Monday, March 06, 2006

Housing slowdown

I've always read with interest any piece regarding the housing market. For much of 2003-04 the focus of stories was about the insanity of being a buyer. The tone turned in 2005 about the inevitable crash that loomed ahead. For the first part of 2006 it has been about not a crash but a housing slowdown. Which is good and bad. Good because a crash is bad. Bad because many of us had just learned about appreciation in a big way.

At the beggining of this timeframe I was working in Hawaii making more money than I have every made. Which allowed me to pay off some medical debt from knee surgery and save a chuck off money to put into the stock market. My wife (not at that time though) was on the east coast and just getting to the end of her lease on her apartment. Luckily she thought she should look into the condo market before signing another lease and in the end made the plunge and put herself into a $175k mortgage at under 5 percent. At the time paying $185k for a 550 sq ft one bedroom condo must have seemed crazy. (I briefly looked into getting a condo in Hawaii but the timing wasn't right for me. Too bad for us.) After my job was finished in Hawaii I joined her back east and we lived in that tiny condo together for one and a half years. Well, at some point we both realized the east coast had done as much for us as it was going to and that we couldn't afford the life we wanted to there. So we sold the condo and both moved back west.

I think we just missed the peak of the market where the high water mark for a condo like ours was about $330k. We sold ours for $315k last October. Over all a tidy little profit for two years. Last month, units like ours sold for $280. In hindsight we got out perfectly. But the best timing was my wife buying when she did.

And once we got out west we shopped for houses in the $275k range. And found a nice little renovated three bedroom for $285k. Where we have over three times the space, plenty of parking, a big yard, and lots of room to grow.

And now with the current housing slowdown we'll be happy with five percent appreciation. That'll still allow us to walk away in a few years from the sale with something to show for it. Of course neither of us expect to make the type of gains we did on the condo.

1 comment:

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