We'll Officially Be Homeowners Tomorrow!

The short version of a long, long, long story is that while we came very close to walking away from the deal (to the point where we had formally signed a cancellation notice), we did finally come to agreement with the seller on the price. All the paperwork has been signed, the money is in the escrow account, and the sale will be formally recorded tomorrow. We're picking up the keys on Thursday and will be moving on Sunday. Yeah, I know it's supposed to be a day of rest but we'll attend Saturday evening Mass. DH has to go back to work on Monday & really wanted to get moved before then.

I've Not Suffered Death by Paperwork (Yet)

Buying a home has turned out to be a bigger pain-in-the-rear than I had imagined. Our offer was accepted on November 30th. The inspection, however, revealed problems with the roof, siding, and foundation. The good news is that the structural engineering inspection found that the foundation issues are minor. The bad news is that the roof and the siding need to be replaced. During our initial negotiations, the seller had forwarded an appraisal done in mid-September claiming that the roof, siding, and foundation were all in "good" condition. Since this turns out NOT to be the case, we're attempting to negotiate a fairly hefty price cut. We're willing to eat a certain amount of the cost of the needed repairs but not all of it. It remains to be seen whether we'll be able to come to agreement on a fair price for this home given its current condition.

Proof It Really Is a Buyer's Market

We went to a party a couple weeks ago at the home of one of DH's grad school classmates, who lives in one of the towns where we're househunting. DH's friend bought the house one year ago this month. So when a listing came into my email for a home in the same neighborhood, I decided to check public records on the friend's home. I knew prices had come down quite a bit from last year, but it's really something to see it.

DH's friend paid $881.5k for a 3 BR/2.5 BA 1608 sq ft home with a pool, or roughly $550/sq ft.

This current listing is for $725k for a 4 BR/2 BA 2012 sq ft home with a pool, or roughly $360/sq ft. Now I've not actually seen the inside of this house in person, but the photos look similar to the one owned by DH's friend.

Unfortunately, we've had to postpone our purchase due to difficulty finding attractive financing. Although we've got excellent credit and a good, stable income, all the lenders we've talked to won't touch us because we have <20% to put down. A couple of the lenders we talked to want 30% and one even said 35%. So we're staying in our current rental townhouse as cramped as it is and trying to save up a larger downpayment.

Ch-ch-ch-changes

Things have been kind of crazy around here in the past couple of weeks. After a 7 month job search, DH was finally able to land a great new position. He loved his old one but his employer had gone through 7 rounds of layoffs with more rumored to be on the way. Not to mention that since the company had accepted TARP funds, they Are now bound by the Congressional rules limiting the size of his year-end bonus.

I understand anger over the AIG situation but what the average American doesn't understand is that in the financial industry, a bonus isn't really a "bonus" (i.e.. a one-time reward for unusually good performance that only a handful of folks at the company receive). It's actually more like a sales commission- an expected bit of deferred compensation to make up for the relatively low base salary. You hit or exceed your target numbers, you get your bonus. To put it into perspective, the base salary at DH's new job is more than twice what his current base is., though the total estimated comp is only somewhat more than his 2007 total comp. The only reason that Wall St. firms can get away with paying their employees a relatively low base salary is because of the bonuses. When Congress arbitrarily restricts bonuses to 1/3 of the base, anyone who can find another position is almost certainly going to leave. Those are typically the best performers, like my DH. He made his employer a ton of money last year and the first part of this one even with the bear market. He had absolutely *NOTHING* to do with the mortgage mess- why punish him for mistakes other people made?

Getting off my soapbox and back to my main point. Now that DH has accepted this new position, we've decided to take the plunge and buy our first home. It's kind of sad that it's taken us until the age of 33 (for DH) and 32 (for me) and over a decade of marriage to get to this point. My parents were only 27 and 23 & newlyweds when they bought their first place. Granted that was a teeny 2BR ~1000 sq ft starter home and we're looking at 4 to 5 BR homes that tend to be in the ~1800-2400 sq ft range. And the towns we're considering are nicer than Campbell, the suburb of San Jose where my parents first lived. But we're probably going to be spending triple or even quadruple the inflation-adjusted cost of my parents' first house. That's even with the recent declines in the housing market.

I'm finding the househunting process exciting but a bit overwhelming. Fortunately it's not the frenzy of a couple years ago. More properties seem to be coming on MLS than are going off and there are a LOT of reductions in the listing price.