Money Factor in Housing Decisions

By Lois A. Vitt, Ph.D.

Buying a new home, remodeling, or investing in a second home is all about cost and affordability, right? Absolutely yes and no! But aren’t “price,” “monthly carry,” and “tax consequences” the key deciding factors in any housing transactions? Of course they are, and no, not as often as you may think. The money factor is important.

Dreaming of a House

Confusing? Yes, but so is the way many people go about making financial decisions. Though it’s true that your finances inevitably constrain, shape, and facilitate your housing transactions, your financial decision-making skills will show up as clearly as your fingerprints on those you make about housing in particular.

Clearly this could be the best time for you to make that housing change you’ve been putting off with home prices down so much across the country, and mortgage rates at historic lows. No doubt about it, the market might be beckoning you to take the plunge and save money along the way. But before you do, take a look at how you handle financial decisions in general and the emotional baggage they can trigger in your life.

“Buyers are liars,” is an old saying among real estate professionals. Why? Because many buyers insist that the upper limit they’ve just given their real estate agent or broker is fixed and unchangeable. Then, they’ll buy a home that exceeds their budgeted price. This can give agents a large headache, especially if they’ve lost the sale to another agent who wasn’t aware of, or ignored, the buyer’s “limit.” The money factor is an integral part of the process.

Home buyers usually are not lying—to themselves maybe, but not to their agents. What this saying really suggests is that people often enter the marketplace with little awareness of their underlying housing psychology, so their perceptions about affordability and other factors are not always valid.

If this feels familiar, be aware that your tendency to rush ahead without adequate preparation can lead to serious complications and it often does. And it can lead to dragging your feet and can spoil your chances of making the deal of a lifetime.

Some people deny or circumvent altogether their particular money baggage. They believe “hard work” and “planning” will always carry them through. Others get knotted up about money, because “money” is about so much more than dollars and cents. It ties into our conscious and unconscious minds, needs for love, independence, power, security, control, and self-worth.

But this is certain: Money is ever present and ever changing in all of our lives, and we must make our peace with it, especially when good housing decision making is at stake. That means talking about housing transactions, expressing feelings calmly, and honoring concerns of those who will be moving or investing with you whether that be family members or others. It means keeping a cool head and an investment “checklist”, so you can avoid the pitfalls and emotions that otherwise can spoil your ability to negotiate wisely.

About the Author

Lois A. Vitt, PhD

Lois A. Vitt is a housing expert and financial sociologist, and is the author of “10 Secrets to Successful Home Buying and Selling”, the first book to demystify the psychological forces behind our housing decisions. To learn more about Lois and this book, visit

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