My Housing Story - Part 2

This is part 2 of a four or five part series (maybe more) recounting my California housing experience - see The newlyweds and the new house (1989-1992) for part 1.

Part 2 - Becoming a renter and a landlord (1993-1994)

After a few years in the new house, things were pretty much fixed up just the way we liked them. Since it was a new house, the backyard required a great deal of work - patio, sprinkler system, retaining wall, landscaping, patio cover, and more - all of these were lovingly crafted by hand except for the surface concrete work.

Unless you know what you're doing, you'd have to be crazy to attempt to finish your own concrete patio - the truck driver and pump man would probably just look at you and laugh.

Naturally, all the improvements were paid for with a credit card.

The once tame outstanding balance that played like an amusing game of "whack-a-mole" became a lot less amusing and thus began the years-long low-interest teaser-rate credit card shuffle where the outstanding balance would be moved about every six months - like a tenant that gets evicted twice a year when the rent goes up.

Hey, that's what you're supposed to do when you're in your early thirties.

Fortunately, we always made the maximum contributions to our retirement plans.

In 1993, after a year or so of rumors, the division of Northrup Grumman (formerly Litton Industries) where I worked finally relocated about 25 miles further away from our wonderful little home and, without much hesitation, we decided that a 70 mile commute was just too much to bear.

What to do with house?

We had heard stories about home prices declining but hadn't paid much attention. It's easy to ignore that sort of thing when it goes contrary to everything you want to believe, so that's what we did.

It's not until you actually have to move that declining home prices really sink in.

The Savings and Loan Crisis and the recession of 1990-1991 hadn't really affected us. We both still had jobs, we were able to pay our bills, and we saved some money. It wasn't until we began to explore our relocation options that we learned what had been going on since the Cold War ended - many thousands of Southern California aerospace and defense jobs had been lost and everyone stopped spending so freely, particularly on housing.

Having put only $500 down turned out to be a stroke of genius as, even with thousands of dollars in improvements, we were still upside down by more than $20,000 - that turned out to be just the beginning.

Doing about the only thing we could do at the time, we decided to try to find a tenant for our lovely home and search for a rental closer to work. When all was said and done, we wound up in a nice townhouse in Westlake Village, about ten or twelve miles from work and a nice single mother moved into our old house.

And so began a cash drain of about $600 a month.

We could handle that.

Next up: Part 3 - The new purchase and the lucky timing (1995)