Domestic disturbance

[textualdeviance]

The good:
There seem to be a fair number of houses in our price range, and they're getting marked down regularly. There are bargains to be had! (Though a few of the ones we've looked at are also selling fairly quickly at those price points; looks like the upper end of our range is about what many folks are willing to pay right now.)

The bad:
Ehm. The same sort of thing is happening in our zip code. And there's no way we can cover this without at least $100k of equity profit on this place. It's also taking 100 days or more to sell up here. Bugger.

The frustrating:
A fair amount of the uncertainty on this would be solved if I got a job. I still wouldn't count my income toward what we can afford in payments (heck, we're not even going by the 28/35 rule), but it would be a nice cushion for the other stuff, like the upgrades and fixes we need to do here to sell the place.



If we do this, we'd be burning through about 80% of our non-retirement nest egg (equity + stock) for the down, and stretching a bit for a monthly payment. Any other big expenses that came up in the near term--including things like the adoption--might be difficult to manage.

And of course, economic times are uncertain. Things may well get worse before they get better. M's job is safe, but little else is a given. The overall value of the house we buy may well go down even further after we buy it, putting us at risk for being upside-down in the payments.

On the other hand, the local economy here is pretty strong in its bones. Real estate prices were definitely overinflated, but I think they're rapidly coming down to a realistic settling point. Our place, for instance, has added about 35-40% of its original value. That's a reasonable gain over nine years in a growth area. So chances are pretty good that what we buy now will probably be worth a fair amount more when we're ready to move again in five years or so.

Also, I think it's certainly reasonable to expect that I'll be working at least some of those five years. I'll of course take some time off to be with the little one when we get one of those (as will M), but I don't expect to be unemployed forever. If I absolutely had to, I'd go back to office temping. Heck, I'm probably more of an untapped investment than either the house or the stock at this point.

Barring total disaster, the real worst-case scenario I can see happening is that prices drop even further, I can't find a job and we have to do some serious Vitus dancing to make the mortgage payment for a little while. But I really, really don't see that sort of thing lasting beyond another year, maybe two at the most.

And in the meantime, we're likely to be considerably happier on all other counts because we'll be in a nicer house in a better location, we'll be seeing our friends more, and M will have an extra half hour to an hour in every day thanks to the shorter commute. Heck, that bonus alone would be worth the move, IMHO.


Bah. I still just don't know. In the short term, this is probably crazy. But for medium-to-long term value, I think jumping on these bargains right now is probably justifiable.

What do y'all think? Am I throwing myself off a cliff or making a shrewd wager?

Comments

[thefirstalicat.livejournal.com]

I'm in the "you're throwing yourself off a cliff" camp on this one, I'm afraid! Though it might only be that my definition of homeownership doesn't actually include the concept of the house being an investment; rather, it's my home. I can understand being fed up with your place, but I think making an effort to make it more comfortable for you is smarter than chucking it and buying someplace new in the current economy.

Also, despite M's job being safe, you like most Americans are almost certainly one serious illness or accident away from bankruptcy. Not to be a doom and gloomer, but on that basis alone I'd be very reluctant to deplete my retirement by some 80% in order to buy a house I only plan to stay in for five years. Add in your plans to adopt and it seems that much more reckless to me. (Also, I'm not sure how adoption agencies would look upon you as prospective adoptive parents if you happen to be in the middle of a huge move at the same time - from what I know of such places, they're looking for stability above all, and that means people who are settled in their home and community.)

[textualdeviance.livejournal.com]

Well, FWIW, this isn't our retirement money. We have a relatively healthy 401k (as well as very good disability, health and life insurance.) Everything we've been saving up so far, in terms of stock and equity, has been in service of building the next house. The only change, really, is that we'd be buying instead of building, and we'd be doing that a couple years sooner than we would have built (which is more expensive.)

And as far as the adoption goes, we'd definitely delay that until we were in the new house.

So really, the big issue is whether it's stupid to try to sell (house and stock) right now while the market is down. The question is whether the potential money we'd lose on those transactions would be made up for by a potential much larger gain on the new house.

[mekle.livejournal.com]

Just remember to think about that potential gain not only in monetary growth, but also day to day happiness over the timespan of living in that house. :)

[thefirstalicat.livejournal.com]

FWIW, this isn't our retirement money.

Ah, my misunderstanding, then!

The only change, really, is that we'd be buying instead of building, and we'd be doing that a couple years sooner than we would have built

But if you're planning to build your dream house in a couple of years anyway, why wade into the maelstrom of the housing market now? Two/three years is not a long time, and if you buy now you won't be able to build your dream house until you've saved up enough again...Doesn't make sense to me, I'm afraid!

And as far as the adoption goes, we'd definitely delay that until we were in the new house.

That does make sense!

[textualdeviance.livejournal.com]

As far as the dream house goes, there are a few weird things with that.

