Lately I’ve been spending a lot of time looking back on my full-time real estate sales career since I began in 2004. What I find most fascinating are how clearly winners and losers can be delineated by what they purchased the property for and either what they sold for or where its current market value sits. Way back when my mentor John Vantress told me, “The real money is made simply by holding property, not so much fixing and flipping.” To be a Flipper is a gamble. To be a homeowner is a sound investment and the winning strategy.
If you hold onto a property long enough, even if the values go down in the short term eventually it’s going to be worth more than you paid. This is especially true in the Marin single family home market, and closer you get to the City the higher the appreciation on your investment. By owning you will be paying your mortgage, instead of somebody else’s mortgage when you rent. Part of your mortgage will be paying principle on the loan, and over time you will be gaining more equity as you pay down your principle and the percentage of your mortgage going to principle increases. You also get tax benefits from writing off interest and property tax. In the long-term owning the house you live in is a win-win proposition.
The problems that we experienced leading up to the Great Recession and Financial Crisis were largely due to banks giving out loans to buyers who could not afford them. Stated income loans with no money down, and hence no equity, were a disaster. A flood of distressed properties hit the market and values plummeted. People who bought properties after values dropped have seen the greatest gains in their property investments.
The homeowners who suffered were the ones who lost their homes, their life savings, and had their credit destroyed. In 2007 I did my first short sale transaction, and in 2014 I did my last one. In between I not only did more short sales than I care to recall, I represented banks in liquidating their assets. It was astounding how much losses I watched banks writing off with each transaction. Yet somehow, we emerged from those dark times and the market has pretty much gone in one direction since it hit the bottom in 2010.
Fast forward to 2020 and during Covid values became super charged by historically low interest rates. Since those heady days things have cooled somewhat as interest rates have approached historical averages. New homebuyers in the past two years may have seen their values decline a bit. If those homebuyers are it for the long term they have nothing to worry about. Owning property in Marin is kind of like owning a quality stock. Sometimes the value goes down. In the long term it doesn’t matter. You are paying down your mortgage which is like an automatic savings program. You are gaining equity and appreciation and using the tax write-offs which are likely to permanently increase with the ‘Big Beautiful Bill’. If you own property, you are winning the real estate game.