How to buy a house

Actually, how to think about buying a house.
You don't see a lot of ads trying to sell you on spending too much money on a house. It's more subtle than that. The marketing is all around us, and has been for years. The enormous social pressure and the expectations that come with it lead to misunderstandings and confusion. Here's my advice to someone in the market:
1) In an era where house prices rise reliably (which was 1963 to 2007), it was almost impossible to overpay for a house. It was an efficient market, and rising prices cover many mistakes. Investing in houses in the USA was a no-brainer. More leverage and more at stake just paid off more in the end. This consistent, multi-generational rise taught us more than an ad every could: buy a lot of house with as little downpayment as you could.
2) A house is not just an investment, it's a place to live. This is the only significant financial investment that has two functions. Things like cars and boats always go down in value, so most of the time, if you're investing, you're doing it in something that you don't have to fix, water, fuel or live in. You shouldn't fall in love with a bond or a stock or a piece of gold, because if you do, you won't be a smart investor. The problem (as people who sell and fix and build houses understand) is that you just might fall in love with a house. What a dumb reason to make the largest financial investment of your life.
3) The psychology of down markets is irrational. Rising house prices might be efficient (many bidders for a single item lead to higher prices), but when there aren't so many bidders, irrational sellers (see #2) don't lower their prices accordingly. So, inventories get longer and it's easy for the prospective buyer to think that a certain price is the 'right' price because so many people are offering houses at that price. Just because someone offers a price, though, doesn't mean it's fair in a given market.
4) Along the same lines, anchoring has a huge impact on housing prices. If someone offers a house for $800,000 and you think it's worth half that, you don't offer half that. No, of course not. The price is a mental and emotional anchor, and you're likely to offer far more.
5) The social power of a house is huge. When you buy a big house or an expensive house, you are making a statement to your in-laws, your family, your neighbors and yourself. Nothing wrong with that, but the question you must ask yourself is, "how big a statement can I afford?" How much are you willing to spend on personal marketing and temporary self-esteem?
6) Debt is an evil plot to keep you poor. If buying a bigger house (or even a house with a living room or a garage) is going to keep you in credit card debt, you've made a huge financial error, one that could cost you millions.
7) By the time you buy a house, you probably have a family. Which means that this is a joint decision, a group decision, a decision made under stress by at least two people, probably people that don't have a lot of practice talking rationally about significant financial decisions that also have emotional and social underpinnings. Ooph. You've been warned. Perhaps you could add some artificial rigor to the conversation so that it doesn't become a referendum on your marriage or careers and is instead about the house.
8) If you have a steady job, matching your mortgage to your income isn't dumb. But if you are a freelancer, an entrepreneur or a big thinker, a mortgage can wipe you out. That's because the pressure to make your monthly nut is so big you won't take the risks and do the important work you need to do to actually get ahead. When you have a choice between creating a sure-thing average piece of work or a riskier breakthrough, the mortgage might be just enough to persuade you to hold back.
9) Real estate brokers, by law, work for the seller (unless otherwise noted). And yet buyers often try to please the broker. You'll never see her again, don't worry about it. [Let me be really clear about what I wrote here, just in case you'd like to misinterpret it: When a prospect sees an ad or goes to an open house, she is about to interact with a broker. That broker, in almost every case, is hired by the seller and has a fiduciary responsibility to the seller to get the very best price for the house. There are exceptions, like buyer's brokers, but those brokers, as I said, note that they are representing the buyer--how can you represent someone without telling them? Many brokers like to pretend to themselves that they are representing both sides, and while that's a nice concept, that's not the law.]
10) You're probably not going to be able to flip your house in nine months for a big profit. Maybe not even nine years. So revisit #2 and imagine that there is no financial investment, just a house you love. And spend accordingly.

I'm optimistic about the power of a house to change your finances, to provide a foundation for a family and our communities. I'm just not sure you should buy more house than you can afford merely because houses have such good marketing.

Article from http://sethgodin.typepad.com/seths_blog/2010/04/how-to-buy-a-house.html

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Financial Times article: Lecce’s architectural wonders

Even the “fast” train from Rome takes nearly six hours to get to Lecce, labouring over the Apennines before dipping across coastal flatlands and endless olive groves, past places like Monopoli, whose names recall the Greek heritage of Italy’s deep south.
In the baking summer heat it is a relief to enter the walled city of Lecce – the harsh light is absorbed by the famed limestone of its buildings. Spared the hordes of foreign tourists that cram the renaissance cities of Venice and Florence, Lecce has a provincial charm. The churches are quiet, but this is a university town, with a buzz in the bars, pastry shops and bookstores.

