My mom came and visited this weekend. It was great to have her and get a break. J and I went house shopping and got some errands done, which was nice. No update on a new house. Still waiting. And that's okay. I sometimes feel like I can be a very impatient person, so it's hard to wait and want something. But, I also feel like it teaches me lessons every time, and that there is value in waiting. Our touring agent this weekend asked us our timeline, which I replied, "Well, either before mid-summer or we wait until next year." We won't move unless it's right, which means there is no pressure. Besides our own. I've thought about making a "best of redfin" post about some of the ridiculousness I have seen on the market in our searching, but have decided I would rather write about a more serious issue, and I hope this doesn't offend too many.
This weekend, we watched, "The Big Short," which was nominated for best picture. Christian Bale was also nominated for best supporting actor (and did a really good job). I highly recommend that you watch that movie. It makes what happened during the Housing Market crash of 2007/2008 more tangible and understandable. And it leaves you angry. I have been studying the housing market since we have started thinking about moving again, so when I saw clips from the movie during the Oscars, I begged J to watch it. What got me so interested is that the prices now are so much higher than they were in 2011. During a period with relatively little economic expansion and inflation. Is what happened then, happening again? After doing a fair amount of research, I'm coming to the conclusion of, "no, but..." A couple of things have happened since the downturn in 2008. First let's take a look at the housing market index.
The red line is the one you want to to look at. Starting in the late 90s, the bubble is pretty clear. How did the first one happen? We'd like to think that the fault entirely lies with the big banks making huge profits for about 10 years, but the blame is much more spread out. The government had decided that the path to homeownership should be easier. They encouraged lending agencies to start lowering their standards from 20%+ down and fixed mortgages to 3% down (or even 0% down) adjustable rate mortgages. Eventually standards downgraded to the subprime stuff you hear about - bad credit scores, 0% down, interest only, adjustable rate, no income verification. Of course these types of loans are incredibly risky. So, to mitigate risk, they packaged all these loans into a CDO (collaterized debt obligation). The idea was that some percentage of the mortgages may default, but they won't all default and in the meantime, the interest generated was quite high. What's terrible is that these CDOs got high investment scores by the ratings agencies, placing them as safe bets in the stock market, when they weren't safe at all. That led to bonds and pensions being based off of these funds that were backed by subprime mortgages. With lower lending policies, people began to flood the market. Houses that were once not affordable became attainable. At 0% down, an individual has unlimited leveraging power. And as long as prices were going up, people thought they could easily flip a house if it didn't work out. Not only that, but people that were not real estate investors began buying property for investment purposes. Eventually, the market became saturated and the intro rates for those adjustable rate mortgages began to expire. But people were unable to refinance because the market was saturated and the prices began to fall. As this happened, more and more people defaulted on their mortgages. And it should be noted... with relatively few consequences. Defaulting on one's mortgage and being foreclosed means losing the money you put into a house. If you put down 0% or even 3%, that isn't a whole lot of loss (besides the hit to the credit score, which for many was already low). As defaults rose, the CDO market evaporated, which took down the banking sector and led to the Great Recession. So, who's at fault? The government for encouraging lax lending strategies and lowering requirements for Fannie/Freddie. For backing many mortgages that should never have been written? For bailing out the banks, who then used the money for bonuses? Absolutely. The government did a horrible, very bad thing. How about the individuals taking on loans they couldn't handle? Individuals were taking on trillions in debt on a gamble that the market would go up indefinitely. When a system is hacked, do you blame the hacker or the sysadmin who left the door unlocked and the window open? You blame both. The hacker obviously didn't do the right thing, but hackers as well as individuals usually exploit the system given to them. The lending agencies left the door unlocked, the window opened and had a sign pointing, "this way to financial ruin!" Then there were the predatory lenders, who would be like those guys from "Microsoft" asking to VPN into your computer. Yes, the government was to blame, the banks were to blame, the lenders were to blame and the individuals were to blame. And then the American people bailed out the banks. The responsible ones who saved up 20% for their house saw their investment go down the drain and were left holding the check. And no one learned their lesson. The American people were left worse for the wear and the 1%ers left richer. No one was even prosecuted. And if this doesn't make you angry, it should. It should make you sick to your stomach.
