Sunday, May 01, 2005
On The Hunt
I recently reduced my posting to about once a week, for a number of reasons. I suppose if I was a little more motivated (or had more to say), then I would post more often. Still, I like writing, and want to stay disciplined. So, I think it's important to at least stick to once a week, but this weekend's made it a bit impossible. We basically spent the entire weekend hunting.
Initially, I assumed that we'd have a busy Friday and Saturday, but a relaxing Sunday. Friday we saw "Hitchhiker's Guide to the Galaxy", although because we got screwed by Mapquest (Heaven only knows why we didn't use Google Maps), we ended up driving all over Virginia hunting for the movie theater, and seeing a later movie without the friends we had driven into Virginia to meet in the first place. The movie was just ok. Read the book instead.
Saturday, we participated in Sam's cousin Max's Scavenger Hunt for his organization Kid Power. It was a lot of fun, but was definitely hectic. We made it downtown just in time for the beginning of the hunt, and then drove all over creation for the next four hours, actually finding the items on the list. It was a ton of fun, but was exhausting. We didn't win, either.
During the hunt, we barely had time to eat, so when it was over, we were starving. We walked around trying to find a place to eat, and ended up close to the MCI Center, where the Bulls vs. Wizards playoff game had just gotten out. So, all the restaurants were completely full, and we ended up eating at some sort of fast food BBQ place. But at least we didn't die from starvation.
Today we thought we'd have a relaxing day. We were going to go to the gym, run a couple of errands, and maybe look at a couple of open houses. It was going to be a relaxing Sunday compared to the past two Sundays, where we went on "house tours" and spend a few hours looking for a house to buy. This time, we just thought we were going to go to one open house that we were aware of. But then, when we returned from the gym, our realtor had sent us links about eight open houses. We wrote down the addresses of about five of them that we were interested, and headed out.
Basically, for the next 10 hours, we ended up driving around. And we didn't even go anywhere! I'd say we stayed within a 10 mile circle. We went to three open houses in Kensington. Didn't really like anything. Then we headed to an open house in Chevy Chase. Didn't like it. Then we headed to Silver Spring to look at a house we had seen previously, but was still on the market. We felt like we didn't know Silver Spring well (And before you ask if I'm from Silver Spring, the answer is yes, but that Silver Spring isn't a city - rather, it's everything in Montgomery County that isn't in another city, so it's gigantic), so we drove around trying to get a feel of where the house was, where the stores were, where the subway was, etc.
Finally, after driving in what felt like six gigantic circles, we were ready to go to run our errands. On our way, we ended up passing a cross street that we had originally thought was too far away, and so we had ignored that open house. We figured what the hell, and went to the open house, and ended up really liking the house. They wanted contracts by Tuesday, so we called our realtor, Shelley, and left a message. Then we went on to our errands.
Let me make a small aside about house hunting. Apparently, the market is crazy right now, and has been for a couple years, especially in the DC area. I saw "apparently" because I've never looked for a house before, but everything tells me that it wasn't always like this, where "this" means basically if you want a house, you have to present the seller with a contract that basically allows them to take five pints of blood from you if they want. Houses are going on the market and getting 10-20 contract put on them over a weekend. Prices have doubled or tripled in the past 2-3 years. It's just nuts. Some people think the bubble will burst, but aside from the dollar collapsing (don't laugh - that's closer than you think), I don't see why. They're not building any new houses, but people are still breeding. They're still moving into DC, too, as the government expands under one-party rule. So I figure we're safe on that front. That's if we can find enough blood to obtain a house. Maybe we'll promise our first-born child, just to get a leg up on the other buyers.
So, back to the task at hand. As we were running our errands, our realtor called back and told us that she couldn't meet tomorrow, but was available at 6:45. (It was 5:00 at this time. We left the house around noon.) So we finished up our errands and went to meet Shelley. It turned out that writing an offer is much more time-consuming that we originally thought. I figured we'd be out of there by 8. I am a fool.
I suppose in some cultures, signing papers could be considered "relaxing" - maybe even "romantic". But not in this one! Actually, our realtor is great, and explained everything to us - but that, of course, takes time. So we understood what we were offering, and signed every last piece of paper, had our blood drawn and hermetically sealed and placed in a cooler which the lending back will keep in escrow.
We finally got home at 10 pm. It was a long day. It's fortunate that one of our errands was stopping at the grocery store, otherwise we would have had to continue our hunt by trying to shoot some deer in our backyard for dinner. Instead, we finally made dinner and ate at 11. It's 12:40, and I have absolutely no idea why I'm writing instead of sleeping or in some sort of coma.
We find out on Tuesday if they offer's been accepted. If not, the hunt continues...
Initially, I assumed that we'd have a busy Friday and Saturday, but a relaxing Sunday. Friday we saw "Hitchhiker's Guide to the Galaxy", although because we got screwed by Mapquest (Heaven only knows why we didn't use Google Maps), we ended up driving all over Virginia hunting for the movie theater, and seeing a later movie without the friends we had driven into Virginia to meet in the first place. The movie was just ok. Read the book instead.