The city is a delight to explore on foot, each turning revealing another architectural treat. To understand the story behind the architecture, I hire a guide, Simona Melchiorre, a local historian, who is passionate about her home city. She tells me the stately grandeur of courtyard villas, some occupied by descendants of their original owners, and the refined elegance of the churches conceal a darker passage in Lecce’s history. Following the persecution of Jews in Spain, Charles V expelled the city’s Jewish population in 1541. Wanting space to build a castle, Charles V moved the church and local nobility into the former Jewish quarter.
A stone foundation block below ground level in the Palazzo Adorno reveals an inscription in Hebrew, “House of God”, testifying to its origins in what had been the local synagogue. Other Jewish remnants went into the construction of Lecce’s Church of the Holy Cross, consecrated as a basilica by Pope Pius X in 1906. Building started in 1549 and took about a century to complete. While the side chapels are richly ornate, the basilica – in Greek-Roman style modelled on the Temple of Jerusalem – is light and airy, beautifully proportioned with 12 pillars.
There are several villages close to Lecce where the inhabitants still speak a form of ancient Greek, while at the Church of Saint Nicholas in Lecce the liturgy is in Greek according to the Byzantine rite.
Before moving on, my guide introduces a local, heavenly treat – black coffee doused with ice and almond milk (caffè in ghiaccio con latte di mandorle) and oval-shaped lemon custard pastries (pasticciotti).
Being inland, on the southeastern tip of Italy’s boot, Lecce was spared the sieges and destruction that befell the Norman cathedral ports, such as nearby Otranto where the bones and skulls of 800 Christians martyred by the Ottomans are on display in the crypt.
When the coastal towns declined in status with the discovery of the Americas and trade shifted from east to west, Lecce survived on the backbone of its rural economy and its importance as a religious centre.
Yet the 20th century was less kind and in the 1970s much of the city lay in disrepair, its tobacco and textile industries unable to match east European and Chinese competitors.
But efforts to regenerate the area, from the late 1980s, appear to have been a success. So much so that a visitor to the city could be tempted to place Lecce less in the company of chaotic southern cities like Naples and instead with the far away prosperous north. Yet the burghers of baroque feel very much of the south.
Lecce’s architectural history can be surveyed in one sweep across the main piazza, Saint Oronzo. Towering above the scene is a statue of Lecce’s patron saint (Saint Oronzo) perched atop a 25-metre-high marble pillar from Roman times that had been one of two marking the end of the Appian way, stretching across Italy to Brindisi. The column was donated to Lecce by the people of that Adriatic port to mark the saint’s reputed triumph over the plague in the 1600s.
Next to the square is the half-uncovered Roman amphitheatre, which was once big enough to seat up to 15,000 people. It was discovered in 1908, having been lost in the 1500s. Excavations were carried out under Mussolini, who was intent on rebuilding a national sense of empire. In the process, the renaissance-era town hall on the square’s edge was demolished, and municipal buildings erected instead.
The severe buildings are yet another reminder that Lecce’s compelling character has been forged out of so many diverse influences. Written by Guy Dinmore is the FT’s Rome correspondent
http://www.ft.com/cms/s/2/2f32b6a2-48da-11df-8af4-00144feab49a.html

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Borgo Cenate, luxury villas for sale in Santa Caterina di Nardò, Salento, Puglia

New development of 6 luxury villas for sale in Santa Caterina di Nardò, south-western coast of Puglia Italy. This unique development in XIX-century style is located in one of the most exclusive area of Puglia and next door to the most important villa of the Cenate, ancient borough where noble families from all Italy used to spend their holidays and own their villas. This under construction development consinst of 6 independent semi-detached villas each spread on two levels: ground and first floor, with terraces, private garden and car parking. The villas will be built in 3 different sorts and each will have 3 bedrooms, 2 bathrooms, living room with dining area and kitchen corner, garden, car parking and storages. The development will be finished with high standard specification following the character of the region and its typical materials. Part of the building will have vaulted and star ceilings and part with particular and original roofing tiles. The villas will be elegant and comfortable at the same time, will respect the building character of 19th century and the existing environment. The location will be unique: next door to the most exclusive villas of Puglia, only 10 minutes walking from Santa Caterina beach and piazza, 5 minutes driving from Nardò town centre, 10 mins from Gallipoli, 20 mins from Lecce and 50 mins from Brindisi international airport. Become an early owner of one of these unique villas, with a little payment you will book it, fix the price and not pay the agency commissions. Full details on http://www.sispropertyandtourism.co.uk/public/Sale/Villa/SV695LS.php

Italy, Puglia, Salento: Property market analysis

Picture: Santa Maria al Bagno Piazza and views

As for UK Clients, our area has suffered during the last year not the real crisis but the weekness of the British Pound against the Euro. Clients have continued to aks information about the properties for sale in Puglia but most of them decided to wait for a better exchange rate before to make an offer to buy. Now most of them are used to that exchange trend and from a couple of months are starting again to buy Puglia properties, which are more affordable than other well-known regions of Italy. Of course, the trends of the sales are lower than the latest 3 years but it is a fair and positive signal for us. In my opinion the crisis in this area have stopped the quick-raise of the prices and now most of the vendors decided to follow the market trends for their asking prices.

The number of Swedish buyers come after the British ones. They haven't been effected by the global crisis and their exchange rate is still good against the strongness of the Euro. Swedish people prefere brand-new property or taking a better advantage and choosing off-plan solutions which give them the opportunity to buy with a 20% discount of the final price.

As for the rest of Europe, last winter we had a good new! Ryanair and other low cost airlines, start new direct flights from most of the Europe's airports to Puglia and opened new markets for us, especially to Brindisi the nearest international airport to the south-western part of Puglia. Those new flights brought to us a good number of clients from Belgium first, followed by Norway, Netherlands and Denmark.

We are proud to offer character properties in a nice area, where buyers can enjoy history, food and beaches. There are also undiscovered Baroque towns down here, in the countryside or by the sea, with low-priced properties. I think that the South-Italy is a safe bet and the property market in Salento area continues its slow upward trend for a simple reason: the area is desirable to locals and non-residents, who both want a holiday home in a place unaffected by mass tourism and where there’s a safe and healthy property market. The hot spot for our clients is Puglia’s south-western coast and particularly the coastline between Gallipoli, Santa Maria al Bagno and Santa Caterina di Nardò passing by the next-door towns Galatone, Nardò, Maglie and Galatina. (Luigi Spano)

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