But why am I going on about this? Because prices are climbing back to 2004/2005 levels. And my question is why? Why after all that are prices not returning to their pre-1998 trend of gradual climb? One reason is that interest rates are still low. And as they remain low, the monthly payment on a 30 year fixed mortgage can be reasonable even for higher prices. Also, inventory is still low because builders haven't been building as much. Okay, fair enough, but...
Not to mention the national association of realtors is one of the leading lobbyists and PAC in Washington. Subprime mortgages are back! And so are CDOs. It's almost like banks and lenders didn't really learn a lesson since the American people are here to bail out big money. Remember, they're "too big to fail"! What concerned me and left me very worried was the conversation I had with the builder before we backed out of our new construction house. When I explained that it was so much money and more than we were wanting to spend, she replied, "well, I see you want to put down 20%. Why would you want to do that? That's insane! No one puts down more than 10%. I would never put down more than 10%. There are other options than a fixed rate mortgage." If I wasn't backing out before, that statement had me running for the hills.
Life in America is becoming increasingly difficult for middle America. There are few incentives for responsible decision making. And people are living with higher and higher debt to income ratios. If someone let their child run around with no consequences for their actions, we would condemn the parent. But our government, our corporations are given just that. It makes me so upset that our society is driven by this instant gratification mindset. Instead of letting the banks fail and prosecuting the scum that engaged in fraud, which would have led to better lending practices and a stronger economy eventually, we bailed them out. What lesson does that teach us? What does that teach our children? Gambling is easy when it's not your money on the line. And I can't help but think that history may very well repeat itself.
If you read all this, thanks for listening to my tirade.
If you made it to the end, here's a fun photo. Metro areas have a lot of cars. L has to tell me about each one.
I haven't posted in a while. Again. I should probably stop leading my blog posts off with that since it's almost always going to be a long time between posts.
L is now walking. He took his first steps just after Christmas. It took him a bit to get the balance thing down and he still often prefers to hold our hand(s) while walking, but he's been walking a LOT more recently. Apparently, at daycare, he walks and babbles to the other children and is much more interactive with them. His word count is still relatively low, but he still signs a lot and his comprehension seems good. If I tell him to pick up a toy and bring it to me, he will. Or if I ask if he wants to do some activity he will crawl/walk to where that activity takes place and point. He certainly doesn't say his ABCs or count or anything like that. He seems to be much more visual and observant. He plays with Duplos quite well and can built both towers and structures. He loves cars and balls. He is quite good at puzzles to the point, I'm thinking he needs more challenging ones. Quite frankly he acts like a little engineer. (Ha) He's becoming both more interactive and more exhausting. He is constantly moving. He loves music and dancing. He is also acting much more like a toddler - screaming when he doesn't get his way, screeching in general, and fighting back against things he used to be relatively calm about. I think a lot of the true tantrums are coming from his delay in communication and not being able to tell me what he wants. Although, sometimes I definitely know what he wants, but the answer is no.
Some of you on facebook are probably thinking we bought a new house. Short story: we didn't. Longer explanation: J and I had a plan that started last summer. J would buy a car, I would find a new job, and then we would get a new house this spring. The first 2 have already happened, so we're working on the third one. We want to move for a couple of reasons. One is we feel we are outgrowing the townhouse. L's room is pretty small and there is just a lot of stuff. Now, we could get rid of some of the stuff and try to make it work, but there's a few things that piss me off and just probably wouldn't change. And we really can't make our rooms larger. We also would like to have a garage. We have parking spaces, but it's getting old. Plus parking in our community is just a problem and will likely continue to be a problem. We are also close to an area where a lot of college students live. There is always noise, always someone honking their horn, having a party, shooting off fireworks. I think we are both just kind of tired of the whole situation and ready to move on. So, we started looking early in January. The problem of course is that inventory is low in January. Spring is when real estate starts moving so we were early to be looking. Our approach was to visit different areas and figure out which neighborhoods we would focus on. This worked out well during our last search because we had very little pressure to buy anything, but were able to get the everything in place so we could move quickly. Since not a lot was on the market, we visited a lot of new construction places to see what was out there. Most were above our price range so it was more for fun than anything. One place we visited on a whim was in our price range and had a gorgeous model home. We went through the process as far as making a deposit. But we had a 3 day contingency to back out. Enter 3 very stressful days. Once we added in everything we wanted into the house, the price was outside of what we said we were going to spend. It was close, but the reality of how much we would be cleaning out our savings really started to hit home. I also starting thinking about how new houses don't have a porch/deck, have to be painted (inside), and the lawn takes a lot of maintenance the first year. With the house at the top of our budget, I was worried. When I voiced my concerns to J, he was worried as well. We were up half the night discussing it, and we were both so on the fence, we decided to pull out. When we bought our current place we were 100% all in. This just wasn't the same. I still think it was the right decision. I'm seeing comparable houses in the same area for less money on the market. I think we would have overpaid. But it was a pretty house.
