“House Poor,” by June Fletcher (Harper Collins Publishers, New York), 2005, $21.95, 192 pages; available in stock or by special order at local bookstores, public libraries, and www.amazon.com.
The worst thing about “House Poor” by Wall Street Journal real estate columnist, June Fletcher, is its negative title. But the best thing is the mostly positive factual information explaining why homes can be both great places to live and also great investments.
When I first saw this book, based on its title, I thought to myself, “Do I really have to review a depressing downbeat book telling me homes are lousy investments?” But I kept seeing this book displayed in bookstores, so I knew I had to fairly evaluate it.
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I’m glad I did because I learned facts, not just opinions, explaining why homes can be such wise investments if they are purchased right. The book gets the negative material out of the way up-front in the introduction titled “Waiting for the Bubble to Burst.”
Although that statement presumes there is a real estate price bubble, the text doesn’t support that assumption and actually offers little evidence to show rising home prices are nothing more than high buyer demand, fueled by low mortgage interest rates, with an under-supply of homes for sale.
After the reader gets past the book’s negative introduction, with unsupported statements such as, “some Florida markets, especially Miami, where condos are overbuilt,” it gets much better. Yes, there are realty speculators, but there always have been realty speculators who either win big or lose big. They are not typical home buyers who purchase for the long run.
Some of the author’s opinionated statements in the introduction are hard to accept. For example, Fletcher says, “When the housing market turns, and it always does, eventually, the manicurists and the moguls are going down together.”
That opinion follows the prior sentence that makes an apples-to-oranges comparison of the stock market with real estate. There is no connection.
The author’s negative opinions in the introduction and early chapters shouldn’t turn off readers, though. The book gets better–much better. Fletcher switches to several positive examples of home owners who profited from their purchases.
Finally, after telling readers what a lousy purchase a home could be, in chapter three the author changes focus to buying a home. But she surprisingly recommends buyers consider purchasing without a buyer’s real estate agent.
“In other words, buying real estate, like buying gasoline, clothing, insurance and nearly everything else, increasingly has become self-service. So why are most of us still paying 5 or 6 percent commissions, just like we did 10 years ago?” Fletcher asks. She overlooks the fact that it is the seller, not the buyer, who pays the real estate sales commission. Home buyers need not be concerned about the sales commission.
After an all-too-brief chapter about buying a home, for no explained reason the next chapter jumps to profitable home improvements, mostly aimed at sellers. One of Fletcher’s best pieces of advice is, “If you’re planning on moving within a year or two, don’t renovate for personal taste or to impress the neighbors. This is the time to be a follower rather than a leader: put in the colors, the level of finish and materials that the neighbors already have.” In other words, don’t over-improve for the neighborhood.
Next, the book switches to the topic of non-owner occupants investing in houses. The author wisely explains, “According to a recent survey by the National Association of Home Builders, 64 percent of builders currently won’t let buyers sell the home or contract before closing, and 82 percent said they would only sell to buyers who promised to occupy the homes.” In other words, most home builders don’t want to sell to speculators.
Then, for no explained reason, the topic shifts to foreclosures. Rather than emphasizing how home owners can prevent foreclosures, emphasis is on how to find and profit from foreclosures.
The one chapter that seemed entirely out of place is about buying a home in a foreign country. It makes for fascinating reading as Fletcher emphasizes all the negatives, such as restrictions against foreign ownership. But the countries she writes about seem strange: Croatia, Dominican Republic, Panama, Philippines, and Thailand. Overlooked were Costa Rica and Mexico where thousands of U.S. retirees live and buy homes.
Chapter topics include, “To Buy or Not to Buy”; “Buying Under the Influence of Low Interest Rates”; “Your Secret Agent: You”; “Getting Smart About Home Improvements”; “Investing Without Losing Your Shirt”; “Facing Foreclosure”; “Going Global”; and “Catching the Next Wave.”
In the book’s epilogue, Fletcher turns very positive about home buying with emphasis on all the home-ownership benefits. She explains home ownership offers many advantages, in addition to a place to live. The author says, “And they’ve become our prime investments: our college funds, our pension funds, our cash cows, and our financial chess pieces.” On my scale of one to 10, this well-written book rates a nine.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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