28 October 2008

Boomers and their Home Values

This neighbor—the camel—is helping to produce wildly inaccurate home values, at least for the dome I live in and according to one online real estate site. I don't think any of us can avoid thinking at our home values as we read of the housing bust. Most boomers count home equity as a major part of net worth and a crucial element of the retirement nest egg. To that end, I checked out our home's estimated value on four web sites. (I'll track the numbers for a while and report back.)

One of the web sites produced a value of about a million bucks. Wow. But it's not accurate and probably reflects the deadly average of values (and that's the main reason home values are reported with median prices, not averages). The camel lives on a nearby ranch that may be raising the neighborhood numbers, but there's also the Bradshaw place that sold a few years ago. Terry Bradshaw moved his horses to Oklahoma, selling his North Texas home and barns for more than the typical suburban sale. Throw in a couple of golf communities, and you can appreciate the problem of tracking home values in my area.

Most of the sites that I checked were more realistic, noting the important differences among neighborhoods. With the housing market still plummeting, it's important not to assume that a web site can predict prices.

A more reliable online tool (at least for buyers) is the New York Times calculator by which users can find the break-even point between renting and buying. Find the resource at the calculator page titled "Is It Better to Buy or Rent?"

Take your time to explore all parts of the calculator. Enter several different values, but also play with the sliders on the left-hand side of the page. That's where you get a sense of "what happens if..." home prices do not appreciate—a likelihood for the months ahead.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

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