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Don't be hasty in buying house for 'forever after'

THE BALTIMORE SUN

Some in the real estate industry call it the "forever after" house. Others use the grimmer phrase: "terminal house."

Whatever you call it, the concept is the same. The idea is a property where you wish to reside for the rest of your days.

There are 77 million baby boomers in America. And with the oldest boomers reaching their mid- to late-40s, a swelling throng is starting to think about that sumptuous forever-after house, says C. Douglas Rittenhouse, the broker for the Century 21 office in Catonsville that bears his family name.

"We baby boomers are the 'get-it-now' generation. Many of us were raised in affluent times, and we want what we want when we want it," says Mr. Rittenhouse. At 43, he recently purchased the ultimate cocoon -- a luxury town house in the College Hills development outside Catonsville Community College.

Among the amenities of Mr. Rittenhouse's home: two fireplaces, a European kitchen with a built-in microwave, and an oversized master bedroom with a "superbath." He plans never to move.

Are you coming into middle age? Do you notice your thoughts of the future focusing more on comfort and convenience and less on adventure? Then you may be a candidate for purchase of your "terminal home."

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Real estate experts offer these pointers:

* Realize there's now a rational basis for making a long-term housing decision.

The 1980s idea of buying one house and then flipping to another a couple of years later is no longer justifiable from a financial perspective, says James Hughes, a housing specialist at Rutgers University.

"In the past, there was always more demand than supply for homes and if you made a mistake, it was no sweat. Inflation would bail you out. That's just not true anymore," Mr. Hughes says.

Nowadays it's not only tougher to make a housing transition -- since property is harder to liquidate -- but many people aren't getting the income increases that would support a succession of trade-up steps.

Realizing how difficult and costly housing moves can be, many ** are thinking that the next house should be a carefully selected last house, Mr. Hughes says. "They know that churning doesn't make sense."

* Don't plot your "forever after" property prematurely.

"You can anticipate what you'll need in a house for only five or 10 years ahead. You can't project the lifestyle you're going to lead much beyond that," advises Sue Zitzer, an agent with Century 21-Forty West in Ellicott City.

Ms. Zitzer says that, time and again, people miss the mark when they try to project their housing needs too far ahead. She recalls a Baltimore schoolteacher who, at 55, took early retirement. He and his wife, a homemaker, still had teen-age children at home when they moved to a much smaller "terminal house."

The move proved a mistake, however, Ms. Zitzer remembers. The teen-age children didn't leave their parents' nest until well into their 20s; as a result, the new home proved crowded. As it turned out, the small house that could have been fine for the couple in their 60s was just too small for them in their 50s.

* Don't go to extremes in reducing your lifestyle in your forever-after house.

Trading down is not something most Americans handle well, says Mr. Hughes of Rutgers. Over most of the last three decades, homes in America have not only gained in size but have also become more packed with amenities, he says. Despite the rough economy, housing expectations continue to rise.

It could be a prudent choice to move from your big suburban house to a tiny condo-apartment in your retirement years. But imagine yourself living in the little apartment. Would you truly be happy with that tiny living room-dining room combination? Would you like a kitchen so small that you couldn't eat Sunday morning pancakes in there? Would you feel comfortable when your grown children become houseguests, along with the grandkids?

"People are trying to be more economical about their lifestyles. -- But the old American dream catches up with them," says Ms. Zitzer, the Ellicott City agent.

Real estate experts don't argue for one particular lifestyle -- only that those making a transition do so carefully to avoid costly mistakes and reversals.

* Pick a mortgage term in keeping with your long-term housing and financial objectives.

If you're 50 and moving into a forever-after house, do you really want a traditional 30-year mortgage that wouldn't be paid off until you're 80? A better idea -- presuming you could afford it -- could be a 10 or 15-year mortgage, housing experts assert.

Although shorter-term mortgages are becoming increasingly popular, some Americans cling to the belief that it's smart to have a traditional 30-year mortgage which will provide them more years to benefit from the federal tax deduction on mortgage interest.

But even if you believe that the mortgage interest deduction will remain available to Americans for the indefinite future (some experts think Congress will whittle it away to almost nothing) you may well find better future uses for your money than making monthly house payments. What about your children's college educations? What about your own retirement costs?

"It could be very nice not to have a house payment in the future," says Mr. Hughes of Rutgers.

* Never say "never" on changing your housing decisions.

You can become neurotic about trying to plan the rest of your life, or you can simply do the best job possible, leaving open the prospect of unpredictable developments.

Who would anticipate that the grown daughter of a couple in their late 50s would become a "boomerang" kid and return to the parental nest to live, along with her baby? Who would guess that a longtime widower in his early 70s would decide to remarry?

Not only do lives evolve organically, but some people have a strong tendency toward restlessness with the status quo.

And focusing too much on your final housing plans of the future could rob you of some of the spontaneous enjoyment of the present, Mr. Hughes cautions.

"Remember that the real terminal housing decision is 7 feet long, 3 feet wide and has a lid," he quips.

@4 (Ellen James Martin is a columnist for The Sun.)

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