Buying a House in La La Land

A decade ago the ex and I bought a beautiful little ranch house in a million dollar location up in the Oakland hills. It was small, but location to die for, and over time we made it very cute. It was a casualty of the divorce and a serious sore spot for me. California Real Estate is always a trip through a Tim Burtonesque fantasy land, something I do not love. We sold that house and I used much of my half to buy off the ex. Good news is that I do not pay her alimony.

Since then I have rented, mostly because I really have not known where I wanted to settle. Until the Wife came along my plan was to get the son off to college, get a small Bay Area rental apartment and then buy something big in the Sierras or up in the Trinity Alps, long term it was to be my family retreat in the boonies.

The arrival of wife changed that plan.

We are now in the hunt for a house in San Mateo. Actually wrote an offer on a place last night. The market is softer and frankly we have enough options that we will find a place, but we are trying to find a place that will work for some time. I for one expect the housing market to stay soft for years and do not agree with the buy now and move up in a few years theory, at least not now. So the parameters are something that works in our budget and something that we can lock in and live in for the next ten years.

Conservative, but in general a pretty good plan.

Of course, the biggest hitch in that plan is the current state of denial in the seller/real estate groups. They just seem to be unable to give up on the games, and I know we are in store for some silliness. The offer we put in last night was a solid offer at asking price, mainly because the place has been sitting for some time and it already has come down in price. I am pretty sure that the other Real Estate agent is going to try to jerk us around and get some kind of bidding war going, but what my real estate agent knows and what I know is that I am not playing. If she pulls in someone else and they offer higher, I will walk. Frankly, though the Wife wants something now, time is on my side.

You see, I watch the numbers. San Diego is dropping, Boston is tanking and Florida is in flames. Sacramento, Tracy, Pleasanton are all dropping and properties are sitting for months. It will not get any better, not with interest rates climbing. No, the fed has two choices, fight inflation or re-inflate the housing bubble, and it is pretty clear that they will pop the bubble in housing and put the country into a recession in order to kill inflation.

The San Mateo Real Estate people do not want to believe this, and they are all working overtime telling everyone that San Mateo is Different, that it does not follow the Laws of Economics, that here it is different. This is the same bull crap that gets told to everyone, it was the crap they said in Boston, Florida and San Diego before the rout began, it was the same BS that was peddled right before the NASDAQ took a dive.

The other unfortunate fact is that 60% of the mortgages in the Bay were option ARM or interest only, and most of those have quick resets. 2007 is the banner year for resets, it is only beginning to happen now. It does not take a genius to figure out what will happen when all those ARMS start resetting into a Fed induced recession.

Housing will suck, and suck everywhere.

So the offer I did last night was one that I can live with for the next 10 years comfortably, and that is plenty of time for the end of the world to happen and recover. If that is not good enough, they can find a greater fool. Maybe they will.

Then again, maybe the greater fool will not be able to complete escrow, and by then I will be on to the next place, further down the road into the housing black hole that I know is out there, with a better deal for me.

What they are not seeing is that there is a wave effect... downturns start somewhere and over time migrate, San Mateo is not immune, it is just at the end of the wave. Time is truly on my side.

We will see.

As you can guess, I am not a big fan of real estate agents, mort. brokers and the like. I deal with them, and use them, but in the end I see them mostly as un ethical, greedy parasites. They do not make anything, do not innovate anything, they simply play middle man to a badly distorted market, one they help to distort.

More on that tomorrow.

Update

Long time, no post.

All is well, Wife is progressing well down the road of pregnancy, going to be a little girl. Son is out of the house and getting some life lessons, the kind that will not really hurt him but will make him start to think and take some better decisions. Work is fine, I am keeping the weight off and we are house hunting in a down market, which is a lot more fun than doing it in an up market.

So, not much reason to blog..Hence the long hiatus.

I did get a nasty email from my Ex's Fiance. That was mostly amusing. His soon to be wife likes sexual banter, tosses it at everyone..And of course she has poor impulse control. Usually I just let it pass, but in an email three weeks ago I pitched it back at her, not really even thinking about it much.

Then I get this very nasty and somewhat threatening email from him, followed by a frantic call from the ex pleading tolerance from me and describing somewhat the drama occurring as a result of said banter. Seems that the fiance has some real trust and abandonment issues. Suprising, since he has been billed to me as this evolved, liberal, compassionate type. Silly, since in reality his actions were very schoolgirlish... In tone and approach, something I would expect from my 17 year old daughter. I let it drop and have not seen or heard from the guy since, he seems to be going out of his way to avoid me.

More later.