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My Housing Story - Part 1

Thursday, July 12, 2007

This is the first in a multi-part series recounting my California homeownership experience going back almost 20 years. If you've been wondering how the views expressed here have been shaped and molded over time, realize that a keen desire to understand the past and, more importantly, to not forget the past have been two of the most important factors.

As Mark Twain famously said, "The past does not repeat itself, but it rhymes."

The past is rhyming now.

Part 1 - The newlyweds and the new house (1989-1992)

In a few days, my wife and I will celebrate our 18th wedding anniversary - it has been a wonderful two decades together and we look forward to many more.

In the summer of 1989, a few months after the nuptials and the seemingly mandatory honeymoon in Hawaii, the newlyweds from Sherman Oaks, California did what millions of other newlyweds do - they bought a house. It was a fairly straightforward process - find out how big of a loan you could get and find a house at that price.

Making more than $50,000 combined (not bad at the time), the lender said we could afford a home worth about three times that amount meaning that, if we wanted a single-family home, we'd have to go north about forty miles to the Antelope Valley - either Palmdale or Lancaster.

Prices had been rising rapidly in the late 1980s -what was once affordable had become less so and outlying areas became popular lower cost alternatives to more established parts of Southern California.

The details didn't really matter because we had both been reading the LA Times real estate section for many months where, over and over, we were urged to "Buy Now!" - Californian real estate never goes down, always up.

The longer we waited, the more money we would lose out on.

After listening to the stories of co-workers and their shrewd home purchases in the years prior - camping out, waiting in lines was common for new housing developments - and about how much prices had risen in just a few years, we couldn't wait to sign on the dotted line.

The commute would increase from about ten minutes to almost an hour and Palmdale in the summer is basically a furnace with a stiff breeze, but none of that mattered because we'd sell the place in a few years and use the profits to buy a much nicer house that was closer to work.

In a move that would end up saving us more money than we could have possibly imagined at the time, we plunked down $500 as the entire down payment for a house in Palmdale, California, taking advantage of the generous terms offered by V.A. financing.

The nine percent loan resulted in payments of somewhere around $1,400 per month for principal, interest, taxes, and insurance leaving surprisingly little left over to pay for the extra gasoline required for the longer commute - fortunately, at the time, gasoline was only about a dollar a gallon.

We were all set.

In the months after we moved in we began hearing what other properties were fetching - people were paying $5,000, $10,000, $15,000 more for places just like ours.

We were on our way.

The young husband undertook all manner of home improvement projects over the next few years and the couple settled into a life filled with good friends, good libations, company softball, company parties, and company picnics, quickly losing track of what was happening in the local real estate market.

It was good while it lasted.

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

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Ritholtz said...

But if your house was rising n value, wasn't the house you wanted to buy also rising in value?

Tim said...

This was our first home purchase.


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