If you’ve been on top of the news at all these past few years, I’m sure you have noticed that we have been living in a real estate fantasy world. Really.

So let me take us all out of La-La Land and into the real world for a moment.

We’ve had two homes for sale, both in troubled real estate markets. Despite all the hype about the real estate market recovery, selling them has not been easy and it’s been impossible to get a price anywhere near what we’d hoped for.

• M’s house in Coral Gables has sold for less than his asking price.
• I’ve had several offers on my Tampa house, but none that I was inclined to take –yet. I am going to sell it for at or less than I paid for it, though.
• I am underwater on my Monterey peninsula property in the six-figure range. My tenant is only defraying half the costs.

That is the reality.

Now that we have one house sold, and we know we like it in California AND we’re more than halfway through our lease, we are agonizing over whether to buy a house here or not.

And I’m the one who’s hesitant. I can’t help but think long and hard about whether I want to be saddled with owning a house.

Look. I had a $16,000 roof fix on my Tampa house last year. I had subterranean termites that ate a series of window frames in my living room. I had a $38,000 assessment a few years ago on my condo on the Monterey peninsula.

It can’t happen to you? Oh, it can.

These expenses are not predictable, but they are part and parcel of home ownership. So, the American dream? Not hardly! The idea that home ownership is a “must” is something people accept without thinking.

But I can’t help but question it and it’s time we all did.

In our parents’ generation, house prices went up a modest three or four percent a year. And people bought a house and stayed put for 30 years or more. That’s not the way we live today.

If you’re thinking about buying a house, you need to be asking yourself a bunch of serious questions.

• Have you figured in the cost of insurance and taxes? Condo fees? Ongoing maintenance? Can you afford the true cost of the home?
• Are you debt free? Because it doesn’t make sense to pay a mortgage when you have credit card debt.
• How long are you likely to stay in the home? Is it 20 or 30 years?
• Will paying the mortgage and expenses make you cash poor? Overbuying just because they qualified is a decision many, many people are regretting because they can’t afford to do anything else. AND they’re under water on their investment.
• How old are you? If you are 70 or 80 years old, renting is a better option. Even if you left a home to your estate, there’s no guarantee they can rent it –for its cost or even at all– in a market like this. Much less sell it. And this market is going to outlive you. So you may be saddling your estate with an expense they can’t afford.
• If you’re approaching retirement age (even if you don’t plan to retire) and are buying at your highest limit, which is to say probably over-buying, you need to consider how long you want to work just to afford a house. One that you may not be able to get your money out of. ‘Til death?
• Also, at that age, can you can afford the mortgage if you or your spouse got sick and couldn’t work? What if you are widowed and can’t sell the house? These are hard realities, but important ones. If you are near 60 and saddling yourself with a big mortgage, you would be wise to think again.
• And if, at that age, you believe that your house is a retirement investment, I’ve got a bridge I want to sell you… Your horizon is probably not long enough. It might be smarter to conserve your cash for retirement.
• Do you have the money for major repairs, if necessary, in your savings account? Can you afford them? Roof, heating and air conditioning, structural problems, appliance replacement–these things come up when you least expect them. They aren’t cheap.

Today, when something goes wrong in California, we call our landlord and it’s his problem. Now that we’ve done this a time or two, we see its value. I love it. “Not my problem” are three words that mean we keep more of our cash for travel and other things we enjoy.

And then, let’s get real. My husband’s has been a banking and finance lawyer for 35 years. His assessment is that the real estate boom was not sustainable or repeatable. It was bogus, and we are not going to see anywhere near those kind of returns in our lifetime. We’ll be lucky to see three or four percent a year.

I’m not going to kid you. We can afford to buy a house and we can afford to maintain it. A huge one, if we want. But the question we’re asking ourselves is “do we want to?”

Do we want to be saddled with a house that will inevitably need expensive repairs? One that we might not be able to get our investment out of, even if we could sell it? Do we want to limit our geographic flexibility? Lock ourselves into living in one place for decades?

We may decide to buy, but if we do, you can bet we will have asked ourselves all of the questions I listed above, and answered them. We’re already begun.

You can also bet that we won’t buy anywhere near the house we could qualify for. We’re retirement age. We do not want a huge house to maintain. Nor do we want to deplete a huge amount of our savings. Not when there are very cool vacations to be taken!

http://online.wsj.com/article/SB10001424052970204409904574350432677038184.html