Tuesday, October 16, 2007

What do Pregnancy and the Real Estate Bubble have in Common?

....both tend to have better outcomes the longer you wait.

For he record, I think difficulty with waiting is a personality quirk of mine.

For example, I had the same anxiousness with my first pregnancy. I had to wait 9 month after we decided we wanted to have a baby for it to actually arrive. Mentally I knew the longer the baby gestated, the better. Of course I didn't want the baby to come early. I knew waiting was the best option....but it doesn't make the wait any easier (not to mention the whole pregnancy discomfort thing). Fortunately I come from a very fertile family, so we didn't have to go through the initial agony each month of finding out we weren't pregnant. I truly sympathize with my many friends who have had these difficulties.

I tend to be a very action oriented person, and also a planner.....so when I make a decision to do something life changing, like have a kid or buy a house, I want to take action right away.

But I have learned to cope with my quirks. On the kid front, with the second we "started" months before we were actually "ready." Then by the time I was actually "ready" for my second, the wait only ended up being 2 or so months.

In a somewhat similar fashion, that's how this blog was born.....to make my wait for reasonably affordable housing more bearable, and of course take comfort from the company of others in the same situation.

Hopefully the Bee will post September sales soon! The wait is killing me =)


Cmyst said...

I'm the same way. To think is to do.
It's embarrassing how many unfinished and even never-started projects I have sitting in my storage shed. Which is why I've learned to "wait a week" when I get the urge to buy something.

Paul said...

Buying Time: Hummmmmmmm. Maybe you are measuring the right buying time in days, rather than months or years? I know I do sometimes and have to remind myself, it took years for the bubble to burst, it has taken two years for the reversal to take place (from the peak in fall 2005 to present), and it will take years for the current downward momentum to flatten out. Note, I did not say "bottom" or "reverse." (Although it is probably it will reverse someday, it is also historically very likely that it will be "flat" for several years before prices start to go up again, although Shiller has opined that this is very hard to predict. I can still remember the housing declines of the early 70's, 80's and 90's.) Apparently local inventories have increased to about 14-15 months (per the blogs). This is in the face of monthly increases on the MLS of distressed properties. I have just accepted that I'm not evening going to start looking at homes until 2008, or inventories are down to about 10 months (still a buyer's market, but a sign of improvement) ... And now I don't worry about the daily "noise" of the bubble's collapse and the "good deals" that will become better deals with the passage of time. (On the BIA tour Sunday saw a beautiful home in EDH for $2.1 million! For that price, of course it should be beautiful, but $400/ft on one acre? Of course, that is about $1.8 million above our budget!)

Keep the faith!

Sippn said...

You should meet my teenagers. Not so cute. Ha.

buying time said...

Paul I completely agree....this bubble will take a long time to deflate. And once it does, we are likely to stay flat for some time. Although I do belive the internet speeds up the cycles a bit.

I have a semi self-imposed deadline of a year or two (since I would really like to be settled by the time my daughter starts kindergarten).

Cymst - I no longer walk into Michaels unless I am on a particular mission...to avoid the unfinished projects in the storage shed =)

Sippn said...

BT - I agree with you, finding a permanent home before kindergarden is a great plan. Kids need stability and a "home" when possible. A neighborhood is a plus. A community you're involved in is a plus.

Gwynster said...

Kids are not that frail! This is the worst sort of emotional reasoning. What makes healthy kids is consistent parenting, warm nuturing environments, and educational opportunities. None of the above is determined by whether you hold a mortgage deed!

What often leads to unhealthly environments is economic pressure on the parents which leads to harsh, inconsistent parenting yada yada yada. This has been modeled over generations by multiple studies.

Sorry Ave. but I hear this crap daily and it makes the people who actually work in human development nuts. It's right up there with Phlogiston theory.

Giacomo said...

I agree with gywnster. The idea that you have to own a home for the sake of your kids sounds like Realtor BS to me.

I would think that one of best ways to protect your kids is to make sound financial decisions for your family.

buying time said...

Kids are resiliant.....but at the same time, I don't like the idea of moving them in and out of schools. I'm not hard over on the deadline, but all else being equal, it would certainly sway us toward purchasing.

In an ideal world we would actually wait for the market to start moving up a quarter or two before purchasing...but that is way far off if you ask me. And I just don't think I can obsess that long =)

Gwynster said...

Ave, then admit the house is for you and not the kids and be gloriously happy with.

If you have your heart set on a certain school, rent there.

buying time said...

