By: Revanche

First forays into homebuying

June 14, 2013

“We have to get this guy a house.”

Back from our various vacationtimes, we immediately saw that, while Doggle was thrilled to see us, he was also happier, peppier and more engaged than ever before. He’d been hanging his shingle in a house with a yard, kids and other pets for a week and amid the shameless spoiling, it was clear that he’d been taking dog lessons from someone.

Apparently the quiet life in a small apartment with DINKs doesn’t quite inspire the still-reticent Zendog to come out from his shell and do a doggy dance, or dash around happily pouncing on his toys four times a day nearly so much as the chaos of a full house does.  It’s probably too much to hope that he’d picked up the notion of catch, but we actually have hope now that he might try.

So are we serious about getting a house for the dog?

Well, we’d been kicking around the idea of buying a house for some time now, and we designed our budget this year with a specific goal to save for a new down payment.  It does feel like providing a yard is the next best thing we can do for our beloved Doggle.  And yes, we want it for ourselves too, but let’s be honest, we’re doting parents and the dog is our happy excuse for a lot of things.

But  … real estate around here is absurd.

Early explorations of Zillow and Trulia revealed real estate listings that are literally jawdropping.

We’re planning to stay outside the city.  Many 20 and 30-somethings may find it appalling that people would actually prefer suburbs to the bustling city, but it’s true of us. We love visiting the city but it doesn’t feel like home to either of us. Between the traffic, the lack of (free) parking, the tight quarters, we’re just not city people.  And with the tech industry out here, and the salaries they pay, we couldn’t afford the city if we wanted!  So, y’know…

We’d like to be within fifteen or twenty miles of the city for reasonable commutes, which also suits my need for a warmer microclimate, so that was our first search parameter. We’d definitely be paying more for the luxury of better weather and saving time on a daily basis. If we were willing to be in say, Hayward, where I know the weather is as hot as even I would like, prices would be far closer to reasonable. But the compromise is better weather for me, not great for me and utterly crappy weather for him. For this, we shall pay.

We’re looking for at least two bedrooms, we’d really like two bathrooms and a two car garage, and a decently large kitchen is important to me. If there was a room I could start converting into my own private library (The Dream), that’d be the best but I will settle for a good amount of wall space and storage. We have no storage where we are now.

Last, PiC is reminding me to keep searching in specific areas where the schools are better. Which is sensible, this may be where we stay for a really long time. It needs to be a pretty safe neighborhood with some staying power. Which also means we probably should look at more than 2 bedrooms if we’re going to have any spawn. I grew up in a small 2 bedroom apartment but as an adult, I don’t really want to do that again, albeit from the other side, if I don’t have to. It might be character building but I’ll find another way to impart that.

Search results: moderately horrifying

We’re finding one and two bedroom, one bathroom, one car garage single family homes in moderately close/decent neighborhoods are starting at A. Million. Dollars. Seriously.

This shouldn’t be any surprise when in some neighborhoods, $800k hardly gets you more than a two bedroom, x bathroom(s) condo or apartment.

And three bedroom, two bathroom with garage SFHs run more like 700K-3M.

*gulp*

The estimated monthly payments on those homes that are 3k-7k (in more extreme cases) are almost beside the point.  I’d only feel comfortable to committing to a new loan if we had 200K in cash with a healthy uncommitted cash flow. We do not have 200K in cash.

We could make a pretty good run at it but it’s not going to happen overnight and as much as I fantasize about taking another job, that’s not going to happen either. Freelancing, maybe. A whole other job would be crazy and crazy-making.

Making it happen

We still hold hope this can work and maybe even in the next year or so. Not that I expect the market to get much friendlier over the next year, but we have steps to take to increase our buying power, and reduce our stress.

1. Reduce our current fixed expenses, including the current mortgage to make a significant dent in the down payment goal. We’re refinancing and going over all the other expenses to trim back.

