She Had No Way of Knowing Who Lived Here

This came in the mail the other day. It was addressed to "Future Homeowner", which, while a correct characterization, does Ms. Hernandez little good unless she wants to move north at least a few hundred miles and wait at least a couple years.

Somewhere there must be a list of properties that are not owner occupied, and the ambitious Ms. Hernandez must have figured that there were a few potential clients in this list. You can't blame her for trying, but her plea has done worse than had it just fallen on deaf ears.

Her request for us to reconsider our living arrangements has prompted the following brutally honest critique of her arguments.

I'm afraid this is not going to be pretty Mia.

Paragraph #1- No, we haven't considered buying our own property this year. We're happy to rent for now. You'd have to be nuts to pay what comparables have sold for in the last year or so around here - absolutely nuts. And banks bending over backwards to try to convince renters to become homeowners? Why would banks bend over backwards? Are they nuts too? Banks bending over backwards can't be a good sign. When this sort of thing happens something has gone terribly wrong - the system is no longer functioning as it's supposed to when banks bend over backwards.

Paragraph #2 - No, that would be a win-lose situation - seller wins, buyer loses. A few thousand dollars in closing costs as an incentive to buy a home that's overvalued by many, many times that amount? No - that's not a win-win. And about those possessive pronouns, Mia, they're starting to creep me out - "buying your own property" and "pay your closing costs to own their property" - please stop.

Paragraph #3 - OK, more with the weird possessive pronouns - "why haven't you bought your home yet?", or maybe it's just me. Fearful? No. Motivated? No. Hoping for prices to fall? Hoping, but not counting on it. It's hard to follow your interest rate logic there - if interest rates rise and home values decline, that sounds like a wash. If interest rates rise, and home values do not go down (like right now), that would seem to be the worst time to buy.

Paragraph #4 - I'm pretty good with numbers and you might send me to Mike and Dan for some of their mortgage madness, so let me see if I can figure out what we can afford. In fact, let me see about buying the house that we rent. With recent comparable sales at around $800,000, ten percent down, 30-year fixed at 6.5 percent, property taxes of 1.25 percent, and $1000 per year in insurance, Karl's mortgage calculator puts it thusly.
Wow! That's over $65,000 a year, and that's before we even have a custom barbeque put in, buy a plasma TV, or pay our first cable bill.

That's a lot more than our $2,200 rent.

Why on earth would we want to pay that much money to buy this place? Even if you allow for very generous tax breaks of near 40 percent on the interest and property taxes, that's still over a thousand dollars a month more than what it costs us to rent. And then, instead of calling the landlord when something breaks, we have to hump it over to The Home Depot.

Paragraph #5 - OK, this just looks like filler - like the printer said, "If you go with this version, the type is going to be way too big", and so you just rambled on a bit. Fair enough - a pause that refreshes, prior to the big finale. But, who charges buyers today? It's spring of 2006. From the news reports about real estate in the last few months you'd think that real estate agents would be paying buyers, "Make your best deal, and I'll split my commission with you."

Paragraph #6 - Stressed sales? Why did you go and bring that up? Banks bending over backwards, creepy possessive pronouns, and now pre-foreclosures? The whole idea of buying real estate in the Spring of 2006 is sounding worse with each paragraph. We're going to have to pass, but having come this far, we'll go ahead and read through to the end.

Paragraph #7 - Well, yes we do dream a little bit about buying, but, the alternative of actually buying right now has too much potential to become a nightmare. Just think how quickly that 10 percent downpayment could vanish with everything that you hear about rising inventory and flat or falling prices. And that part about "stop telling yourself you can't afford it until you actually try it" - what's that supposed to mean? Are you saying that even though the monthly payments may seem to take up a ridiculously large portion of our take-home pay, an amount that we may feel we can't afford, that we should try it and then decide whether we can really afford it? That just doesn't sound right - has real estate always been like this?

Yellow Highlight - It sounds like you're pinning the blame for being a renter on a lack of desire or laziness - as if the will to own a home is a sort of underdeveloped emotion-fueled force that can somehow be harnessed for good.

The joy of owning a home doesn't only belong to the privileged, the lucky, or the rich, it's for those who want it bad enough to make it happen.

Well, Mia, it ain't gonna happen here - at least not right now. Clearly, we just don't want it bad enough - if only there were some way to ratchet up the emotion so that we could just not think about it so much, and just do it.

Maybe then we'd consider buying something this year.

Besides, to come up with that down payment, we'd have to get rid of some of our gold coins, and we're pretty set against doing that this year. That big bag full of gold coins that we bought after we sold our ridiculously priced California house a while back has done quite well recently.

Why sell any of that to buy California real estate that is now insanely priced?

Maybe in a couple years.