Should I stay or should I go now?
Should I stay or should I go now?
If I go, there will be trouble
And if I stay it will be double
So come on and let me know
In January we invited a realtor from Redfin into our home to consult with us. We planned to put our house on the market in February and get as much of a profit for it as possible. Looking at real estate prices in our city, state and region, we realized the top was in, or close to being in and we thought we should get our profit out. Three days before our agreed listing date the news about the Coronavirus, or COVID-19 started to spread in its early stages and some smart people we follow voiced concerns that a global pandemic could be in the making and that it would be best to start thinking of ways to prepare sooner rather than later. It was alarming, but we realized we should not go forward with putting the house on the market. We wanted too much money and going into a global crisis would not be the best time to create an atmosphere where bidding wars are necessary.
Fast forward, what a few months it has been throughout the world dealing with COVID-19. As rumors of a total imminent shelter-in-place lockdown circulate throughout our state, Mrs. Cat and I have just continually looked at each other periodically and say “wow, I can’t believe this.” While we are definitely surprised at how bad everything got how fast, we were not caught totally flat footed. Last year we did a lot of thinking and going back and forth on whether we wanted to stay in our current situation with our house and property, live in the US or not and what lifestyle we wanted. I personally started preparing mentally and financially for a hard economic recession about 12 months ago anyways. It was brought to my attention that just from a market cycle perspective, we were overdue for a major correction in the trajectory of the economy, so shoring up our finances, paying off debt, taking profit from some assets and saving cash seemed like the right thing to do. Even with every indicator and popular financial advice expert posting a sign in our face that we were crazy and leaving money on the table, it felt more right than ever before in my lifetime to play defensively with a young family to think of.
This crisis hit in a way that we didn’t expect - we anticipated a financial downturn caused by some type of black swan event, but not a pandemic. The nature of the pandemic basically means that no matter where you go in the world you are at risk. Granted the risk of contracting COVID-19 in a rural area vs. a densely populated area are different, there will likely be no geographic part of the world un-affected by the social and economic problems this is causing. Yes, the stock market has crashed and will continue to in all likelihood, but it is not as if having some specific asset or moving to a country which is still prosperous will create any real security. Cryptocurrency, gold, and probably pretty soon real estate are all getting slaughtered in-line with the primary equities and bonds we all know about.
Here are the top 5 reasons we decided to stay put and not sell our house for profit during this crisis:
#1 - We Had A Great Lot Of Land For A Bigger Garden
Ever since buying this house, we were in awe of the lot of land the house was set upon. The house itself is very humble - well built but aesthetically not beautiful. But in the city we live in, a lot like ours in a location like ours is hard to come by. So many friends and family told us we should do sports and recreation on that plot, but when the market started to quake and the COVID-19 situation, we realized that this house would likely not sell for an amount worthy of moving for and even if it did, where would we go? So we decided to jump headlong into the property we already have and turn it into a food forest that can sustain us. I was nervous about destroying our lawn at first, but now I do not regret it at all! Now I just cannot wait until we start getting some sprouts shooting up.
#2 - We Didn’t Have A Place To Go
Alluded to previously - we really didn’t have anywhere specific in mind that we wanted to go. So why move? There were a few nice apartment complexes nearby that would have been ok to live in that would have been affordable, but with a crisis on the horizon, we felt that it was too risky to displace ourselves on a whim for an amount of money that wasn't life changing. Now that we’ve put so much effort into transforming our current property into a food forest and realizing some shortcomings of it from a layout and city ordinance perspective (we want some livestock but cannot have it here), we now know even better what we’ll be looking for when it’s time to move. Having some clarity about what we want and do not want after so much uncertainty feels good.
#3 - We Have More Control Over Our Day to Day Lives
We are both still working full time in our jobs which were already remote before. This is such a blessing. We also have our son’s daycare less than half a mile away, which we love. Even though the daycare is closed now, our lives are basically as close to normal pre-COVID-19 as we could hope for. We stocked up our food and supplies and it makes it a lot more comfortable to shelter in place for a period of time than if we were just moving and unpacking when this all occurred. The timing and our luck were in our favor on this one.
#4 - Normalcy During Stressful Times Is Underrated
I want to say that we’ve all handled this time with grace and courage, but it’s not true. My wife and I have felt a lot of stress and fear for our own family, our extended relatives and our community and have been unsure how to react at times. Being in our original property and taking away the uncertainty of selling and moving has at least grounded us to feel certain about what our daily lives should look like. With a young child this is especially important because any extra stress that cannot be managed well just flows down to them and affects them disproportionately, which is the very last thing we want. We work hard for him and his future, so we should set ourselves up for success.
#5 - The Market Dynamics Were Questionable
If we had sold and the COVID-19 crisis never hit we could have gotten out of the real estate market at the top. We also would have needed to rent for a while until a market dip happened, otherwise we’d be buying at the top as well, which isn’t advantageous. Just as the market was peaking before COVID-19 took hold, it looked like a plane sputtering going upward about to stall, home prices were stagnant even though inventory was low. Even with all the realtors telling us that we were in the best neighborhood and might get a great price, it felt like we were potentially going to flop due to lack of demand given that our house has a lot of great features, but isn’t upgraded to be attractive to a high-dollar buyer. It’s better to stay put with our recently refinanced mortgage with a lower monthly payment and enjoy the extra disposable income rather than take a gamble in really uncertain economic and social times.
So there’s risk all around no matter what. The difference will be realized in how we mitigate that risk. We stocked up on good food that stores well and made sure our assets were allocated appropriately for the challenging times ahead. Whether it’s a month more or the rest of the year, we are really tightening the belt more than we have to in order to maintain flexibility and agility to survive and eventually thrive despite what’s going on. That includes not selling our house even though the profit numbers two years after buying it looked so damn good.
How has this crisis affected your short term and long term plans involving real estate and financial goals?