Real Estate

I suppose I ought to post an update, even though I have had no time to write anything of any consequence. So a few loosely connected observations.

J. and I finally took the plunge and bought a dwelling of our own. So our largely debt-free and carefree existence is over. Scary time to buy real estate in this economy, but our guiding principle was that a house is no different than any other big-ticket item -- you buy one when you need one. So we are now the proud own... er, make that residents of a lovely two-bedroom condo, owned by the people who lent us the money to buy it.

The local real estate market makes less sense than ever. Everyone acknowledges that at the height of the real estate bubble, the prices were obscene, here no less than elsewhere in the US (more, if anything), yet they are down no more than 3% from their height. In desirable neighborhoods at least. The bubble does not appear to have burst -- on the contrary, it appears to be hardening in its inflated state. Elsewhere, in the meantime, house prices are down as much as 40+%.

The laws of supply and demand do not appear to apply. On any given Sunday anywhere in Arlington or Alexandria, the sidewalks are flooded with Open House signs. So there is no shortage of properties on the market -- on the contrary, it is flooded. Yet the prices remain sky-high. The best explanation I could come up with was that these properties are being sold not by residents who need to move, but by investors who are trying to cut their losses. I don't know if this is enough of an explanation, but thank goodness there is no house exchange the way there is a stock exchange, and that you still have to find a specific buyer for every house you are trying to sell. On the other hand, maybe the prices would have dropped noticeably if we did have such an exchange, and you could simply make a phone call and sell your house(s). Just look at the stock market.

Further insanity: while doing the final walk-through of our new condo before closing, our agent casually mentioned that the previous weekend, another client of hers offered the asking price with no contingencies on a property, an did not get it because there were four other offers. I've got your bubble right here, for anyone who's looking. I consider ourselves lucky -- our process was so normal, I felt like I was back in the sixties.

You would think that the subprime debacle and the generally sad state our banks are supposed to be in would inject some sobriety into the mortgage market. Yet the first lender we contacted, after hearing my unofficial (but accurate) account of our financial situation, literally offered to lend us an order of magnitude more than what we were comfortable borrowing. J. and I do ok, income-wise, but we are not Beverly Hills plastic surgeons, for heavens' sakes! Are these mortgage people insane? The modest (by these people's calculation) amount we did end up borrowing is a huge commitment for us, far more than we ever paid in rent, and they were perfectly willing to let us pay thousands and thousands more every month? Why have they not learned their lesson? Yes, I know, we are a good credit risk. But this was off the scale! And this lender was supposed to have been a solvent, responsible one who did not take any bailout money. We went with someone else.

No matter how hard you look, you never find all the problems in a place you're considering until after you've bought it. And a home inspection is designed to detect major problems, not minor headaches. Furthermore, even minor headaches look worse after you've been looking at them for a while. Net result -- J. and I spent the last three days painting our living room. And that's after I had to deal with the consequences of the previous owners' inept picture hanging jobs. Now the hallway looks disgusting by comparison, so we have to paint that, too. We're paying more money than we did in rent, yet have to do our own painting. How does that make any sense? At least everything we found so far is, indeed, very minor. Let's hope it stays that way.

We have some old furniture to give away -- shelves, a desk with a matching printer stand, a coffee table/end table set, and a drop-leaf dining table. None particularly nice (least of all the dining table), but all usable. Free to friends -- contact me if interested.