ILLUSTRATION BY JOEL KIMMEL
A house might be the biggest investment you’ll ever make—but is it the best?
Warren Buffett has said that one of the best investments he ever made, in fact, came with a much smaller price tag. It was a book he bought decades ago, The Intelligent Investor by Benjamin Graham, who’d later teach Buffett at Columbia Business School. The takeaway: “Price is what you pay; value is what you get.” In other words, Buffett explained, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
Buying low and selling high is, of course, a central tenet of investing, from StubHub to fantasy football. In real estate, to some, that might mean rehabbing an outdated home or identifying a neighborhood on the cusp of great things. To others, it translates as staying put long enough to accrue equity and living within your means. (As the late author Thomas J. Stanley pointed out, “There are nearly three times more millionaire households living in homes valued at $300,000 or less than there are millionaires living in homes valued at $1 million or more.” He added that many of these savvy investors factor in sizeable upkeep costs over time.) The St. Louis housing market has its own waxings and wanings, but fortunately it’s relatively stable—and affordable—compared to those on the coasts.
But, as Buffett advised, recognizing value is just as essential in the long run. In real estate, that might mean realizing a plot of land’s potential, a house’s good bones, a neighborhood’s essential qualities. Here in St. Louis, we’re fortunate to have no shortage of great options, whether for families needing room to grow, the young professional looking for a lively block, or the empty-nester seeking a headache-free condo. And though this issue highlights just a handful of neighborhoods that are in demand at the moment, keep in mind that the potential is there for myriad others. As the real estate chart in this issue show, in some cases the average home value has nearly doubled over the past five years—and there’s still room for growth.
Speaking of growth, back to Buffett. Today, he lives in a relatively modest house that he bought 60 years ago for $31,500 in Omaha, Nebraska. It’s now worth an estimated $653,000.
He considers it his “third-best investment,” just behind that book and his marriage licenses.
