Rent Or Own? We Ask Author And Expert Jane Hodges
Jane Hodges knows a lot about real estate. First, she’s a business writer who has written for The Wall Street Journal, MSNBC, and The Seattle Times. Secondly, she’s an experienced homeowner who bought when she was single, did an extensive remodeling job, sold for a profit, and then bought again with her husband. Her new book Rent Versus Own, due out from Chronicle Books in 2012, examines Americans’ shifting attitudes towards homeownership.
That was just too much real estate expertise to stay in one place, so I grabbed Jane for a one-hour LearnVest chat about the housing bust, the perils of renovating, the upside of working with a realtor, and how to think about buying a home now.
LearnVest: You bought your first home when you were single and in your thirties; what were you thinking?
Jane Hodges: I thought I’d be there for at least four years. I bought in Seattle, in a neighborhood where I could afford a home, and also in a gentrifying neighborhood where people were fixing up properties. I had a full-time job at the time, and I wanted to buy then, with the goal of later self-employment—because as you know, it’s easier to buy a house when you have a full-time job than when you’re self-employed. And I thought I’d get roommates.
LV: And did that work out the way you expected?
Hodges: I did get roommates, but I also started seeing my husband not long after I bought. Within two years of buying my place, he became the roommate. So ultimately, I ended up selling my house three years after I bought it so that we could buy a place together. If the market hadn’t allowed for me to sell at any kind of profit, we could have stayed in “my” house, but I thought it was better for our relationship to get “our” place. He sold a home to move in with me, which was a big gesture, so I thought it was only fair to sell mine, so we could start afresh.
LV: So you weren’t just fighting leaks and making the place pretty; you were almost immediately renovating to sell.
Hodges: I did a lot of work. I put on a new roof, put in a new electrical panel and a lot of new windows, did one major bathroom renovation, one cosmetic bath renovation, and some carpentry in the basement. Plus I added some new lighting that’s really cute, did a front porch renovation, and painted the exterior.
LV: Are any of those renovations different from what you would have done if you were staying?
Hodges: When I renovated the bathroom I put in pedestal sinks with no storage. If I were staying, I wouldn’t have done that. And I put in little hex tiles, which looked really good with the house since it was built in 1918, but if I were staying I would have put in something else because they can get really grubby. But my real estate agent—Samantha Lamb, who is now at Lake & Company—came over and brought a stager, so I could get their weigh-in on what was worth doing or not.
LV: As an agent, I love it when clients ask me to do that … if they listen! Did anything your agent and stager said surprise you?
Hodges: I didn’t have to do a lot to my basement, even though it had low ceilings and ugly lighting. And I had kitchen cabinets that I thought looked kind of cheap, but they said “just sand and paint them, and then they’ll be ready for the next buyer, who can paint them again if she wants.” Also, the stager gave me some color palettes to work with, and she made me change the bedroom color from a planned wine-red to a seafoam green. My house was only on the market for a week before it got an offer .
LV: Those were the days! And the current house?
Hodges: We’re never moving again, unless we have some kind of crazy liquidity event. We just refinanced to a fifteen-year-mortgage, so when I’m 55, we’ll own it. And that’s typical of new homebuyers, who now expect to stay in their places for ten years.
LV: That sounds like a lot. I think when I wrote my book in 2007, the expectation was six or seven years.
Hodges: That change is one of the big things I found researching Rent Versus Own: People have accepted the fact that home prices don’t perpetually appreciate, and may even go down, so you have to stay in a home long enough so that it has value when you exit.
LV: So people are no longer seeing a home as a one-way ride up?
Hodges: It used to be not whether you’d be lucky when you sell, but how lucky. Now buyers have a different attitude about a home as an investment. First-time homebuyers, especially, who typically buy with a low down payment, will have to stay for a few years to get out with equity.
LV: Any other advice for first-time homebuyers?
Hodges: Try to have savings before the inevitable recession—downturns drive your budget all over the map! That happened to me, and I’d even lived through the dot-com recession. Also, when you buy a fixer-upper you have to be realistic about who’s going to do the work. I think people have a romantic ideal of doing things themselves, but after you’ve done a couple of projects, you start to think, “What else could I do with my time?”
Image courtesy of janehodges.net