Friday, March 16, 2007
Here's the story behind the housing situation
So here's the long story on my living situation. There is a reasoned purpose behind why I live the way I do. I haven't always rented from the 'rents, but I have had my parents as landlords for a LOT longer than I originally intended. Here's why:
When I moved back home, I had lived with my little brother and the woman who would one day become The SIL for a couple of years. I was broke and disenchanted with most of my existence. I went back to get my shit together and put things back on track. At that point, I had quit school, not that I ever took school seriously to begin with, so the idea was to move back, get my life in order, and get back out into the wild as soon as possible. My intention was to buy a condo or small house somewhere in Pinellas County, if possible. Toward that end, I changed jobs, got out of my leased Honda and into a WRX, and started looking around at houses.
Needless to say, I didn't buy one. After a year or so of looking at options, bouncing around and waffling on the idea, I set my mind to paying off the car, climbing the ladder at work, and buying something better when the money came available. This was about the time that housing values started exploding locally. Within a year, houses that had been selling for $100,000 were now bringing prices of $125,000-130,000. At the same time, Pinellas County's property taxes started increasing and insurance rates began a slow ascent what would accelerate with time.
In the meantime, I paid the car off in exactly four years, eliminated all of my debts, and watched disheartened as the housing market literally rocketed out of control. Houses that once sold for $130,000 were now selling for $180,000 and up. Hurricanes rolled through the state and took insurance prices into the stratosphere. At the same time, property taxes and utilities became more expensive in both Pinellas and Pasco counties. My salary was increasing, but not fast enough, and my relationship situation made where I lived irrelevant, as I wasn't serious with anyone at the time, so I was not feeling much pressure to jump into the melee.
There was one house that I actually wanted to buy pretty badly, as it would have made a nice, long-term investment. It was a 2 bed/2 bath with a pool just up the block from my parents' house. It would have been perfect, as my family had known the original owners for decades, it was relatively small, had a garage, and the entire house was in immaculate condition. The owner was a widow (whose story I have written about here or on one of my other blogs…can’t remember) and she was asking $205,000, which wasn't out of the question, given the market value of homes over the past 6 months. I could afford the payments, the location would have been perfect, and I started investigating what would be involved in making the purchase. My credit score was very high, so financing wasn’t an issue. My salary was adequate, particularly since I carried no debt to speak of. Things looked pretty good…for a while.
As always, there was a catch. Insurance was going to be over $2000/year, assuming I could find an insurer that would take me on as a client. Property tax was going to run in the $1400-1600/year range. Start adding those figures to a $1000/month mortgage payment, and one thing became utterly clear, it was time to get back in school. This was all going down in the mid-2006 timeframe, so the housing market hadn't yet collapsed, but the correction had begun. Her house would have sold in a few days only one year before, but it languished on the market for months last year. She ended up selling for to a real estate broker for $193,000, which was probably fair market value at the time. Interestingly, the house would bring around $185,000 in the current marketplace. It will eventually rebound, but it could take years, given current economic realities, and the decline in value probably hasn’t ended yet, as sub-prime borrowers are defaulting on their loans and flooding the market with homes, which can only push market values down further. Houses sit for months or even close a year now…if you’re a buyer, things look good. If you’re a seller, it’s a shitty situation.
Which is to say, if I had bought a house 2 years ago, I would probably be negative ~$15k or so, which is roughly what I've gained from my 401k and stock holdings (combined) over the same period. At this stage in the game, I'm earning money toward my retirement, nearly debt free, and in the black across the board. I could own a house, and do none of the things I enjoy, but I choose to sacrifice my image as a guy who can "hold his own" in order to do the things that bring some happiness to my life. I do my own laundry, make my own meals, pay my own bills, and help around the house when I can. My situation is much more like a tenant than people would believe.
The funny part is, I could afford to buy the motorcycle AND get a small place of my own, but the net benefit would be what? I'd be living paycheck to paycheck, miserable (because honestly, the thought of owning/renting a condo does not excite me), and still looking for a needle in a stack of needles, where women are concerned. I could probably get more random ass, but then random ass isn't what I'm after...never has been. Some people enjoy owning/maintaining a home, I understand this, but I'm not one of those people, so going through all that hardship just isn’t worth it.
So that's the story. When the time is right, I'll buy something and get myself saddled with a mortgage just like every middle class schlep is supposed to. Until then, I will pay my rent and live with the "shame". Women will continue to pursue "better" men, and I'll keep fighting my good fight. If that makes me less of man in some females' eyes, so be it. I bring a lot more to the table than my place of residence and eventually someone will be alright with that. If not, fuck 'em, I’ll just keep doing my own thing anyway. :)
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Erik, it seems like you might have taken offense to my suggestion that you prepare for meeting the right girl and eventually settling down in your own home. In no way did I expect you to explain yourself. If you can afford a bike payment and your own home great, I was simply suggesting that before you run out and get the bike you keep in the back of your mind that someday soon your views of owning your own place might not be the same.
Although you feel that people who own their own place are just a "middle class schlep", I strongly disagree. I take pride in what we have accomplished. I take pride in the fact that we live on our own. We still go on very nice vacations... in the last year alone we went to Hawaii, Vegas and Florida. Not to mention all of the other vacations we have taken over the years. All in all not to bad for a married couple in their mid to late 20's who also have no debt, no car payments and are also building their retirement.
