Thursday, August 13, 2009
After stumbling across this link the other day, I couldn't believe it still worked.
Boomtown USASuch fond memories of the late great housing boom and the role that publications like Money Magazine played in all of it...
Something strange happens when real estate makes everybody rich. Is this where your town is headed?
May 23, 2005: 3:46 PM EDT
By Stephen Gandel, MONEY Magazine
NEW YORK (MONEY Magazine) - Twenty-four-year-old Kelly Pearson says the $580,000 ranch-style house she bought near downtown San Diego last August is a dream come true.
It is nice: 1,450 square feet, four bedrooms, two baths, crown molding, a big kitchen with an island and -- quick! duck! -- a 737 jet descending upon her roof with what feels like 10 feet to spare.
Pearson barely flinches. You see, her half-million-dollar-plus house sits just 1,000 yards from the airport's single runway. She's grown accustomed to the near-constant flybys, even if visitors must resist the urge to dive for cover when a plane thunders down. The low, barreling boom of the FedEx jets, biggest of the bunch, rattles the windows. "Every morning," she says, "10:45 on the dot."
With no savings, and a college loan to repay, Pearson took out a mortgage for 100 percent of the price of the house. Closing costs were paid for by a $10,000 gift from her parents (money first earmarked for her wedding).
Actually, I remember this particular issue of Money Magazine vividly since I wrote a whole piece on it - Money Magazine Does Real Estate. It came out right around the same time as the now famous Time Magazine housing bubble cover.
I wonder how Kelly Pearson is doing today or more importantly, the adorable Rothschild family pictured above.
But if Pearson has any doubt about being leveraged up to the eyeballs on a house next door to a major airport, she's not showing it. The rent she's getting on three of her bedrooms covers most of her monthly mortgage nut. Besides, a smaller house across the street just sold for $740,000, so Pearson figures her place is already worth $200,000 more than she paid.Memories...
Her plan: to borrow more soon and invest in a condo. "Where else can you turn a huge profit on a house in eight months?" she asks. "The possibilities in San Diego are unreal."
Unreal, indeed. Across the country, talk of whether home values will continue soaring or begin to level off or even tank is starting to drown out every other topic.
Whatever happens, it's clear that something big and basic in the way Americans think about housing has changed. Used to be you'd start with something modest, then move up as your family (and income) grew. And that was pretty much the end of it. A house was a home first and an investment second, if at all.
No more. For many of us a house has become a way to pay for retirement or the kids' education, or simply a way to get rich.