The Housing Market

Hill Ridge Dr. I will be able to rattle off the full address of the house I lived in San Antonio until I die. 78250. After 25 years I've lived in 8 different cities, in townhouses with green shag carpet, overpriced split levels with cricket problems, an apartment building from the 1800's, a brand new apartment, and another one whose neighborhood was much more crappy upon reflection. I lived in one town twice, once in the '80's when it was surrounded by cow pastures is now a place I wouldn't want to be in after dark. The second place was the aforementioned split-level, overpriced but for its placement in a good school system.

But the house in San Antonio will always be the best, especially now that I found out it cost less than $80K. You can't buy a dirty mattress in an alleyway for that much around here, though its low price was just as much a product of an economic downturn. In this case, it was too many houses. A developer mowed down some fields and made two HOA-run suburbs, Misty Oaks I and II. We lived in I, on a street that was definitely a hill but I'd argue its status as a ridge. Houses were snatched up, people moved in, and the developer kept building, believing the new houses could be built and sold before the bubble burst. The area being cleared the year we moved was formerly a barbed wire-encircled weed factory/unofficial junkyard, home to feral dogs and giant snakes. Much to some homeowners' dismay, this area was essentially their backyard. It was an eyesore, but better than having large machinery grinding away while you're eating dinner.

Our house was a ranch style, 3 (later 4) bedrooms, 2 bathrooms, huge living room w/ vaulted ceiling, open kitchen w/ giant pantry and island, add-on family room off of the kitchen, huge backyard w/ deck that included built-in seats. Nowhere else have I lived in a ranch-style house, and I hope to someday return to a life free of stairs. Though, truth be told, ranch style houses are a luxury created during the post-war housing and population boom. They take up twice the land of a regular split-level or two story, they require a much larger foundation to be poured (and leveled), among other things. In short, they suck up all the resources needed to create affordable (though nowhere near as luxurious) housing.

In a complete reversal of acreage, my parent's current house rests on a plot that only extends about 2 yards on each side, giving them an uncomfortably close view to their neighbor's windows (and vice versa). However, around here there is no way around it. The older houses (most from the 1970's) are being demolished, what with their inefficient heating/cooling and construction based on a world without computers and big-screen flat panel televisions. In their place are cookie-cutter McMansions on plots almost half the size as would normally be used, with shortcuts taken at every opportunity. In this community, normal drainage procedures (storm drains, underground runoff gutters in front of houses) have been replaced with 4 foot deep troughs that run between the road and the sidewalk, necessitating some fancy footwork if you parked in the street. Upon that is the fact that the roads are the right width for a horse and buggy but not for the SUV’s, which usually take their place halfway in the grass (there are no curbs) in the inevitable event that the homeowners run out of room in their driveway. Navigating the roads in that neighborhood is essentially a game of chicken with the over-worked, stressed out nouveau riches struggling to afford the houses they believe they deserve. And such is the case, the first of the month delivers the mortgage bill with the adjusted rate as the For Sale - Foreclosure signs spring up like weeds.

While these shortcuts do allow the builders to cram as many houses as possible on their land, they serve a much more annoying purpose down the road. With the rules for building materials, as well as the state of the roads in the community are already set in place by the builders, they have already set part of the CC&R that the HOA must follow after the sale. In the case of the drainage and roads, the builders have left the residents with a costly process to bring them up to municipal code in the event that the HOA is dissolved. However, HOA's are notoriously difficult to dissolve, and many critics report that their HOA's have no contractual legal means of dissolving. So this is a concerning thing, not to mention its oligarchic structure, lack of oversight, potential for abuse and lack of homeowner involvement in the decision making process. Their supposed positive side, to keep property values up, has shown to not be the case in many situations. (Link)

So it is in this environment that I contemplate purchasing a home. There's a pretty strict structure for becoming a homeowner around here, having as much to do with upward mobility as financial feasibility. From the apartment you get a condo or townhouse, essentially owning what you were previously renting. And while not having to throw money down a pit every month is a fine idea, it still involves sharing at least a wall with someone else. It may be a sign of age, or exhaustion, but when I come home from work I do not want to hear anyone except who I live with. No pounding bass, no screaming babies, no loud TV, no constant footsteps above. Simply peace and quiet. This is because honestly, after 45 minutes on the beltway I really hate people.

I would like to own a home sooner than later, though since I am not an investment banker nor would I like the financial suicide of a deferred interest loan, I will need to get creative. I don't really want to settle on a 40-year-old house; they have character in spades but upkeep will drain my wallet even faster than the down payment and mortgage. Granted, as of last week the Feds cut the interest rate by 0.5%, rallying Wall Street to some impressive gains. But something stinks about it. Could this just be the Feds' realization that referring to the current credit crisis as a "market correction" won't fix the decline? Half a point is a lot; I think most were expecting a quarter percent, or (more likely) no change at all. I think its going to end up just being a confidence booster in the short term, and hopefully not a mistake in the long run. With the current sub prime lending crisis, its probably going to take a lowering of foreclosure levels to get banks confident again.

Just for a round number, the houses around here are going for the neighborhood of $500K. That's half a million dollars for a zero lot line house squeezed between a turnpike and a highway, in an area where building superseded proper urban planning. This is why it took me an hour to go the 20 miles from my work to my doctor's office.

I don’t have a fix for this yet, and honestly I haven’t been looking so much at individual houses as the real estate market in general. The house-flipping fad caught on pretty bad around here, and there’re a lot of people looking to unload houses. There’s no question that I will own a home someday, its just looking more complicated than I imagined.