“Well, at least I won’t lose money.”
That was my conclusion
in the fall of 2006 as I considered buying a condo in Fort Lauderdale.
My wife and I were moving from New York to South Florida for my new
job. It was a decadent time. As in: Everything was falling apart but
none of us knew it. There had been a 1 percent drop in the median sales
price in Fort Lauderdale that summer, the first annual drop since 2000.
A necessary correction, some said. Others knew better. Not me. Three
and a half years later, back in New York, we just sold that Florida
condo in a short sale for $135,000. We paid $290,000 for it in 2006.
short sale process was relatively quick, if painful. The paperwork
seemed incessant and redundant; we lost two buyers along the way; and
five months of strategic default wasn’t fun. But our two-bedroom,
two-bathroom condo in a leafy Fort Lauderdale neighborhood clearly had
takers at the right price. The banks, two of them, took the loss. The
condo, rather than a reliable investment, was like a new car that
dropped in value from the moment we set foot inside it. Still, with 100
percent financing, it’s a stretch to say we lost money. So my statement
three years ago was in fact prescient.
Yet, I was not one of
those who thought constantly about the plunging value of my home. We
enjoyed that place. I spent many evenings by the condo community’s
pool, grilling and drinking Cabernet. Our kids ran around the verdant
park outside the building’s front door. And I played tennis on the
public clay courts next door.
Our home before the
Mediterranean-style condo in South Florida was a new Manhattan
apartment building. The Harlem rental was appealing on its own: a
doorman building in an emerging (or insert your euphemism of choice)
part of the neighborhood. We endured the boom years in New York
wondering why we couldn’t buy. We moved to Florida and became
homeowners within weeks.
Housing had absorbed my professional
life for years. Before college, I spent the better part of a year as a
housing organizer. Years later, I wrote about affordable housing for a
public policy magazine. Then I moved onto a newspaper, covering a
southern Connecticut city often consumed by elaborate neighborhood
campaigns to block new housing developments.
In other words,
buying homes was something other people did. I wrote about those
people. I wasn’t one of them and nor did I ever really expect to be.
realize now, that when I signed those closing documents in Fort
Lauderdale, plenty of traders on Wall Street bet on me as well. Some
thought my investment was one of more profitable endeavors to come; the
smart ones knew it was folly long before I did. As many have
said, a housing market doesn’t make sense when the barriers to
buying are so low. But that’s what we found in South Florida.
Everyone wanted us to buy a home. We were all in the bubble and
couldn’t see beyond it.
But a different sort of reckoning came
to me with a recent perusal of the Broward County property appraiser’s
website. I noticed that our condo sold in 2002 for
$126,100, making this year’s sales price 7 percent higher.
The problem wasn’t the condo, I realized; it’s just when we bought
it. Sure, inflation would have eroded our return had we
bought in 2002 at that price and sold this year. But I’d
much rather walk away with money in my pocket than a $1,000 bill
(as we got) from the second mortgage holder.
Now we are
back in New York City, in Harlem. We are renters in a struggling condo
building. The handsome but hulking brick structure with large windows
and striking city views offers a comfortable home and someday, perhaps,
a solid investment. But the asking prices for those condos are like a
hangover from the boom. Still, people leave open houses there with that
“what if” glow. Owning a home seals a life as few other material
But I’ll let others experience that for now.
Here’s why: After selling our condo, we unloaded our 2003 Honda Accord,
which we bought used just months before our condo. We made a modest
profit on it, after the bank was paid in full. And that felt good. The
trick, I guess, is good timing.
Matthew Strozier is The Real Deal’s deputy managing editor.