I've always had it in my head to do this, but it was never a possible reality until we bought this place, and started building equity and stock and otherwise improving our overall financial picture. When I started thinking it was possible, I started drawing plans, and have been continually revising them ever since.

I've also drawn up countless spreadsheets on how we were going to afford this. I've researched land prices, construction prices, how the loan process would work--the whole shebang--and I have a fairly good idea of what it's going to cost (adjusting for inflation, of course.)

When I drew up the latest series of projections of how much money we'd have to do this, it was just before I went back to school. Those plans were predicated on the idea that our equity and investments would continue to have net rises. Perhaps stablizing somewhat over the meteoric rises they'd had initially, but still gaining. With those projections, I figured we could buy the land shortly after I graduated and got a job, and break ground by next year at the latest.

The problem with the existing house is that we never intended to be here for this long. We've been wanting to move for about the last four years. We sacrificed some of that for my schooling, but figured it wouldn't be much longer after that that we could finally get out of here and get started on the build.

And then our nest egg--the building fund--started shrinking. Realistically speaking, the kind of house we want to build is something that, on an open market with an intent of profit for the builder, would probably be worth about twice what our current place is worth. Had our funding maintained value, we could've swung that about now. But with the sharp drop therein, it's just not going to happen.

The reality here--that the dream house simply isn't going to be possible within the next 3-5 years, if that--is what's prompting this reconsideration.

Thinking of this in car terms:

The house we have now is kind of like an aging Toyota. It's been reliable and serviceable for a long time, but it's starting to show some signs of age, and really doesn't have a lot of the newer features we want. It's going to need some expensive repairs to get it up to date and in better running order.

Now, we've been driving this Toyota for such a long time because we've been saving up to buy the Jaguar we've been dreaming of for years. Only now, we're seeing that the money we had saved for that just isn't going to cover that Jag anytime soon.

So the question becomes: Do we use this savings to keep repairing the Toyota, or do we instead roll it, and the savings, over into something midrange, like a nice Audi or something? Yeah, it means it's going to be even longer before we can buy that dream Jag, but in the meantime, we won't be constantly wondering whether the Toyota's going to cough up another $2k repair bill. And we'll also have heated seats, power seat adjustments and an MP3 jack on the stereo, all of which will make driving to work a heck of a lot nicer than it is now.

Or in other words: Do we wait longer to jump from, say, category three to category eight, or do we admit that category eight is basically out of reach for the forseeable future, and it's time to just upgrade to category five instead?

[textualdeviance.livejournal.com]

Also, the kid thing is a factor here, too. I'm not going to want to try to move OR build when there's a toddler running around the house. So whereever we are when the kid comes is where we'll be staying until she's in kindergarten. So more or less? We're stuck for five years no matter where we are. I'd rather be stuck in a nicer place.

[mekle.livejournal.com]

So, Just for context: Yes, My job is what most would term 'safe'. I also need to note that my employer has a fantastic benefits package, and our savings is in a place where we probably DON'T fit in the category with most Americans, and would weather a serious illness or accident fairly well financially.

[thefirstalicat.livejournal.com]

My job is what most would term 'safe'. I also need to note that my employer has a fantastic benefits package, and our savings is in a place where we probably DON'T fit in the category with most Americans, and would weather a serious illness or accident fairly well financially.

In that case, congratulations! I've just heard so much lately about people in what appear to be quite secure situations suddenly find themselves facing bankruptcy and homelessness because of a serious accident that left them unable to work, for example, or an illness requiring expensive meds that their health insurance won't cover. It's not even poor or uninsured people anymore in the States who face those kinds of problems, it's middle class people with good jobs and good health care coverage - or so they thought, until disaster struck.

(Why yes, this is a plug for Canadian style universal medicare {g}...)

[textualdeviance.livejournal.com]

I absolutely love our health insurance (which is administered by The Company.) It pays for basically everything. The only things we shell out money for are certain percentages of vision and dental stuff. We don't even need approval to see a specialist, which is amazing.

I do hope that if we do get some sort of single-payer or other plan here (which would be great) that it's going to be administered as a full-pay dealio, and not set up like current insurance companies that require ridiculous copays for everything. Or that at least companies will be allowed to offer supplemental plans to cover whatever the government plans don't.

[thefirstalicat.livejournal.com]

I do hope that if we do get some sort of single-payer or other plan here (which would be great) that it's going to be administered as a full-pay dealio, and not set up like current insurance companies that require ridiculous copays for everything. Or that at least companies will be allowed to offer supplemental plans to cover whatever the government plans don't.

Well, Canadian nationalized health care doesn't cover absolutely everything, but it's close. I have dental coverage through Chris's work, but if I had serious dental problems and didn't have that coverage, I think it would be covered by Medicare. Just not stuff like cleaning or fillings. I think.