Saturday, we participated in Sam's cousin Max's Scavenger Hunt for his organization Kid Power. It was a lot of fun, but was definitely hectic. We made it downtown just in time for the beginning of the hunt, and then drove all over creation for the next four hours, actually finding the items on the list. It was a ton of fun, but was exhausting. We didn't win, either.
During the hunt, we barely had time to eat, so when it was over, we were starving. We walked around trying to find a place to eat, and ended up close to the MCI Center, where the Bulls vs. Wizards playoff game had just gotten out. So, all the restaurants were completely full, and we ended up eating at some sort of fast food BBQ place. But at least we didn't die from starvation.
Today we thought we'd have a relaxing day. We were going to go to the gym, run a couple of errands, and maybe look at a couple of open houses. It was going to be a relaxing Sunday compared to the past two Sundays, where we went on "house tours" and spend a few hours looking for a house to buy. This time, we just thought we were going to go to one open house that we were aware of. But then, when we returned from the gym, our realtor had sent us links about eight open houses. We wrote down the addresses of about five of them that we were interested, and headed out.
Basically, for the next 10 hours, we ended up driving around. And we didn't even go anywhere! I'd say we stayed within a 10 mile circle. We went to three open houses in Kensington. Didn't really like anything. Then we headed to an open house in Chevy Chase. Didn't like it. Then we headed to Silver Spring to look at a house we had seen previously, but was still on the market. We felt like we didn't know Silver Spring well (And before you ask if I'm from Silver Spring, the answer is yes, but that Silver Spring isn't a city - rather, it's everything in Montgomery County that isn't in another city, so it's gigantic), so we drove around trying to get a feel of where the house was, where the stores were, where the subway was, etc.
Finally, after driving in what felt like six gigantic circles, we were ready to go to run our errands. On our way, we ended up passing a cross street that we had originally thought was too far away, and so we had ignored that open house. We figured what the hell, and went to the open house, and ended up really liking the house. They wanted contracts by Tuesday, so we called our realtor, Shelley, and left a message. Then we went on to our errands.
Let me make a small aside about house hunting. Apparently, the market is crazy right now, and has been for a couple years, especially in the DC area. I saw "apparently" because I've never looked for a house before, but everything tells me that it wasn't always like this, where "this" means basically if you want a house, you have to present the seller with a contract that basically allows them to take five pints of blood from you if they want. Houses are going on the market and getting 10-20 contract put on them over a weekend. Prices have doubled or tripled in the past 2-3 years. It's just nuts. Some people think the bubble will burst, but aside from the dollar collapsing (don't laugh - that's closer than you think), I don't see why. They're not building any new houses, but people are still breeding. They're still moving into DC, too, as the government expands under one-party rule. So I figure we're safe on that front. That's if we can find enough blood to obtain a house. Maybe we'll promise our first-born child, just to get a leg up on the other buyers.
So, back to the task at hand. As we were running our errands, our realtor called back and told us that she couldn't meet tomorrow, but was available at 6:45. (It was 5:00 at this time. We left the house around noon.) So we finished up our errands and went to meet Shelley. It turned out that writing an offer is much more time-consuming that we originally thought. I figured we'd be out of there by 8. I am a fool.
I suppose in some cultures, signing papers could be considered "relaxing" - maybe even "romantic". But not in this one! Actually, our realtor is great, and explained everything to us - but that, of course, takes time. So we understood what we were offering, and signed every last piece of paper, had our blood drawn and hermetically sealed and placed in a cooler which the lending back will keep in escrow.
We finally got home at 10 pm. It was a long day. It's fortunate that one of our errands was stopping at the grocery store, otherwise we would have had to continue our hunt by trying to shoot some deer in our backyard for dinner. Instead, we finally made dinner and ate at 11. It's 12:40, and I have absolutely no idea why I'm writing instead of sleeping or in some sort of coma.
We find out on Tuesday if they offer's been accepted. If not, the hunt continues...
Comments:
If I were you, I wouldn't shrug off the idea of the housing bubble bursting. Why do I say this? Well, if you look at the last 2,000 years or so of history, you'll find that when things get grossly overvalued, there tends to be a "correction" to adjust things back to reality. For further details, do a google search for "great depression", "dot-com bubble", "1987 stock market crash", and "late 1980's real estate prices".
From what I've heard, one of the main reasons that housing prices are so high is that the record low interest rates around right now allow people to borrow far more money than they otherwise could. At 5%, a mortgage payment on a $500,000 house is about $2,700, which for most people is what really determines how expensive of a house they can afford. What happens if interests rates go up to 10%, like they were back when the democrats were in power in the late 70's and early/mid 90's?(I feel dirty saying stuff like that, because it's retarded, but you do it so I have to dish it back) Those monthly mortgage payments skyrocket, and $2,700 a month only buys you a $325,000 house. Meaning far fewer people can afford to buy your house from you, greatly reducing its value.
