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THE OTHER DAY, I did something I probably shouldn’t have done. I checked Zillow to see the current estimated value for the condo I sold last year during the COVID-19 pandemic.
I knew real estate prices had gone up quite a bit since I sold in June 2020. But when I looked at Zillow’s price, I was still surprised to see my old home had risen 19% during that short period of time. It’s hard to imagine, even in California, that a 789-square-foot one bedroom, one bathroom condo built in 1968 can have an estimated value of $453,500.
Do I have seller’s remorse? No. I was glad to get rid of it and start a new life somewhere else.
That said, my new home does feel different. I don’t feel as rich as I did living in my old condo. Where I used to live, a lot of my neighbors were first-time buyers and renters. You didn’t have the sense people were flush with money. It made me feel wealthier as a retiree who’d done well saving and investing over many years.
Where I live now, homes, restaurants and even car washes are more expensive. Most of my neighbors are at an age where they’re entering—or are in—their peak earning years. Even though the value of my investment portfolio hasn’t changed much, I feel poorer. I don’t feel I’m doing as well as I did in my old neighborhood.
For most people, rich is a relative term. How rich you feel isn’t solely based on the size of your portfolio or how much you make. It has a lot to do with who you associate with and where you live. You also don’t have to move to a different state or country to feel richer or poorer. I only had to move 25 miles south.
I relate, but didn’t even have to move to feel poorer. 7 years ago we bought our home in a less-expensive corner of an affluent area. The house was affordable because it was on a smaller lot, near railroad tracks and the exterior was very aesthetically challenged. I felt like we were near the middle – wealth wise. Since then, older homes have been sold and torn down and replaced by $2,000,000 houses with owners that go on exotic vacations and all drive Teslas and Audis. There are just a few of us left driving Toyotas, Hondas and Fords. My husband drives a 17-year old Toyota and I drive a 10-year old Kia. We are definitely less wealthy than most of our current neighbors and my daughter won’t stop bugging me to buy a Tesla. She doesn’t understand that the reason we were able to buy a house in this neighborhood is because we both spent our adult life-times not buying Teslas and Audis even though we could have.
You should also tell your daughter that the neighbors who appear rich may be anything but. Unless you’re able to review their financial statements, you simply can’t know (though you do know they’re less wealthy than they could have been — thanks to their extravagant spending).
We are status-seeking apes, always comparing our position to others. Even when we know this, even when we tell ourselves it’s unimportant, some part of us always seems to be making those comparisons.
Count your blessings. I bought my 2-bedroom, 1-bath condo in early 2007 for about $100,000 and financed 100 percent after a separation. A few years later amid the Great Recession, the same unit above me (minus interior differences) sold for half that in a foreclosure. More recently, the unit next to me (again identical but flipped) sold for $80,500. Meanwhile, the condo fees have risen from about $118 monthly to $287. Now retired, I feel stuck and unable to move with little or no equity. I owned three single-family homes over my married life, and they always appreciated.
Ha! I sold my 430 square foot coop in Manhattan in 2016 for $450K cash. It was a wreck that needed to be completely refurbished, but some fellow who owned a jewellery company in Hong Kong and needed a Manhattan pad took it as is.
I wasn’t going to ask so much, the real estate agent said it was the only studio in a doorman building within 10 blocks, and demand was really high. I had already bought another place, so I was quite happy to receive the money and deposit it in my brokerage account.
Great article Dennis, and so true. Yesterday my wife and I drove about 50 miles of the northern NJ coast, traveling through about 10 beach towns. It was amazing how different the housing, and the feel, could be in less than a mile. You would go from tiny, older bungalows to beach front mansions in a few blocks. We felt richer (we could afford this town) and poorer (no way could we afford this place) several times as we drove from town to town.