2. Keep those fixed expenses low – I don’t want to commit ourselves to either too much house (payment) or too strict a budget. After nine+ years of living on a shoestring income to debt ratio, I refuse to find ourselves coming up empty on cash for the sake of a house.

3. When we get a decent cash cushion in place, I’ll focus on foreclosures to see if we can’t stretch our buying power.

4. Hope hope hope that mortgage rates aren’t abominable twelve to twenty four months from now.

It’s time to dig deep and turn on the saving engines again. It’s not worth cutting off our allowances, I don’t think, since it’s not much per month anyway, but I’d love to pull back a little bit everywhere.

::What else should we be doing? 

13 Responses to “First forays into homebuying”

  1. Consider moving to a cheaper city. That’s the only other option left, or rent forever.

    It’s just ridiculous how much these homes cost.

  2. Morgaine says:

    We’re house hunting right now too and it is NOT a fun process! The looking at various places, discussing pros/cons, determining how close/far away from amentities, what changes would be needed. And then there’s putting in an offer and negotiating. We’ve had one home inspection that caused us to walk away from the home and have to start all over again! T and I have had some heated discussions as well since we have only found 1 house we both liked but are trying to negotiate with the seller on price. Fun times! :S

    Hope you guys find a place that works for all of you 🙂

  3. Debt Blag says:

    Ouch. As someone who’s dabbled with the idea of buying in NY, I feel your pain.

    It seems like the biggest problem you’re always going to run into is that you’re competing against Silicon Valley money. Maybe think of things that they wouldn’t do, like take the train maybe? Have you checked out the further stops along the Pittsburg or Dublin lines?

  4. Yeah, that sounds about right. I <3 Mountain View, but a 20% downpayment (or a 40% downpayment to keep from getting a jumbo loan) is out of the question. We have friends who did it though– lots of spending almost nothing for years and putting money in the stock market. They had to tent the house for termites before doing any serious remodeling to make the house habitable. But it has a great location!

  5. moom says:

    The prices you are facing are even higher than here. Only the most expensive neighbourhoods in Canberra reach that price range. The bank set us a maximum price of $850k with a 10% downpayment (need to figure in a 4% buying tax here). Right now we can actually get $200k together in cash, so probably can raise the limit. And in the neighbourhoods that Snork Maiden seems to like for what we are looking for, below $850k doesn’t get very nice houses really. Or they need a lot of work and so really the total is higher. But at least they would have a minimum of 3 bedrooms. The one house I actually bid on sold for $877k and I bid $830k and dropped out. Snork Maiden is not so keen on the neighbourhood. We haven’t done any househunting for a couple of months now due to travelling (which makes me ask whether we should really buy a house). I’m still hoping that after the election here the price of houses comes down a bit (due to cuts to the public service). I doubt we’ll actually buy anything before then.

  6. spiffi says:

    I’ live over the hill and not in Silicon Valley, so I think the market might be slightly different here, but the biggest issue right now in this area is that a) there is minimal inventory of houses for sale and b) as soon as something comes on the market, there are multiple all-cash offers coming in from investment companies who are scooping up houses to rent out. So the average homebuyer who wants to do the “normal” thing, and go through inspections, get a loan, etc, is getting beat out by all-cash, quick turnaround offers.

    It’s a hard market right now for buyers – I would recommend that you look around, to figure out what you really want and what are deal breakers, because when the time comes that you *do* want to make an offer, you will likely need to put in multiple offers and decide quickly.

    And make sure your realtor is good – my friend is a realtor, and last week, she got her buyers into a property – there were 3 other offers received by the buyer, in addition to hers. The other offers were all for *more* money – but their realtors hadn’t bothered to read the listing or talk to the listing agent – the seller was looking specifically to sell immediately, and rent the property for 60 days, as they needed the money right away, but had surgery scheduled, and wanted to recuperate in their house, before packing and moving. My friend was the only agent who wrote up the offer with the 60 day rent back, and so her clients’ offer won, even though it was for a lower amount.