It's happened before, and will happen again. The question is simply when, and how severe will it be. It's quite possible that you'll buy a house (for arguement's sake, let's say $350,000) this week and have it go up 20% in the next year, netting you $70,000 for doing essentially nothing. But it's also likely that the price of the house will level off, meaning that at a 5% interest rate, you'll pay (aka, lose) $17,500 in interest, plus another similar chunk of combined money in realtor fees, moving costs, taxes, etc.. Note that this is WORSE than continuing to rent at $1,500/month until after the bubble bursts, when houses will effecively be "on sale" or "discounted". It's also possible that the housing prices will decrease by 20% or even more, meaning that you will LOSE $70,000 plus your $15,000 in random other costs. Not a trivial amount of money.
As you say of the housing situation right now, "It's just nuts." People said the same thing about the dot-com bubble. That should be a red flag for you. I'm not saying flat out that you shouldn't buy a house - I'm saying that you really need to make sure you've done your homework and looked at the past 10-30-100 years to see what happened in the past, as it often tends to happen again. BTW, talking to your realtor, or someone else who recently bought a house, and to some degree anybody who owns a house, is borderline worthless research - they are all very biased - the realtor needs you to buy a house in order to eat and pay the bills on her overpriced house, and the others have a very strong desire to continue to believe that housing prices will increase, potentially blurring their judgment.
Warren Buffet recently warned about the housing bubble bursting - an article about the subject, titled "All Signs Point To A Housing Bubble Blowout" says in particular that "the fact is that while home prices have doubled in four years, they haven't been nourished by income gains anywhere near that level. So a 30 to 50% drop is completely possible." If you don't believe me, at least do a google search and read for yourself what some of these people are saying. I found dozens of articles warning of a bubble burst by searching for "warren buffet bubble burst".
I don't want to rain on your house buying parade, but I also don't want to see you lose $100,000+ by buying a house at exactly the wrong time.
-Dave Shear
From what I've heard, one of the main reasons that housing prices are so high is that the record low interest rates around right now allow people to borrow far more money than they otherwise could. At 5%, a mortgage payment on a $500,000 house is about $2,700, which for most people is what really determines how expensive of a house they can afford. What happens if interests rates go up to 10%, like they were back when the democrats were in power in the late 70's and early/mid 90's?(I feel dirty saying stuff like that, because it's retarded, but you do it so I have to dish it back) Those monthly mortgage payments skyrocket, and $2,700 a month only buys you a $325,000 house. Meaning far fewer people can afford to buy your house from you, greatly reducing its value.
It's happened before, and will happen again. The question is simply when, and how severe will it be. It's quite possible that you'll buy a house (for arguement's sake, let's say $350,000) this week and have it go up 20% in the next year, netting you $70,000 for doing essentially nothing. But it's also likely that the price of the house will level off, meaning that at a 5% interest rate, you'll pay (aka, lose) $17,500 in interest, plus another similar chunk of combined money in realtor fees, moving costs, taxes, etc.. Note that this is WORSE than continuing to rent at $1,500/month until after the bubble bursts, when houses will effecively be "on sale" or "discounted". It's also possible that the housing prices will decrease by 20% or even more, meaning that you will LOSE $70,000 plus your $15,000 in random other costs. Not a trivial amount of money.
As you say of the housing situation right now, "It's just nuts." People said the same thing about the dot-com bubble. That should be a red flag for you. I'm not saying flat out that you shouldn't buy a house - I'm saying that you really need to make sure you've done your homework and looked at the past 10-30-100 years to see what happened in the past, as it often tends to happen again. BTW, talking to your realtor, or someone else who recently bought a house, and to some degree anybody who owns a house, is borderline worthless research - they are all very biased - the realtor needs you to buy a house in order to eat and pay the bills on her overpriced house, and the others have a very strong desire to continue to believe that housing prices will increase, potentially blurring their judgment.
Warren Buffet recently warned about the housing bubble bursting - an article about the subject, titled "All Signs Point To A Housing Bubble Blowout" says in particular that "the fact is that while home prices have doubled in four years, they haven't been nourished by income gains anywhere near that level. So a 30 to 50% drop is completely possible." If you don't believe me, at least do a google search and read for yourself what some of these people are saying. I found dozens of articles warning of a bubble burst by searching for "warren buffet bubble burst".
I don't want to rain on your house buying parade, but I also don't want to see you lose $100,000+ by buying a house at exactly the wrong time.
-Dave Shear
# posted by 
: May 2, 2005 at 11:22 AM
: May 2, 2005 at 11:22 AM
Good luck with the job hunt. I've been looking around myself to see what's out there. It's all a bit expensive in Seal Beach, though. Maybe next year...
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