Now that I've established that I'm looking to buy a house, let me tell you all about my first foray into the market.
First of all: as soon as I knew I'd be moving back to Portland, I applied with my credit union to be approved for a mortgage. Then I did some emailing with a friend and he recommended his mortgage lender so I also applied with that bank. In both cases I was approved for up to 250k. So, yay.
Of course personal finance 101 tells us not to max ourselves out on housing costs, and I don't intend to borrow that much, but it at least gives me a framework. No surprise: my frame is the very bottom of the real estate market in Portland.
I did start poking at the market a little bit: I loaded the redfin and realtor.com apps on my ipod touch and started doing searches... all the time. As I feared, my price constraints limit me to a ring well outside the close-in parts of Portland, but one of the approachable areas is near houses owned by three different friends, so that's kind of awesome.
The real estate searches I've been running are helpful, even if they make me feel silly. Last Wednesday I saw a listing that really made me sit up and take notice. It was an adorable beautifully-finished house just over a half-mile from my friends' houses. The location was otherwise crappy - extremely close to the highway and a freight train line. However it was just so amazingly cute I couldn't stop looking at it.
Long agonizing story short, I used miles to book a flight to Portland and arranged to see four houses with a randomly-chosen agent. I liked the agent quite well. One of the houses was a nightmare pit that is going to be on the market a LONG time; one had a fussy yard and an icky inside; one had good bones but was going to be a pretty big project. The fourth house, the cute one, was every bit as amazing as I thought.
My agent said they were reviewing offers that night (after a whopping 3 days on the market) and that it didn't hurt anything to offer if I wanted to. It costs nothing and takes ten minutes. She said if I thought I'd regret not making an offer, then I might want to do it. She also said it was going to go higher than the list price.
So after futzing with a calculator a bit, I decided to make an offer for 10k more than the list, with a 10% down payment. We offered 45 days to close and free week to get out of the house after that. The agent and I parted ways, and I went to my friend's house to sit by my emailbox.
About 15 minutes later an email came in; the link in it took me to an electronic version of the offer letter. I had to click to initial 11 times and that was it! (Yes, I did skim it before sending it in.) By 3pm I'd made an offer; by 9:40pm I knew I was their second choice, and by 8:30am I knew I didn't get the house. The winner(s?) had a bigger down payment and had offered the same price as I had, so it's nice to know my guess was decent.
It was disappointing but I'm mostly glad. I've decided it was an A+ house in a D+ location. I think I'll shoot for a B location and a B house and hope I can make that work. But I should probably stop monitoring the real estate sites because I can't fly up for another weekend jaunt! I can do this in earnest starting in five weeks.
Tuesday, August 28, 2012
Monday, August 27, 2012
House hunting: why I am considering buying
I'm starting what may become a saga of house hunting, so I thought I'd begin by stating why I'm pretty sure I want to get into the market. I may need this for moral support in the future!
Financial picture:
I'm moving back to Portland in about a month. Since I left six years ago I've paid off all my debt (car + credit + moving + grad school all came to approximately 25k; it was never at scary levels but it certainly took a long time to become and stay fully debt-free), have continued saving aggressively-ish for retirement (18% + 4% match, fully vested now that I've passed my six-year anniversary), and have started saving for a house down payment. I've also managed to do quite a bit of travel and a lot of local exploring as well. In short, life's been good.
Why I didn't buy already:
When I lived in Portland before I didn't think I could afford to buy. With retrospect...maybe I could have, if I'd gotten in before things got crazy. But my head wasn't there and it's just as well I didn't buy, given how my life has been more mobile than I expected!
I've known that as long as I was in the Bay Area, I wasn't interested in buying: anything I can afford would be in a pretty rough neighborhood, would be pretty icky, or would be very far from work. All that and it would cost a lot more than my apartment! The final factor was that I never had any intention of staying in California permanently. So that's been a non-starter (though I have looked, and despaired, occasionally).
Buying for retirement stability:
A few years ago I had a conversation with a friend that was pretty illuminating. She was looking at her retirement plans a few years down the road and was despairing. As long as she keeps working she can live a great life, but once she retires, she can't afford anything like her current life. Her rent alone will take most of her social security check, she doesn't have a pension, and I inferred that her retirement savings aren't that robust. So that was certainly food for thought. If I didn't have to pay rent, my retirement might be smoother.
On the flip side, property taxes and maintenance are no joke. It's impossible to know if the monthly outlay post-mortgage would be equivalent to or even more than rent would be. There's also the responsibility involved in owning a home. That tilts me toward a condo, but then you run into HOAs and the possibility of special assessments in the future if problems crop up. So in short, it's certainly not a given to me that buying is the right and only choice.
What I'm looking for:
I had my eye on a particular condo development for a long time, but their HOAs and taxes are so high - nearly $800/month!! - that the sales price is going to have to come down a lot before I can be tempted into it. Honestly I think they're going to go into foreclosure soon for the 40% unsold units, and then they'll likely be cash sales, and therefore not for me. That's all a guess though.
