Monday, January 19, 2009

Probably Exactly What I Should Be Blogging About

As I write this, it's Monday morning and Ish and I have the day off. He's just switched on the television in time to see a young couple on Maury have some Family Sex Secret Revealed. The tv is on mute, so I don't know exactly what's happened, but the young woman without many of her teeth suddenly burst into tears and the man on the stage next to her, also sans many critical teeth, turned bright red but didn't change his expression. The woman regained a little control, enough to walk off the stage.

I'm pointing this out because most people in the world, and most people even just in this country, have worse problems than Ish and I do. I know this. And it's why I don't write about some of the stuff Ish and I are dealing with because, oh boo-hoo, it's so hard to move to wine country. Cue violins.

But not writing about it doesn't mean it's not happening. And just because other people in the world have far worse problems, doesn't mean ours disappear.

So with that long preamble, here's the situation:

Initially, Ish and I thought we were going to move to Napa/Sonoma/thereabouts and rent a house. We thought renting made a lot of sense because we don't know how we'll like living in a rural area (versus our beloved San Francisco). We also thought that renting made sense because, frankly, this job market blows. Ish's job seems secure-ish now, but what happens in six months? 12? His company is in real estate investments. (Yeah, ouch.) And it's not like there's a lot of work up in wine country for guys with Ish's background, even if he is really funny.

But yeah -- initial thinking was, We'll move to Napa, rent a place, see how we like it. If things look good after 6 months or a year, we'll buy.

Well, except.

Except that we can afford to buy a place now. And the market prices are better than, well, we may ever ever see again in our lifetimes (let's kind of hope so; this Recession is super sucktastic). And living another 6-12 months in yet another temporary place that isn't ours is not appealing. Knowing that no matter what, we'll have to move again -- oh, and this time with an infant -- makes my whole body slump. Not to mention spending another year throwing money away on rent that we'll never make back. And what happens when things are just as murky down the road? What if things seems just as uncertain, perhaps for different reasons, in a year? When do you just decide it's worth it?

So, there it is. Our uber middle-class problem. Please don't throw rocks.

A couple weeks ago, Ish and I decided for certain that we were going to buy. Never rent when you can buy! is some mantra stuck in our heads (and subconscious) because that's the thinking. Surely you've been told the same? It's just...mortgage rates are low, housing prices are relatively good, we should just do it.

We've looked at over 20 properties.

And then yesterday, on the heels of finding what we think is The One we want to make an offer on (gulp), we cooled our heels. Stopped dead in our tracks, actually.

Ish looked at me and said, "But what if I did lose my job in six months?"

[Update: I am digging your encouraging and positive comments, thank you so much. Seriously.

I do just want to emphasize one kind of major point, though. Bleh. If Ish lost his job, it would likely necessitate our moving out of wine country altogether. That's the complicating factor -- you're right, a payment is a payment, but given that we'd have to move to a different part of the state, it would be far easier and cheaper to break a lease than to have to try to sell a house at a potential loss. This is the bitch of it, and why the decision is particularly prickly. Bleh again.]

A little over a year ago that would have seemed like some completely hypothetical question. One we should consider, but not give undue weight to. Sure, you might get laid off. Also, what if you got hit by a bus?

But now there is this big black cloud looming. The market has gotten worse, Ish's job is on shakier ground. The future is completely uncertain.

Except for the parts that aren't.

Like, I am due to have a baby in five months. Like, I have given notice. Like, Ish's job -- a job he likes in an industry he loves and does not want to leave -- is in Napa. Like, our current rent is too high for living conditions that are unsuitable for a baby.

So no matter what, something has to change. Things can't, and won't, stay as they are.

And THAT, along with this miserable, MISERABLE cold, is what's taken up a lot of our time in the last few weeks. I simply don't know what we're going to do, but whatever it is, we've got to do it.

25 comments:

  1. I bought my house about 5 years ago -- single, financially non-secure, and not making a ton fo money. Granted, I don't have kids and I live in Minneapolis, where the cost of living is lower, but we also get paid less. :-)

    I guess my thought on it is this... if you lose your job and you still have to pay your mortgage, how is that much different than having to pay your rent? You'll get evicted either way. Ha. Granted, the mortgage is probably more money than rent, but it also might NOT be given the current economic climate.

    Anyway. Once you get through the actual scary stuff of getting approved and signing the papers, it's just a payment.

