-up buildings around. We just got word that one of them is being converted into almost 200 units of low-income housing — I’m not looking forward to that.

Anyhow, I saved for years in order to buy, and bought a very low-priced, one-bedroom unit so I didn’t live outside of my means. I thought I was making a very reasonable investment, even if my home didn’t appreciate at all. Now, all the people in my complex who overpaid, put nothing down and lied about their income are in foreclosure, and the value of my home has dropped by about 20 percent — plus the homeowners association (HOA) is going broke, so it is looking to the few responsible owners to cover all the bills. I don’t even like my place that much — it’s just all I thought I could afford.

I would really prefer to live somewhere where there is more shopping and more restaurants and homes but am upside down, so I can’t afford to move on unless I buy something else first and then walk away. Everyone else I know seems to be doing that. I thought I was being very smart when I bought my home, but apparently not. What did I do wrong?

A: Well, my dear, first off, I think you needed to get all that out. Venting is cathartic, and you have earned the right. You and I both know that you really didn’t do anything wrong. The fact that your neighbors’ poor decisions and financial habits are pulling down the value of your home is completely unfortunate and unfair, but there’s not really much you could have done to prevent it from happening — if I had the preventive for that, I would be the queen of the universe.

However, I do think your house-hunting strategy was, like that of most house hunters in the last decade (yours truly included), misguided. We all fell into the trap of overemphasizing the nature of our homes as investments or financial assets, rather than prioritizing their primary nature as a place to live our lives and house our families.

Yes — owning real estate, let me rephrase that — wisely owning real estate is a primary building block for long-term prosperity and wealth. However, if we’ve learned nothing over the last couple of years, we’ve learned that poorly planned or overly aggressive property ownership can turn your one-time dream home into a longtime nightmare, with credit and financial repercussions long after the home is gone. When it comes to investment properties, it is rightly all about the numbers — planning, cash-flow analyses, estimating rentability and, perhaps, being assertive to get ground-floor pricing in an area targeted for redevelopment. …CONTINUED

When it comes to your home, however, there are emotional and lifestyle impacts of ownership that should be given equal decision-making weight with the financial effects. Studies have shown that children who live in homes their parents own have stronger community ties and might even do better in school. Many of my single women clients develop strongly positive feelings of personal empowerment and financial independence by successfully surmounting the challenges of ownership, as well as feeling fulfillment at having been able to select the look and feel of their day-to-day lives through their choice of home and neighborhood.

All those financial analyses and plans you did fell far short of getting you what you wanted — a real home that gave you the surroundings and lifestyle you crave. The housing crisis did have the added advantage of causing us all to be much more deliberate and rational in our mortgage decision-making.

And if I had my druthers, we’d also start to take a more holistic approach to our real estate decisions and consider all of the lifestyle repercussions any given property might have — pro and con, financial and otherwise — before we select our next homes.

So, what’d you do wrong? Nothing, per se. I would encourage you to think long and hard before just walking away from your home, as it seems like an action that would be out of line with your normal modus operandi — a way of life that, notwithstanding the case in point, has likely served you quite well, overall.

Whatever you do with your current home, before you buy your next one, remember that your home is not just an asset — it’s also the place you have to, or get to, come home to every day. It doesn’t have to be over the top, but neither should it be something you buy only because it seems like a good business move, even though it’s not functional for you. The right place is a structure that makes you feel good, in a neighborhood that fosters connection (if that’s what you want) or activity (if you’re that type of gal) or privacy (if that floats your boat) — and at the same time doesn’t burden or even improves your financial picture. I wish you much better luck next time.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.


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