At any rate, I definitely want 2 bedrooms. I would prefer low- to no-maintenance requirements for the yard. I very much want to be near friends and would also like to be near a neighborhood center: library branch, coffee shop, perhaps a small grocery store. I want my mortgage/interest/taxes/insurance to be about what I'm paying for rent now, since I know that leaves me breathing room. I want the place to be move-in ready - I do NOT want to have to manage and finance projects in the first few years of ownership. Finally, I view this as a potentially lifelong commitment - it's not an investment but a home.
Why I may not be ready:
I do have concerns about being the responsible party if anything goes wrong. I have currently saved enough to cover a 10% down payment and closing costs, if I pillage my savings accounts. My parents have offered to lend me some money, which is great, but I wonder if I should buy if I need to borrow to make it happen. At this point I'm thinking I will try hard to buy without assistance, and will keep their offer in my back pocket in case something goes awry before I've rebuilt my savings. And of course being the lone earner is scary. I'd want to keep the mortgage low enough that I could recoup it in rent if I lost my job or took a big pay cut at some point. But life just keeps happening, and if I'm going to retire with a paid-off mortgage, I've got to get started.
Financial picture:
I'm moving back to Portland in about a month. Since I left six years ago I've paid off all my debt (car + credit + moving + grad school all came to approximately 25k; it was never at scary levels but it certainly took a long time to become and stay fully debt-free), have continued saving aggressively-ish for retirement (18% + 4% match, fully vested now that I've passed my six-year anniversary), and have started saving for a house down payment. I've also managed to do quite a bit of travel and a lot of local exploring as well. In short, life's been good.
Why I didn't buy already:
When I lived in Portland before I didn't think I could afford to buy. With retrospect...maybe I could have, if I'd gotten in before things got crazy. But my head wasn't there and it's just as well I didn't buy, given how my life has been more mobile than I expected!
I've known that as long as I was in the Bay Area, I wasn't interested in buying: anything I can afford would be in a pretty rough neighborhood, would be pretty icky, or would be very far from work. All that and it would cost a lot more than my apartment! The final factor was that I never had any intention of staying in California permanently. So that's been a non-starter (though I have looked, and despaired, occasionally).
Buying for retirement stability:
A few years ago I had a conversation with a friend that was pretty illuminating. She was looking at her retirement plans a few years down the road and was despairing. As long as she keeps working she can live a great life, but once she retires, she can't afford anything like her current life. Her rent alone will take most of her social security check, she doesn't have a pension, and I inferred that her retirement savings aren't that robust. So that was certainly food for thought. If I didn't have to pay rent, my retirement might be smoother.
On the flip side, property taxes and maintenance are no joke. It's impossible to know if the monthly outlay post-mortgage would be equivalent to or even more than rent would be. There's also the responsibility involved in owning a home. That tilts me toward a condo, but then you run into HOAs and the possibility of special assessments in the future if problems crop up. So in short, it's certainly not a given to me that buying is the right and only choice.
What I'm looking for:
I had my eye on a particular condo development for a long time, but their HOAs and taxes are so high - nearly $800/month!! - that the sales price is going to have to come down a lot before I can be tempted into it. Honestly I think they're going to go into foreclosure soon for the 40% unsold units, and then they'll likely be cash sales, and therefore not for me. That's all a guess though.
At any rate, I definitely want 2 bedrooms. I would prefer low- to no-maintenance requirements for the yard. I very much want to be near friends and would also like to be near a neighborhood center: library branch, coffee shop, perhaps a small grocery store. I want my mortgage/interest/taxes/insurance to be about what I'm paying for rent now, since I know that leaves me breathing room. I want the place to be move-in ready - I do NOT want to have to manage and finance projects in the first few years of ownership. Finally, I view this as a potentially lifelong commitment - it's not an investment but a home.
Why I may not be ready:
I do have concerns about being the responsible party if anything goes wrong. I have currently saved enough to cover a 10% down payment and closing costs, if I pillage my savings accounts. My parents have offered to lend me some money, which is great, but I wonder if I should buy if I need to borrow to make it happen. At this point I'm thinking I will try hard to buy without assistance, and will keep their offer in my back pocket in case something goes awry before I've rebuilt my savings. And of course being the lone earner is scary. I'd want to keep the mortgage low enough that I could recoup it in rent if I lost my job or took a big pay cut at some point. But life just keeps happening, and if I'm going to retire with a paid-off mortgage, I've got to get started.
Tuesday, August 14, 2012
Calendar: August
Last year I visited a good friend in LA - and it's a good thing, too, since he's now moved on to Tucson. Hey, just one more place to visit!
Anyway, we visited Venice Beach and while we watched the skateboarders, I practiced using the burst mode on my camera. Confession: no clue if it's called that. But you know, you set it a certain way and it takes multiple shots. And it did, and I caught this kid in flight.
Anyway, we visited Venice Beach and while we watched the skateboarders, I practiced using the burst mode on my camera. Confession: no clue if it's called that. But you know, you set it a certain way and it takes multiple shots. And it did, and I caught this kid in flight.
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