So, we are back to searching, but with a little more trepidation and a lower top price. We have also started to make some small improvements to our place (like new appliances) in order to prep for selling. We are using Redfin to search for places and I am loving the experience - low pressure, lower costs, but also knowledgeable agents. There is no hand holding, so I would say you have to be your own advocate a little more, but if you are willing to do the upfront work. it's great!
The Housing Market 2016
There's a couple of interesting differences between house searching in 2011 and now. In 2011, there was so much built up demand for houses due to the recession/housing market burst that decent houses sold quickly. Our house went on the market on a Friday, we saw it that day and had an offer in that night. By Sunday, they had 5 additional offers and we had to deal with a bidding war. And that wasn't an unusual situation. Now, it's a little different. Nice houses seemed to be overpriced (this is my opinion, but most list prices seem ridiculous to me). I think this is largely due to low interest rates pushing up sale prices as people can afford more house with a lower rate.
Another interesting difference is that houses are sitting on the market longer than in 2011. To me, that means demand is lower, which could put us in a good position to bargin with sellers to get a good price. Although, we may also have a harder time selling as well.
The uptick since 2012 has been concerning to me since it seems like housing prices are growing much faster than inflation and certainly more than people's salaries. I think as long as we are in the house long enough that shouldn't affect us too much.
So, we'll see. But, no we aren't buying a house. At least not yet.
So... it's been a while since I've blogged, so I thought I would share some updates. It's been 3 whole months since I've sat down and done this. I think that officially makes this my longest dry spell with blogging. Life has been busy since August. L has gone from a baby to an emerging toddler. I feel like there should be a name for this in-between stage. I have, for a long time, felt like the 1-2 year transition is a little awkward - not quite baby, not quite toddler, aspects of both. Ah well. L has gotten significantly longer. I don't know his actual stats because we haven't done our 15 month check quite yet, but he's definitely losing the baby rolls. What's so funny about this is that clothes that were too small for him last spring (ie pants that didn't fit over his chunky thighs) now fit perfectly! I had this impression that he would continue to fly through the sizes but he has been in 12-18 months since last March. The pants are just now getting a little short in that size. L continues to be a crawling and cruising machine. His cruising game has recently been showing some pretty advanced moves like letting go for a few seconds and transferring really well around and between pieces of furniture. I still think walking may be a little ways off, but possibly by Christmas? I do think he'll be walking before 18 months (which is really the cutoff for physical therapy to ramp back up). But, he'll only do it when he's ready. He said his first word last month - "Dog!" It should be noted we don't actually have a dog, but we do have a lot of stuffed dogs. I was excited to hear him talk. We have also been teaching him signing and he can sign - "eat", "all done", "thank you", "baby", "bye bye", and "more". Since I figured he would be a slightly late talker, the signs have been really helpful for being able to communicate with him. I highly recommend. He continues to point to show things that are interesting. He gained a few more teeth, bringing our count up to 13. He has one eye tooth, but I expect the other ones will come in soon. He takes either 1 or 2 naps a day. He usually only sleeps once at daycare, but usually gets tired mid morning at home, so we give him 2 naps at home. So he typically gets 4 days of 1 nap and 3 days of 2. I was kind of stressing about this, but it usually goes better if I just follow his cues for when he's sleepy during the day. I think daycare is just too exciting to sleep more than once. Oh - speaking of which! We found a daycare and L has been attending since September. It's an in home place with one provider and 1-2 helpers. We like it and L has definitely adjusted well to it. I think I would like a more structured setting when he gets a little older, but it is good for now. L's immunity is working hard. I think he's been sick with one thing or another since September and pretty much always has a runny nose and a cough. I have brought him to the pediatrician who mostly shrugged and said, "yea, he's in daycare." Oh well.