    Go for it.

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  2. I was going to say the same...what would you do in 6 months if he lost his job and you were renting?

    Just make sure the payment isn't outrageous and you'll be fine. I live in Illinois and bought 10 years ago so we are looking at different markets but even back then, my mortgage payment was less than rent. Plus my house has 2 extra bedrooms and an extra bath and a half!

    Buy smart and you won't go wrong. :) Good luck!

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  3. can you lease to own where yopur at ? its a option too.
    delurkering out to say hi :)

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  4. My parents spent their entire married life moving from state to state for work, always with the hope that they'd wind up back in Manhattan where they both grew up. Six years ago, my Dad was able to transfer to the NYC office of his company and they bought a wonderful apartment in a mid-town neighborhood with historic buildings and two parks. They completely renovated the apartment and spent years buying furniture, filling the walls with art and generally enjoying living in the city and having a richer and more exciting social life than I will probably ever experience. Not only did they want to retire in this apartment, but they fully intended to die there. Then, a few months ago, they ran the numbers and realized they could no longer afford it. They're putting this beautiful apartment on the market the day after inaugaration day to hopefully move across the East River to Long Island City. They don't regret living in Manhattan, and despite the sadness of it, they don't regret the idea of selling it either because it's what makes the most sense.

    I guess the lesson here (other than the fact that life can be really unfair) is that you have to do what makes sense NOW and hope for the best. You could buy a house and then both be out of work in six months, or you could not buy a house and miss the financial opportunity of a lifetime. I guess it's a matter of figuring out your comfort level now, given all the unknowns, and making decisions from there. As for my parents, the new neighborhood is one subway stop from the old one and is one of the few places in this country where housing values are steadily rising. So, who knows. In five years they might move back!

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  5. Right, what they said.

    Also, with most rentals you can miss a month, two at most of rent before you're out on your ear. Whereas with a mortgage you have much longer and many more options should something happen to help you get back on track.

    And anyway, houses are like men, when you find the right one, you make it work, circumstances be damned.

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  6. I'm chiming in to agree with the others...go for it as long as the payment is manageable and the rate is fixed.

    With so much change coming with baby you're going to crave a home.

    Good luck!

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  7. change can be very terrifying and you have so much happening at once. Good Luck!!

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  8. Here's the thing. Everything is scarier when you are going to have a baby. And Buying a house is one of the scariest and most stressful things of all even if there were no impending baby involved. It is also true that that after the paperwork it really is just another payment. If you are renting you can't paint your nursery or mark the kitchen doorway with your baby's growth chart. It's an uncertain time for everyone but you can do this!

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  9. I agree with Queen Alisha -- everything is more uncertain when you are having a baby and that makes this decision that much more difficult. Good luck to you -- I believe that everything will turn out great for your little family

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  10. Those are some crappy decisions to have to make. On a lighter note, we refer to folks that have missing teeth as having "Summer Teeth." Some are here and some are there! Best of luck!

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  11. I guess the question is, do you want to stay in Napa in the long-run? Or are you JUST doing it for the job which could be gone in six months? Would you consider buying in San Francisco?

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  12. I don't know much about the Napa market for either buying or renting, BUT...
    if you bought a house in Napa and did end up having to leave Napa 6 months later, would you be able to rent out the house? That way you would retain the property investment and potentially sell it for a profit down the road?
    If you were able to grab a foreclosure property at a fixed rate, that might be a decent option.

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  13. Yay! These comments so far seem WAY smart; in other words, they're reflecting a lot of the advice I wanted to give ya!

    I'm all for encouraging you guys to take the plunge on this. Mortgages these days are pretty much only written to people who can actually afford them, so there's *far* less risk you'll get square-pegged into a deal that ends up being too good to be true.

    Plus, judging by everything I've heard from dozens of pregnant friends over the years, that nesting instinct is there for a damn good reason.

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  14. Location, location, location. You've heard it a million times and it's a million percent true. What if you bought somewhere a bit more centrally located than Napa proper but still within a reasonable commute for Ish? I recommend jumping on the deal of a lifetime at a fixed interest rate (and wish that I had one) but only if the location has benefits for the NOW and the WHAT-IF. Having viable options for any eventuality will help you sleep at night.

