Thursday, June 12, 2008

Housing Options

When we first moved back to the Sacramento area in the Fall of 2006, we figured we wouldn't be in our rental for long. We signed a 6 month lease, and didn't put anything on the walls (since the holes would need to be covered when we moved). We also kept our down payment money in a high yield savings so that it was immediately accessible.

In some ways, I saw this as an option on the housing market. We could have saved money if we signed a longer lease (or moved to a cheaper rental), or locked our money up in a CD or some other financial product. The money we are not making by doing these things, is essentially the cost of our option.

Fast forward a year an a half, and I am starting to become frustrated. I am still hopeful that we will find a great place soon. But am wondering if it would be prudent to give up some of our options. Heck, I haven't even ordered checks that have the rental address on them (we are still using checks with our old D.C. address, and are down to the last book!). This hopeful mindset, has me living in denial, which makes the waiting both better and worse.


Paul said...

In 2002, I made the same decision, after selling a home that was too big for me and concluding that the real estate market was "irrational." Fast forward 6 years later, still nothing on the walls, but at least I have unpacked now, which I take as a sign that I will be buying something soon!

Thank goodness I have a great house, reasonable rent, wonderful landlord, good location, etc. Although I miss not being in my own home, we have a great rental and our net worth has about doubled over the past 6 years renting.

Jacob said...

Wait a second, you still write checks? lol, try bill pay from your bank. Much easier and you save $$ on stamps.

Well lets see, in 2004 or so was probably the first year I could have bought but everything was so out of whack.

I remember hearing something on the radio where someone was asking if they should save $$ and try to buy later and they were told on average they would have to save $3k per month just to stay even.

Well that made no sense to me. How could homes increase so much more than wages.

So I decided either:

1) Prices would come down to me.
2) Prices would level off for. years and give me time to catch up
3) Prices would go on forever and I would just rent and forget about buying.

So it was all #3 for a couple years. Then some #2, and now a lot of #1.

So waiting worked out well so far.

It is tough when you would like to get a nice home, fix it up, remodel it to your tastes, get a nice garden etc. But it is worth the wait.

Deflationary Jane said...

We did do some long term fixed rate investing in 06 and 07. A good chunk of our money is still making 5.25 and 5.4. We also had some short term CDs which matured and those are sitting in MM making 3%.

By renting we were able to sock $1,700 a month away. True, we live small but I still view that as far better then paying taxes and ins on a declining asset. Having those savings set aside is what allowed us to comfortably move out of the area.

Patient Renter said...

try bill pay from your bank. Much easier and you save $$ on stamps.

the business plan behind bill pay, as with all things, is to monetize it (charge for it) once enough people jump on.

but anyways... :)

Mike said...


I am frustrated as well. My 4th year renting anniversary is comming up soon. And I've been actively making offers this year but with no sucess. I either got outbid by investors, short sales never got back to me, or house sold before I could even bid.

I never imagined, I would be renting for 4 years when I sold my house. However, here we are. Lots of things I want to do but can't do it in my rental house. I still can't park my car in garage, can't fully set up my home entertainment system, put in whole house fan (like I had before), purchase some heavy furniture for home, etc...

Anyway, there is light at the end tunnel for me. An offer I made is very close to being accepted (response within days). And this is a Short Sale too !! Amazing.

mcb44 said...

Moved back to Cali in April 07
1. Insisted on 6 month lease
2. Nothing on the walls
3. 50% of furniture in storage
3. Garage full of unpacked boxes. I've really missed some books
4. Downpayment in MM funds at very low yield

Frustrated - a bit
Impatient- somewhat
Ready to pull the trigger - not yet

Sounds like a common theme.


Fast forward a year an a half, and I am starting to become frustrated.

Wouldn't you be more frustrated to find out you overpaid for this home?

sacramentia said...

Moved back to sac in the summer of 06 aware the market was falling, and decided to buy and negotiated the best deal we could in 06. (about 15% off market) Obviously in hindsight it was a poor financial decision. (down another 15% now)

But we didn't put the life we wanted on hold, painted the walls, gave the kids a place to call home, and used the slow market and high inventory to pick a house that suited us very well.

I read these posts of no pictures on the wall and putting life on hold and I'm not sure who made the wrong decision. While my net worth is less on paper, life hasn't changed much. I wake up every day, work as hard as I can to be productive and enjoy life.

alba said...

similar story here. We moved back in '05. Nothing on the walls. I've held out for a new driver's license for 3 years now. Our first lease was 9 months. Boxes in the garage.

Deflationary Jane said...

True Sac but not everyone is denying themselves.

We downsized because we knew we were moving eventually, either to some place local or if we got lucky out of state. It's not for everyone but honestly we found we really didn't miss "the stuff". Reduced our weekly cleaning by 2/3 easy.

Now we did put holes in the walls, painted every room, put up curtains, and replaced some fixtures which we are leaving. Easy to fix with a 5 gal can of antique white eggshell and some putty. Painting is a breeze once the furniture is in the Pod.
All told, that's a couple of afternoons and $700 vs saving just over 20k a year for 5 yrs.

Buying Time said...

There are lots of non-financial costs related to renting. See earlier post for a laundry list.

Up till now I certainly think the savings was worth it. Going forward, I am not as sure. I guess that's why we had gotten more serious about looking.