In other news, we bought a car in early September. It's J's new car, and he really likes it. It's a Jeep, so we have a lot more space than my sedan, which is nice for trips. Last month, I started a new job, myself. It has been good so far, but still the early days. I am still working part time, but work 4 days instead of 3. It's been an adjustment, but I think going pretty well. I do love my new commute and my office is right on a pond, which is way prettier than my last workplace. :) I have been quilting and recently taught myself to crochet. It's been fun to learn and make some new things.
I think that's most of the main updates.
Since a picture is worth a thousand words... here are some pictures from the last 3 months...
We went to Cox farms. I had a great time. Luke... not so sure.
Look at those long legs!
J and I spent our anniversary in Charlottesville
Current quilting project. All the small squares take forever.
Guess who's 1?? That's right -- we have officially survived the first year of parenting! I'll admit L's birthday this year was significantly less painful than last years!
L's current stats:
Weight: 24 lbs 11 ounces
Height: 32.5 inches
Teeth: 10 (halfway there on the baby teeth)
When he was born, he was 7 lbs 9 ounces and 20.75 inches long. That means he has more than tripled his birth weight and gotten a lot taller! He has met his milestones, which led our pediatrician to recommend stopping physical therapy. L now not only crawls a lot, but stands and cruises as well. He will likely still be a later walker due to his late crawling, but that's okay. No words yet, but that's not all that surprising. Lots of babbling, though! We have officially baby-proofed all the things, yet somehow L still finds ways to hurt himself (losing his balance, pulling stuff on top of himself, etc). I feel like some of this is good (as long as it isn't actually dangerous). The growth in defiance and doing things he knows he isn't supposed to do has grown in the past month. I'm realizing more and more that he is transitioning from baby to toddler (excuse me while I go cry). Our doctor said we could stop the formula and switch to cow's milk! (Do you even know how much cheaper cow's milk is than formula?? I'll give you a hint -- a lot!). We are working on the transition. We started a week ago, so I am offering milk and water in sippy cups throughout the day. He didn't drink a lot the first few days, but he seems to be getting the hang of it. He also seems to be understanding how to drink out of a straw cup, so that's pretty cool as well. I'm still doing one bottle before bed as he gets the hang of it, but I'll probably be dropping that in the next month. He is such a good eater, but is starting to become a little more picky (noooo!!).
Our biggest change is coming up. We found out a few weeks ago that our nanny is not coming back from maternity leave (so sad). So... we had a frantic couple of weeks figuring out a new child care situation. Unless you have been through it, it's hard to realize just how difficult finding good child care can be. I went to 6 in home daycares (the center daycares were all full) and interviewed several nannies. In the end, I really felt like L was at the age where I want him to start socializing with other kiddos and I think he would benefit from a daycare setting. I went to several in home places where I was literally backing out as I was saying hello. (yikes!) Others were okay, but I didn't feel all that comfortable. We are going to try out one close to our house that I felt pretty comfortable with. Truthfully, I am really, really nervous about it. I don't know how he's going to do, but I'm just going to go with it and trust that God will protect him. I feel like it's the decision we were pushed into making, so I just pray it's the right one. He starts tomorrow! He's also sort of transitioning to 1 nap a day instead of 2, so I think the daycare setting will help him with that transition since all the other kiddos will be napping at the same time. (We shall see).
In the past month, we have gone to Atlanta for a wedding and hosted a birthday bash for L. Lots of good times were had by all. I also made a busy board for L's first birthday.
Trip to the zoo. L was pretty hot and miserable the whole time.
Wearing the new Georgia Tech shirt we got him from Atlanta
We got a bunch of balls for his birthday so I put them in an inflatable pool for indoor fun.
Food for L's birthday. It was storybook themed. :)
One picture for each month
The busy board I made him. I already had the board from a previous project, so I just bought the other items on the board from Home Depot and screwed them in! Pretty easy project for a toddler. :) I think he likes the switch at the door stop the best.