Stop Watching the News

Amy bought a home for about $120,000 and put down 20%. She plans to stay there for the next 10 or 15 years, but the foreclosures in her neighborhood are freaking her out.

QUESTION: Amy in Louisville bought a home for about $120,000 and put down 20%. She plans to stay there for the next 10 or 15 years, but the foreclosures in her neighborhood are freaking her out. Dave advises Amy to calm down and stop watching the news.

ANSWER: Let’s set aside that you’ve been watching the news too much for a minute. In other words, let’s set aside the freak-out for a minute—the emotions. Let’s step up above and pretend that you’re a real estate agent or a coldhearted real estate investor who doesn’t use emotion. Is this neighborhood really going down, or is it just going through a few foreclosures? Is this neighborhood going to be worse overall—a bad place to live—five years from now or is it getting better?

If I were in your shoes, I would just calm down. Pay your payments. Quit watching the news. Quit sweating every little foreclosure up and down the street. I’ll give you an example. The community that I live in is a smaller community outside of Nashville called Franklin and Brentwood, Tennessee. It’s a wealthy community. It got hit like everybody else did on real estate, but I’m looking around going, “Where’s this place going to be 10 years from now?” It’s still going to be the place to live or one of the places to live in Nashville. Knowing that, if there are some foreclosures or four, five, or six on a street, my goal was to go buy them all because they’re going to go up. But if I looked around that neighborhood and thought the trajectory of this neighborhood is into the toilet, 10 years from now—no matter what you pay for something—it might not be a good deal. Then that runs me off as a coldhearted investor. That’s how I’m looking at your situation.

I’m thinking that what happened is you bought your first home, and you’re a little bit insecure about the whole process. You sound like—with the words you’re using—that you’re probably a single person. You’re being really super careful and a little bit fearful in your carefulness. You’re just looking around, and every little bit of bad news chips away at your confidence. You’re being a worrywart. You need to just calm. Pay your payment and make sure your home is well maintained, and you do a great job. Keep watching the signs, but don’t sit and fret. You made a good purchase decision. You sit there 10 years from now, you’re going to be glad you bought this house.

I don’t want you to get up every morning and have this discussion with yourself anymore. You’re not allowed to discuss this with yourself for a year. Next January, you can have another discussion with yourself about the neighborhood. Other than that, I want you to relax and enjoy the home you bought. I think that’s reasonable. I think it’s okay because it’s a symptom of where you are. The first time you drive a car, even if you do a good job, you freak out. The first time you buy a house, even if you did a good job, it’s natural to have a little freak-out in there. It doesn’t make you a bad person, and it doesn’t make you an incompetent person. It just makes you an inexperienced person at that particular experience. That’s all. I’m really experienced. I’ve owned 2,000 pieces of real estate in my life, and I yawn when I buy one. You’re okay. You did good. It was a great idea to buy that house. Sit there. Own it. Maintain it. Five years later, smile.