patrick.net

Of all the frustrating things in the housing market, "uncertainty" is probably the worst.

My wife and I have been discussing buying a place since she became pregnant with our second child in late 2006. I saw the coming crash as inevitable, so we agreed to wait.

You see, we really want to own a home. We don't want to own a home because we think it's a great investment. We want to own a home because we like the idea of staying in one place for 20+ years. We want a place that our kids will think of as "home". We like that if we want to knock down a wall or replace the flooring, we can. We're also not stupid people and don't want to stretch ourselves to buy a house that's just going to be cheaper later.

So we saved, and now we've got a little over $100k in the bank. I'm making good money (around $150k base), but I still can't see how home prices are reasonable. We moved up to Seattle from the bay area, and while things are much more rational here, I still see 2000 square feet houses that haven't been updated in 30+ years listing for over $600k.

While those prices still strike me as outrageous, it is tempting. By my reckoning I could get something along those lines for under $3000 a month, sitting comfortably at about 25% of my gross monthly earnings even if the stock market tanks again and my bonus sucks next year.

Unfortunately, the $100k is really all I have to spend without touching my retirement, so putting it all into a down payment isn't really a smart choice. That means that if I want to put 20% down on a place, I'd have to look in the sub-$400k range, and quite frankly I haven't seen anything in that market that I'd be willing to buy yet.

The obvious answer here is "wait". Unfortunately, I don't really have that option either. My daughter is two and I've also got a third kid who's nearly one. My oldest is six and in first grade. We're crowded into a small 3 bedroom apartment, and we're really sick of moving between rental properties. If we wait until next summer we should be able to get to around $150k, but my wife may murder me before then.

If house prices were definitively falling -- with banks actually listing the foreclosures that they're racking up, there wold be no doubt that the right thing to do would be to horde cash and stay in the cheap apartment for another year.

If house prices were definitively rising (say, due to massive inflation), there would be no doubt that buying would be the right thing to do and I'd be out signing some paper work right now.

Hell, even if prices were definitively not going anywhere I could at least stop worrying about it.

Is anyone else in a similar situation? Do you have good reason to believe things are going to go one way or another (and I mean actual data, not rants about government or human stupidity)? Does anyone have experience with the Seattle market?

#housing