Mar. 20th, 2009 01:01 am
Domestic disturbance
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textualdevianceThe 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?
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?
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I think there's a little bit of "I need a big project to distract me from being unhappy about not having the job I want and the kid I want". And that could prevent you being as pragmatic as you need to, so think about that some more, maybe, but OTOH your M is nothing if not pragmatic! (Ok, and smart, and geek-hot, but he is definitely pragmatic.)
But despite that--and the economy--I think there are some good possibilities out there, and I agree with you that the economy is strong. I also know exactly what you mean about M's job being "safe" and knowing your retirement planning and non-retirement nest egg situation, I don't think you're ThisClose to bankruptcy. I know you have a LOT of options that many people don't. Frankly, we're sitting on our "buy an investment property" money for another year or two because our jobs are *less* secure and we have a 15 year mortgage on our home--and until H is a citizen (another 2 years we think) he doesn't get unemployment if he loses his job.
In sum, it would be much less risky for you than most people to do this at this point, but if it's mostly for the "need a project!" reason then I'd wait until that's not the primary driving force.
I think that the general housing economy in Seattle has 1-3 more years of shrinking, but if you found the right opportunity you could still be on the safe side of that. The real kicker I see here is that I honestly don't think you'll be able to sell your house for the value that makes the math line out. So I'd say this...
...try to sell first. If you can sell for the price you want, jump on a good opportunity, in my neighborhood of course. If you can't sell for the equity you want, don't go there. :)
But that's just my opinion, and it can be crumpled up and discarded at will!
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Ok. Time for me to go back to trying to figure out how to make a whole-house carpet replacement work while living in the darn place.
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(In other words: How much do I need to pick up the house? ;) )
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It was an horrific night, so much so that we didn't even get to watch... catching up today.
Can we have a raincheck???
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Raincheck would be grand. Maybe dinner sometime?
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Of the housing/job/baby situation, the one I have the most immediate control over is the first one. And so rather than sit around feeling helpless about everything, I kind of want to do something to improve my overall situation. This just seems like the path of least resistance. Technically, I have some control over the baby situation, too, but I really don't like the idea of trying to move when we have a little one to care for. If we're going to move, I want to do it before that happens.
FWIW, as far as the value of our current place: My "gotta get this" number is about $40k less than what it was assessed at last year when we refinanced, and it's in the same ballpark as recent sales around here.