Real estate, the selling and buying of it, is on my mind lately. In addition to the ongoing Swedish Death Cleaning the Bohunk and I are engaged in we are considering where we will live in our later years.
I mentioned in a previous column that my Mazda Scinta RX-8, which I bought when I was in my 50s, was my end-of-life crisis car–either it would die or I would. Life changes forced me to sell it ten years ago. Similarly, when we bought our house on the ridge in Cook County, both of us thought it would be our last house. We’re not so sure now that we’re in our 70s.
One Sunday, early in 2016, the Bohunk was working in the kitchen of our house in Swansea, IL and I was reading the paper on the living room couch. Out of the blue, she said, “I want to move back to the North Shore when we retire.”
“Where will I go?” I said, a bit of panic in my voice.
“You can come with me if you want,” she purred.
The consulting I was doing could be done remotely. With Social Security eligibility just months away, we decided that returning to the North Shore would be a viable option: natural beauty, peace, quiet, and all that promotional hoo-ha.
We scoured real estate ads from Duluth to Grand Portage, and there were few houses listed that were in our admittedly low price range. We were retiring on a relatively fixed income, remember.
One Sunday afternoon that Summer, I decided to see if there were any houses for sale on Craigslist in our price range. Almost as if there was divine intervention, an ad for a home in Colvill, MN —our old stomping grounds from two decades ago —appeared to be just what we wanted. The ad said to call Jeff and gave a Grand Marais phone number.
I asked the Bohunk, my external memory, who we might know in Colvill named Jeff. She came right out with a couple we’d known for years, so I checked the address on Cook County’s website, and sure enough, it was owned by them.
I called Jeff the next day. We caught up on a bit of local gossip, and then I mentioned that we were interested in buying his house. Our middle daughter, Gigi, had recently relocated to Lutsen, so she went over to Colvill and made a video tour of the house. The Bohunk said it was precisely what she wanted in our North Shore house. We bought it, without leaving Swansea.
Maybe divine intervention was happening. We listed our Illinois house with a realtor who told us the average number of days on the market was 286, so we shouldn’t expect a quick sale. Instead, after only two showings, the house was sold to a cash buyer.
We happily moved into our North Shore “end-of-life” house in the first significant winter storm of 2016.
Now, with too much time on our hands, I keep thinking about our half-century of buying and selling houses. When Gerry Ford lived in the White House, we bought our first house—a standard post-war rambler, newly built on a city lot in Princeton, MN. In rural Mille Lacs County, we were financed with a Farmers Home Administration Loan that required zero down and less than $500 in closing and loan costs. Perfect for a young couple with two kids under two.
Back then, owning real estate was touted as the best way to reduce income taxes (mortgage interest was deductible) and build wealth. And it was, for many years.
On the fast track in the business world, and with two more kids, we sold and bought several houses over the years. Our disposable income benefited from the interest deduction, although our capital appreciation in each house was rather sparse.
Now that the federal standard deduction for two old folks is $33,200, we don’t itemize our deductions. We get no disposable income benefit from paying mortgage interest. But what about a young married couple with children? Their standard deduction is $30,000. They’ll find little additional tax benefit with a mortgage for an average house,
Not to be a negative nelly, but the question of whether real estate is a good investment today differs from when the Bohunk and I were young uns.
