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

[pixxelpuss.livejournal.com]

Since you asked for advice (and you know I can't resist that), I personally wouldn't. I don't think of houses as investments, I think of them as the solid possibility of not losing money (as compared to rent). I wouldn't ever count on them appreciating, because frankly I think the economy is going to get a hell of a lot worse yet. Seattle is probably safe from some of that, but by no means all. I think the housing market isn't quite finished deflating yet, let alone being fully effected by the rising unemployment levels, lack of lending, and the market being flooded over the last couple of years. So whatever you buy a home for now, I anticipate it being worth much less in the next few years. And frankly, I'm a nervous nellie. We don't have a down payment saved, we don't have equity, hell, our credit kind of sucks. And I would hate for you guys to find yourselves in a position where you can't afford the adoption stuff. Maybe at least hold off until you've got that covered/saved up?

In terms of house buying, the benefits may still outweigh the problems- a shorter commute, less social isolation, not hating your house. Those are all good things. The question then becomes what are those benefits worth, and how does that compare to the possible cost. In a worst case scenario, if you sell the new house in five years or whatever, will you lose more money on the house than you would have spent to stay put or rent for those five years? If so, I'd say avoid buying, but if not, that might still be worth it.

[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.)

[waterfaery.livejournal.com]

My 2 cents is about 60/40 on the "do it" side, I think. But this is about what you want; it's only because you asked that I am speaking up; I've seen others decide to buy now for whom I think it's a really really poor choice and haven't said anything.

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!

[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. :)

[textualdeviance.livejournal.com]

Lots of food for thought.

The cost/benefit analysis here has to take in so many unknown variables, and so many things that can't be quantified.

At this point, I know that the best course of action is to talk to the agent (though she'll undoubtedly be on the side of "do it now so I can get a commission") and also watch how the market is going, to catch when there might be signs of a stablization or even prices going back up.

[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.

[mekle.livejournal.com]

I think if it were *just* the big project thing, we'd probably be focusing more on just some upgrades to the current place, and basing those on an expected time of when we might be moving in the future.

[waterfaery.livejournal.com]

See? I *said* you were pragmatic. ;-)

[textualdeviance.livejournal.com]

You're right that there's a boredom/distraction factor here. Though the unhappiness thing is definitely house-related, too, and has been for a while, as I keep watching our building plans being pushed further and further out.

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.

[textualdeviance.livejournal.com]

Heee. That's mah boy.

[textualdeviance.livejournal.com]

Dude, you need new icons.

[mekle.livejournal.com]

Yes, yes. I will admit though, it sometimes takes the fun out of things. :)

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.

[mekle.livejournal.com]

I'm open to suggestions. :)

[waterfaery.livejournal.com]

*stabs eyes out with spork*

[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!

[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.

[textualdeviance.livejournal.com]

Hey, quick q: Are you guys thinking about heading over here for BSG tonight or are you staying chez vous?

(In other words: How much do I need to pick up the house? ;) )

[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.

[waterfaery.livejournal.com]

I'm sorry, we ended up with a childcare nightmare. Would have headed over, but the gal babysitting Alexander (one of his daycare teachers) forgot to leave her apartment number so I spent over an hour knocking on doors within her complex--she also wasn't answering cell.

It was an horrific night, so much so that we didn't even get to watch... catching up today.

Can we have a raincheck???

[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.

[textualdeviance.livejournal.com]

Heya!

Raincheck would be grand. Maybe dinner sometime?

[waterfaery.livejournal.com]

Totally. Let me know what days are good for you.