Thursday, January 10, 2008

How I Feel About Housing

What a difference a year makes.  It was at about this time last year where Sue and I began our first serious housing foray, looking at houses, going to a lot of Open Houses, talking with banks, brokers, mortgage agents, lawyers, etc.  We were that close to finding a house and making the jump.
But in the range we are looking and the areas we want to live the choices were pretty slim so it dragged on and on and then a funny thing happned.  The whole world began to change and I looked at my wife, sometime in April or May, and said to her that we need to stop and sit out the summer.  And as summer winded down, I said to her, we should sit out the rest of 2007 too. And we did and we completely cleared our books of any and all debt and meanwhile socked money away like crazy.
So here we are in the beginning of 2008, debt free with a decent down payment amount saved and now, looking at the listings of homes... it's almost shocking to see the difference in homes.  Last year, it was all these crappy run down 2 and 3 BR 1 Bath ranch homes and now, the amount of Bi-levels, Splits and Colonials with 3 and 4 and sometimes 5 bedrooms with 1.5 or 2 bathrooms in decent areas on decent lot sizes is amazing.  And the amount of homes that are simply vacant is noticable although I guess not surprising.
So anyway, these are the types of homes we want and watching the market the way we have and the almost obsessive interest I've had in reading about the economy, sub-prime mortgage crisis, recession fears, rising credit card debt and personal bankruptcy increase, the rising price of oil, resulting in the rising price of gas, which in turn causes an increasing rise in milk and foodstuffs costs, leads me to believe that there is a trememndous amount of more pain to be experienced in housing property values. 
Now, considering that in December there was an uptick in unemployment (which may not be a cause for alarm but we'll see), and all of the factors above... well, the downward movement in the value of homes simply has to continue and maybe continue big because people can't change how much they pay for gas, they have to buy food, Realtors have to eat too and so they need to sell homes and that means that the people who can buy, the people who are like my wife and I, who are sitting on the sidelines because we refuse to pay for a home at the prices in the market currently because all things remaining the same and living costs rising the way they are and salary only increasing slightly for inflation... well... the housing cost has to give simply because there is a ton of inventory on the market, few buyers and people will only pay what they can afford to pay and that is shrinking.
So what does it mean?  Well, what it means is that I'll be a tough negotiator in March April because there is the other reality:  We need to have a place to live and you can't sit on the sidelines indefinitely and time the market for the best deal because timing is bad too.

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