Just got through an interesting article in Financial Planning, which found it’s way to me through an AICPA financial planning news email. Yeah, I know, I get information in my inbox most people don’t care to know about. After buying the Jeep Wrangler Unlimited this past August – which I definitely enjoy driving, by the way - I debated on what to do with the townhouse in Highlands Ranch, CO and the condo/timeshare in Keystone, CO. Not that I have to sell either of them to stay afloat, but it can be stressful knowing that a wrong move could put me on the defensive. Anyway, after doing some research on the current resale value of the condo, I decided not to sell at this time. A couple of statements in the article caught my attention in what I’m thinking in making a decision to either keep or sell the townhouse and/or condo. We here a lot nowadays about the “new normal,” but maybe we’re just back to what we used to consider normal.
“Housing up to the bubble was never considered a flashy investment where you made a lot of money,” says Alicia Munnell, director of the Center for Retirement Research at Boston College (CRR). “So I think we’re back to normal. We’re not in a new world. The unusual world was the bubble world.”
Even before this statement is another one that gets to one of the reasons I haven’t sold yet.
Yet, advisors and other experts who spoke to Financial Planning say that housing should not be disregarded as a component of wealth accumulation. What we’re witnessing is just the downside of a cycle. For many Americans, a house remains their biggest asset. Furthermore, these assets will continue to be critical for people during retirement.
By the time I turn 58 – a long time from now – I will own the house and condo/timeshare. At worst, I’ll be able to live rent free from that point until I retire and through retirement. Or, if I decide to live outside of Colorado, the rental income will help pay for where I want to live, with my 401k and social security income (if it exists at that point) supporting that income. Anyway, I thought it was an interesting read about how real estate shouldn’t make up all or a majority of ones worth, but should definitely be included in the investment mix.