  7. eemusings says:

    The shitty uninsulated falling-down 2 bedroom house (albeit on a full section with huge yard) which we rented half of back home had a council valuation of $800k. Real estate is effing depressing in Auckland too.

    Hoping it will all come together for you guys and Doggle eventually!

  8. StackingCash says:

    House hunting, so close to my <3. Been doing it for the last 10 years. Avoided the bubble in 2007, but missed the lowest prices and interest rates of last year. Now homes are selling like wildfire with outrageous pricing. Granted it is nothing compared to the Bay Area, but still outrageous for Las Vegas, NV. Trying to convince myself to spend so much of our savings on a house, I consulted one of my older coworkers. He told me as long as I had an emergency fund for one year to just go for it. Money does nothing for you in the bank so you might as well "live" in it. Loved that thought and got me more comfortable spending our money for a nice house. Also after reading your post and the comments made me realize that the house prices in Las Vegas are cheap, 500k gets you into one of the top neighborhoods, 2500 to 3000 square feet, 4 bed, 3 bath, 3 car garage, brand new, and energy efficient. Too bad our income hardly qualifies us for that much even though we have a sizable down payment. Must save more I guess…

    If we were in your situation, buying a home would not be possible. I could not imagine even paying the property taxes on a million dollar home.

  9. Miss JJ says:

    I have to confess that your post is one of the few where I can actually relate to the home prices quoted. How sad is that? When I read other bloggers’ pontifications about owning RE, I invariably end up thinking, “That’s so cheap, what are you waiting for?”

    Oh, and you guys have access to 30 year fixed mortgages. I can’t tell you how envious that makes me.

    I do wish you the best in your hunt though!

  10. Living in the Bay Area and wanting to buy real estate…there’s a conundrum.

    I think if I were there and in, say, the first third or so of my working life, I would not even consider buying until retirement age. Instead, I’d rent something that fit most of my criteria, and then put all that I could into an investment account specifically for a house to own in retirement. This would give you the flexibility of being able to move from school district to school district as necessary (or, if your jobs change, to move closer to a new workplace) and protect you from the costs and hassles of maintenance, insurance, and repairs.

    I’m with StackingCash: the very idea of paying California-style taxes on a million-dollar property (that anywhere else is worth about 300 grand…) is absurd.

    If I really, really wanted to own property…well, I’d probably move someplace where housing prices were more in line with reality.

  11. Kris says:

    I lost 80% of my already-CHEEEEEEEAP home value before I had to do a short sale before moving to Washington DC. I also tended to have an abnormal amount of anxiety whenever something broke and needed fixing – I like calling the landlord when I need a repair, and I like my housing to be a fixed cost.

    I think some people are meant to own property and others to rent, although I could see owning again as long as it wasn’t by myself. All the best in your search!

  12. My pup loves the fact that we now own a home instead of living in an apartment so much more comfort and room. I use to complain about prices here in South Florida but you have me beat in that department big time. My wife likes bigger homes and I am all about location so we ended up close to the downtown area near the beach. House isn’t the greatest but you cant beat the location. Looks like you already have a plan in order the only thing I would say is make sure the location is where you really really truly want to be. And keep looking you never know what gem you may find.

  13. LAL says:

    I am dying to live where you live and we’ve been interviewing and hoping. We’ll see what happens. I can’t say I’m surprised. I live expensive area as well and we’ve bought a townhouse with two kids. Mind you it’s old and not large but we can manage. Now to get a home? I have friends moving to the area and buying a hose this week. For a steal of a deal she can buy $699k a 4bd home with rocks in the basement (no floor), no driveway, leaking roof, needs new windows, furnace, no insulation, basically all new renovation or tear down. Or she can buy new further out another 30 minutes for $910k which is what she is doing. And the location of the $699k is still not in the city! About 25 minutes so an hour for the $910k home oh that is “new” since it’s built in 1959 instead of 1890s.

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