Where is Tuscan Ranch and why does the CEO live there in a $340K home?
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A $200,000 ‘loss’ – and happy with it
Century 21 CEO’s home is worth 15% less than when he turned down a cash offer in ’04, but he’s focusing on the gain.
By Chris Isidore, CNNMoney.com senior writer
August 27 2007: 3:11 PM EDT
NEW YORK (CNNMoney.com) — Being the CEO of one of the nation’s largest real estate firms didn’t stop Tom Kunz from becoming one of those homeowners who’s been hurt by the downturn in the housing market.
But not surprisingly, given his position as CEO of Century 21, Kunz thinks the investment he made in his former home in Tuscan Ranch, Calif., was still a good one, even if the value has tumbled about 15 percent over the last three years.
During a recent interview about the state of the current real estate market, Kunz noted that he bought the home for $340,000 in 1998. When he moved to New Jersey from California in 2004 to become CEO of the firm, he had a $1.3 million cash offer for his home. But he turned it down and decided to rent the house instead. A relative now lives there.
This month a former neighbor who has an identical home in the same subdivision sold the house for $1.1 million, Kunz said.
Glut of homes hits 16-year high
It’s the type of decision that could give many homeowners and investors sleepless nights. But Kunz said it’s important for him and many homeowners who find themselves in similar situations to look at what they’ve gained, not the theoretical loss they might have had.
“I could sit here and say, ‘Oh I lost $200,000.’ But I’ve still made about a $700,000 profit,” he said in the interview late last week about the problems facing the housing market.
In fact, Kunz has seen about a 14 percent compound average rate of growth on his home investment, before inflation, since he bought it in 1998. But if he’d sold in 2004 at the higher price, he would have seen about a 25 percent rate of return.
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