A house is more than an ATM

Declining real estate values should remind us that a home's primary purspose is to provide shelter, not more money.

If real estate in 2008 has a fashion corollary, it's the Member's Only jacket. Like those elasticized, cotton/poly zip-ups that were all the rage in the 1980s, houses and condos -- at least those purchased in the last few years -- have gone from must-have items to invitations for public mockery.

That's the feeling conveyed by the relentless onslaught of grim economic news, including reports this week that California real estate foreclosures have hit record numbers and that 2007 sales of existing homes were the slowest since 1982. We were also reminded for the millionth time that home prices -- even in "desirable" areas once considered immune to economic downturns -- are falling. In other words, those of us who bought at or near the "height of the market" -- even if we didn't borrow at sub-prime rates -- are still wearing Member's Only jackets. And, boy, do we look dumb.

A new elite is emerging: the "smug renters." Whereas real estate gloating was once dominated by those who picked up properties back in the early 1990s -- when apparently you could buy a mansion for the price of a Saab -- plenty of non-owners are now getting in on the self-righteous act. Some are former owners who cashed out when prices peaked. Others, presumably, are among the people I saw at open houses back when I was shopping around in 2003 and 2004; unlike me, they didn't buy anything.

Just thinking back to that time makes me feel uneasy. Even though it seemed open houses were a bigger draw on Sundays than church and golf combined, there was always a question as to who was going to jump on the high-speed train and who was going to stand back and wait for the inevitable derailment. As a result, many of us who bought property did so with the nagging shame known to customers who pay full price because they're too impatient to wait for a sale. Meanwhile, the smug renters have been living it up in far-nicer homes than they could ever afford to buy.

The subtext of all this is "The Tortoise and the Hare." As we were taught in kindergarten but perhaps forgot by first grade, the race is won patiently and cautiously, not by jumping on a bandwagon. When the real estate market reaches its nadir (how will we know? Maybe when HGTV trades shelter porn for actual porn) the renters -- especially those with money in the bank from well-timed home sales -- will waltz back in and snatch up formerly overvalued homes for rock-bottom prices, thereby joining the ranks of those who bought in the market crash of the early 1990s. The rest of us will remain tragically zipped inside Member's Only jackets that we can't take off without losing a ton of money.

The tragedy part has become the chief narrative of home buying in the last year. But it's a narrative that's missing an essential plot point -- namely, that there are plenty of reasons for buying a house that have nothing to do with making a buck. The time to remember them is now.

The frenzy spawned by the housing bubble managed to reduce the biggest, most personal purchase of most people's lives into a game of strategy. Amid the rhetoric about how houses could make us rich if we bought or sold them at the right time, we lost sight of the fact that they also happen to be where we live. Now that the rhetoric has switched to how houses will make us poor if we bought or sold them at the wrong time, we'd do well to acknowledge that a house's primary job is to shelter us, not earn money for us.

While I'd be lying if I didn't admit that my house often seems like a roller-coaster car making a long, steep plunge into oblivion (the fact that it's approximately the size of a roller-coaster car may have something to do with that), I'm getting a little tired of people insinuating that I was stupid to buy it. No, it's probably not going to double in value in the next decade, and yes, I could probably afford an extra bathroom if I were a renter. But like everyone who bought at the "wrong" time, I had my reasons. Some were better than others, but they had less to do with building my investment portfolio than with building my life.

It's often said that when it comes to the monumental decisions -- having a baby, for instance -- there's no "right" time. In real estate-obsessed Southern California, we tell ourselves that doesn't apply to houses. But just because they're usually our biggest financial assets doesn't mean we have to view them as dispassionately as we would shares in the stock market. Besides, home prices, like fashion trends, always get hot again eventually. And that (plus the advice of my accountant) is why I'm still wearing my Member's Only jacket.

mdaum@latimescolumnists.com

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