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  15. I live in the Bay Area and I think you really need to live in Napa before committing to buy there. IF you live there for 6 months renting, then decide that you WANT to live there, interest rates will not be that different and neither will prices. Plus there will be (hopefully) more inventory available. The only downside of that is moving twice, BUT this is too big a decision to decide w/o a bit more experience in Napa.

    Plus being pregnant is already one big change. Baby steps.

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  16. If you buy a basic starter in Napa, the mortgage payment will be way less than you're probably paying in rent in SF. The rental market in Napa is pretty stable - the vacancy rate stays fairly low and you would probably be more than likely to rent it for at least your mortgage payment (if it's a starter type home). It's a tough call and with the baby coming, I understand the fear. It's tough cause Napa really is kind of isolated. There really isn't an alternate location that eliminates the bad part of the commute. San Rafael, Novato requires crossing the valley and Vallejo still leaves with the bad part of the commute. Good luck!

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  17. Have you considered places like Vallejo (there are some nice parts) or American Canyon?

    If you are truly city people, then I would suggest renting in the Napa area before buying. Yes, you'll have to move, yes with an infant, but you have a lot of friends, they'll help.

    If you do wind up buying in Napa and then Ish loses his job, hopefully you guys would have been saving money and have a cushion in case that happens. I think the conventional wisdom these days is to have a six-month cushion. When I worked in the foreclosure department of a law firm you could miss three mortgage payments (90 days) before they sent your house into foreclosure. Say you didn't have that cushion and DID need to move - you could always try to rent out your house while you move elsewhere.

    But really, don't buy a house that you can just barely afford. Buy something you can comfortably afford.

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  18. My opinion is that if you can afford the house, you should buy the house. It will be good for your family now. And you can always sell it or rent it (my backup plan) in case you need to move. But I think the possibility that you *may* one day need to sell the house is small in comparison in doing what is best for your family.

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  19. One thing to keep in mind...housing prices will not rise nearly as fast as they dropped. If you and Ish just keep an eye on real estate prices and mortgage rates, you'll have plenty of notice (if you see things start creeping up) to make a decision to buy.

    I don't claim to be an expert, but I have been working in the housing industry for quite a few years now. The ingredients that we (homebuilders) had to drive prices up are no longer available; now we're back to the old supply and demand...imagine that!

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  20. Quit stressing yourselves out! There is no perfect answer. You're both bright people with good job skills. If he loses his job, he'll get unemployment until he finds another job. And that will happen no matter where you're renting/buying/stressing. It sounds to me like one or both of you got cold feet about "living in Napa" and are finding excuses to not make that commitment via a charming home with a sold sign.

    I have the potential answer to all of your problems: Napa and Sonoma are close, right? Just win this years HGTV Dream House.

    Seriously though, you'll drive yourself crazy with all the second guessing and what not. Go with your gut.

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  21. hey - did you really get married today???

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  22. You two are going through a lot of changes. Don't forget to take care of each other.

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  23. I think one of the factors that is missing with all of this advice is that housing in CA is expensive and yes we make more but not proportionate to the home prices. We are in a similar circumstance to you. We looked at a house. The downpayment is 150K...(as if we have that) even with that the mortgage would still be astronomical(aka more than our rent) and our savings would be depleated. When you rent, if you lose a job you dip into savings for a spell. If you have leveraged your savings to buy a house and you lose a job and have amortgage to meet things get tricky. We are choosing to have the kid and rent for awhile. 2009 is gonna be a doozy. I am not saying that you should not buy but you cannot just be swayed by low interest rates and "nesting instinct"

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  24. I was just going to say a quick comment of "buy a house if you find the right one, and you can always rent it out if you need to move back to the city," but then I read the last comment. You don't put all your savings into a down payment. You definitely keep your savings and do 100% financing, which is totally doable these days. Just like there's never the "perfect" time to have a baby, there may never be a perfect time to buy a first home, so just do it when it seems right.

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  25. Whether you're buying a house or a condo, reconsider buying with little or nothing down, experts warn. If home prices flatten or decline, fully leveraged homeowners would be left with a mortgage that's bigger than what they could net from a sale.

    In that situation, more owners default and suffer with a credit record stained by foreclosure, says Kerry Vandell, a finance professor at the Center for Real Estate at the University of California at Irvine.

    If owners patiently continue living in their home waiting for prices to rebound, they won't suffer any financial loss, Vandell says.

    Some owners, however, may encounter circumstances that force them to move.

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