When houses become just another asset

Value Judgments

Your Money

October 03, 2004|By JANET KIDD STEWART

AS HURRICANE after hurricane swept through the Southeast recently, Randy Cooper dreamed that his home in Tampa, Fla., was demolished and his possessions were strewn down the street.

As the storms died down, and Cooper's home escaped damage, the financial planner was struck by the ambivalence he felt in the dream.

"It's made me rethink whether I even need most of the stuff I have," he said.

Cooper lives in a townhouse near Tampa Bay, a far more transient environment than his hometown near Detroit. On a visit there three years ago, he drove by his boyhood home to experience the nostalgia he believes has been lost in a more mobile society.

"I like my house very much, but it's just another asset in my portfolio," he said.

So much for the American dream of home ownership?

Not so fast. Thousands of people lost their homes in the storms, and I'm betting plenty of them feel a painful emotional loss, as well as a financial loss. In almost any tragedy, keeping the home always has been a top priority.

"It is still very important to clients to be able to stay in their homes" after the death of a spouse or a divorce, said Stephen Frankl, assistant director of life insurance products for Northwestern Mutual in Milwaukee.

That said, there may be a growing counter trend of people who view their homes more like Cooper does.

Just look at the burgeoning number of households loading up on home equity loans. They are, quite literally, willing to bet the ranch.

"I'd move out in a second, for maintenance reasons alone," said psychologist Cheryl Rampage, when asked how much she would be willing to stretch to keep her home if she lost her husband.

Rampage, who works with Northwestern University's Family Institute in Evanston, Ill., specializes in helping families through traumatic life events. Like Frankl, she said most of her clients place a high premium on keeping the house through distressing events.

"Most kids are not wild about change," she said. "If given a choice, they almost always will say `no' to a move."

But if keeping the house puts significant stress on a single parent, that stress can outweigh the benefits of keeping the stable family home, she said.

She recently counseled a woman who was forced to give up the family home after her divorce and move with her teenage daughter to a condo building.

"It was rough at first, but the building had a great workout facility that the daughter started using, and the security guard in the lobby provided the mother with peace of mind when she had to work late. After a short period, it was very positive," she said.

I happen to agree with this thinking. Having lived in more than a dozen homes during my life, the structure takes on far less significance than the people inside. And just playing worst-case scenario, if a traumatic event happened, and I was suddenly a single parent, the expense, upkeep and potentially disturbing memories would be enough to send me packing fairly quickly.

This is not to underestimate the power of the emotional baggage placed on a child when a family goes through a dramatic shift in status. An adult friend of mine whose parents divorced when she was in high school told me the most enduring pain was of the status shift it made in her social life to move to a lower-income neighborhood.

Still, Frankl said, anecdotal evidence suggests the drive to maintain the homestead may be waning in deed, if not in word.

Although most people claim that keeping the family home is a top priority, they structure their finances as though it is not, he said.

"People don't seem willing to give up today's consumption - the Lexus and the second home - in order to plan for the future. Our biggest competition today isn't other insurance companies, it's individuals who don't think anything can go wrong tomorrow," he said.

E-mail Janet Kidd Stewart at yourmoney@tribune.com.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.