I definitely see the upside for you to live at home, you're able to save quite a bit more money because although you do pay rent it's not near what you'd have to pay out on your own... it's just not for me, I'd rather be out on my own. If you're happy though, that's what matters.
What keeps you in that area? If the market is so bad there maybe when you're ready to be on your own you might consider a different location.
Really, I just felt wanted to lay it out there, because I feel like people make a lot of assumptions. There are different ways of looking at home ownership. And you have to admit, your housing situation is different than that of the civilian population. I'm not saying it shouldn't be, but the fact remains that it is.
Right now, I could be paying $1000/month + utilities, taxes, and insurance for a house that is now worth something like $900/month, or less. After groceries, miscellaneous upkeep, tuition, etc are factored in, I'd have little or no money left over to have any fun with. That's not living and I sure wouldn't be the kind of person anyone would want to date, because I couldn't afford to take them anywhere and would be a miserable time, if I did.
Honestly, I find it hard to imagine that I will ever settle down and have a traditional family. That's really not my goal at this point, as I have not even had a single healthy, long-term relationship in my entire life. Thinking about marriage under that kind of circumstance seems to be a lot like putting the cart before the horse. :)
Having my own place MIGHT help my odds of finding that a bit better, but in this place, it has more to do with people than it does with where they live. I wouldn't judge a girl in the same situation as myself, as it's not the end of the world and I am keenly aware that functional people can actually find themselves in my situation. I make above average money and still cannot comfortably afford a 2 bed/2 bath in Pinellas County...salaries here are a joke.
And I am not at all ignorant to the fact that there may be something wrong with the way I conduct myself. That's always going to be a possibility, so there's a chance that getting my own place would do nothing to help my situation. If I'm socially retarded and completely unaware, then buying a house would only make me a social retard who's completely unaware and is now responsible for a mortgage payment. That's just insult to injury. lol
The biggest problem is that this place is incredibly convenient for me. Work is a 3.5 mile commute from the driveway to my parking spot. I love being near the beaches, it's close to school, most of my close friends live here, and it's all familiar territory. A large portion of the people suck, but that's universal, so it's hard to justify spending a lot more money per month, driving much greater distances, and putting more distance between myself and the things I enjoy, just to be on my own.
Reality is, were I to actually meet someone and by some miracle have things develop to the point that I would consider moving in with the girl, getting a nice sized house wouldn't be too hard. Assuming miracle girl makes a salary similar to mine, $350-400k is doable. In this market, that will buy a lot of house and I wouldn't have to worry about selling or breaking a lease, etc.
Like I said, there are different ways of looking at the situation. :)
Glad to know you were just putting it out there. You're not socially retarded, just haven't met the right girl.
I do have to wonder why our housing situation is any different? Scott is in the military and the only difference I see is he could be deployed. Yes, he gets a housing allowance but his base pay is so small that with the housing allowance it only brings him up to a very small salary. Military pay can be found anywhere you look on for it on the Internet so I don't mind offering what he makes. His paycheck with all of his different types of pay (base pay, food and housing) after taxes and such is $2932 per month. We live in "redneck" KY and still have a mortgage of $900 plus utilities and all the other normal bills (groceries, car insurance, cell phones, etc) so I don't understand why we're any different other than our property taxes are cheaper here.
I was just curious 'tis all?
On a different note, did you're mom tell you about Sunday night? My mom is having a little BBQ. I know, I know BBQ isn't exactly up your alley, but you could still come and meet the girls :)
Being in nearly the identical situation as you Erik I agree. I looked into buying a house in this area as well and it's not so much the mortgage as it is the taxes and insurance. Add to that routine maintainance, upkeep, etc. and it's nearly impossible to get a house and live comfortably if you are making under $60,000. I've estimated that I need to be making at least $50,000 to be able to move out of my parent's house an even rent a place on my own with bills and student loans to pay off still.
And trust me I know, people make assumptions about me as well and I hate having to say I live with my parents. But they really don't understand that I essentially have my own "wing" of the house, pay $450/month in rent, contribute to the house cleaning/cooking, buy my own groceries, pay my own bills, etc. I guess it's looked down upon less being a female, but still I'd rather not have to tell people at all. Especially when my 18 yr old students have their own places. And I lived in an apartment for 5 years so it's a rough change.
But do to living here for 3 years I've paid off a new car fully, and at least $20,000 in student loans, plus a new computer. Living with parents isn't fun or that cool, but it's worth it in the end if you make good decisions and use the time to save.
It's definitely tough, but most of the people making assumptions really have no grounds for judgment. Take housing out of the equation, and there really isn't anything special about most of their lives.
On the upside (for us at least), the subprime lending market is collapsing and many analysts are beginning to predict a drastic decline in Floridian real estate values, as more and more borrowers default on their loans. More houses sitting on the market means more competition to sell, which means lower (more realistic) prices.
The real question is, what the hell were these lending agencies thinking, giving mortgages to people with bad to horrible credit?? Didn't make sense then, and it's not making sense now, as the growing number of lender bankruptcies proves.
I'll wait to meet that special someone before I think about buying a house. Until then, I'll keep putting money into other things and trying my best to enjoy my time on this Earth. :)