Geez G...you are blowing my cover here. Sure hope Mr. Average doesn't read this =)

My nesting instinct is in overdrive lately....its what is making me so antsy. And a strong nesting instinct can justify some pretty stupid purchases....which is why the "wait week or two" strategy helps me as well.

Gwynster said...

My nesting urge IS in nasty overdrive which explains why I'm sooooo cranky. This is year 7 of my waiting to buy.

I'm serious though, if you want to buy and you can really afford to either take the loss or hold for 12 yrs, they jump in and start adding some color to those ugly white walls. It's your moola so you do whatcha gotta do.

me? I said screw it and painted and worked on the place I rent. I'd rather loose my deposit (1100 over 4 yrs) then pay the ownership premium (14000k above rent annually including the tax break).

buying time said...

In all honesty, I am hoping we can strike a balance between "home as a nest" and "home as a long term investment". I don't want either side to influence the equation too much.

G, drinks are on me when we finally have a house party...7 years ...thats some serious pent up nesting. I'm just hitting my 1 year mark this week.

Gwynster said...

Prices really began rising in 98 here as every SV wanna be daytraders that wanted a tangible asset hedge bought speculative RE here. Then the tech bust hit Sac hard with job losses (I was a causulty) and by the time I had my downpayment saved up again, it was 03 and the craziness was in full swing.

Prices in 97 were low and 99 was ok but then it all went to tell in a handbasket. I was living in and looking to buy in midtown.

I also lived here during the last downturn when wages were really depressed and jobs hard to find.
That's another thing that makes me want to watch and wait because the neighborhoods you think will be fine often aren't and there is always that underdog community that really turns it around.

I really want to cheer for Oak Park but I don't think they are going to make it. Alkali flats is going to be hammered along with outer Land Park. Curtis Park will feel some sting too as all the economic pressure from the south and east eases into the better areas.

mbc said...

I completely understand wanting to be settled before the kids start school. It's true that it doesn't matter whether you own or rent as long as there is stability, but as a renter you never feel completely invested in the neighborhood and the landlord could always force an unwanted relocation. Of course, it would probably be pretty easy to relocate down the street.

This deflationary housing market is the pits. I wish all of the sellers would read the writing on the wall and slash their prices so that home prices will get to where they need to be sooner rather than later, and then everyone can get on with their lives.

Anonymous said...

If you can't afford to RENT in the School district you want, how the hell are you going to buy? Seriously, if you worry about being forced to move out of your child's school district as a renter you really should forget about buying there.

Also, Sippn agrees with you. Now picture in your mind Jimmy Stuart shaking Mr. Potter's hand when he accepts his job offer in "It's a Wonderful Life" that is approximately what your reaction should be.
as a general rule of thumb, whenever Sippn agrees with you you should seriously rethink the issue.

Anonymous said...

@ -HappyinSF

I feel pretty comfortable in saying that AB and her hubby can afford the neighborhood they are currently renting in and can also afford to buy in the same neighborhood.

It's simply a matter of being able to afford Nordstrom's and preferring to pay Ross's prices for the same/similar object. Or doing internet shopping to make sure you get the best possible bargain available.

As for Sippn? At least he warned her about teenagers. LOL!

I can agree that he played on her desire for stability though...

Buying versus renting is a personal decision based on a lot of factors.

Some people want and need that security of owning a home at the end of a mortgage (me) and others prefer the freedom to pick up and move whenever they want (one of my best friends).

The smartest of the renting nesters are doing what AB and G are doing, watching the market and unwilling to pay speculative prices. I don't doubt that they'll find what they are happy with when the prices match all of their internal needs, until then, they'll rent and be smart consumers.

It's no different than shopping for the best price on a handbag, HDTV, or car.

They are being informed consumers who make their decisions based on income, personal preferences, and market conditions.

I enjoy reading their thoughts and applaud them for their thoughtfulness and willingness to blog about the process.


Anonymous said...

My point wasn't that she couldn't afford to live in the school district..it was that if she is shopping in that district she is probably in the top 15% of earners in the area and it is totally irrational for her to think she is going to have to constantly pull her kids out of schools and move around just because she doesn't own. It makes no sense.

buying time said...

Sorry for the confusion gentlemen....with regards to moving the kids for school, my thinking was more along the lines that we haven't really decided where we want to settle down. We are still considering many different communities. As you know, lately we have been looking in Folsom, EDH, and Cameron Park.

It is highly likely that our landlord will put the house on the market in spring when our lease is up. So we will have to find another rental...hopefully nearby so we don't have to move daycare.