You might be waking up as a millionaire some time this week. No, you haven’t won the lottery and Uncle Bertie isn’t leaving his hockey card collection to you.
Its likely your homestead, which you scraped and saved to make a down-payment on all those years ago, is now being priced far higher than you ever conceived. Maybe its up in the half-million dollar range, maybe its worth $750,000–or maybe you are seeing a price in the range of $1.4 million.
Naturally, you don’t get a postcard in the mail informing you that you are now a millionaire (that happens when you hit the billion-dollar range). As with most of us, the way you find out this information is by cruising the real estate sites, and checking out all the houses for sale in your neighbourhood.
Now, you can become quite giddy realizing the ugly troll of a house four driveways down is now worth double what you paid for your abode.
If the people next door, who are raising chickens on the front lawn, are retiring early on their house sale proceeds, why cant you?
You may live in an area like mine where the sale signs sprout faster in the spring than the dandelions on my lawn. There are a number of forces at work here, of course: most folks believe house prices are peaking and wish to cash in before the Real Estate Bubble pops.
Getting a mortgage will now also be slightly harder for first-timers and mortgage rates will rise soon. As well, the economy continues to grow but may stall in a year and that is also pressuring people to sell.
So what happens if you find out you could get some unheard of sum for your ramshackle mansion with the leaky roof and the 70s shag rug? If you think you should sell, answer this simple question: Where will you live?
I have a plan. I sell my home at a huge profit and move my family into one of Torontos nicer ravines for the summer. The money we save on mortgage payments and electricity will be a bonus and the kids will enjoy the wholesome outdoor experience. Once house prices fall, I plan to buy a home at the lowest trough and who cares if it is two hours from work, near a rendering plant or whether the children have any friends. I will have made a killing in the real estate biz, and for that I would even move to Mississauga.
Seriously, if you are retired and have no kids and are willing to relocate, this is probably the chance of a lifetime if you can downgrade to smaller, cheaper digs. For most of us, however, selling your high-priced home just because it seems profitable often brings more issues than you may really want to deal with.
So if you wake up one morning and you find out you are a millionaire, don’t panic and don’t get upset–just go back to bed because in a few months you wont be a millionaire any more.