My post yesterday generated a number of posts along the lines of "What?! You're buying a house on the cusp of a double-dip recession? How do I get hold of some of the potent recreational pharmaceuticals that seem to be easily available in the Greater Washington DC Area?"
So I thought it was worth writing a post about how we thought about buying a house; if nothing else, it's a good way for you all to see how clearly I'm thinking about this whole financial crisis thingy.
Step One: Why buy a house?
I have spent enough time reporting on the financial crisis to have made very sure that the answer to this was not "Because renting is just throwing your money away!" All calculations, mental and otherwise, were based on an assumption of no house price appreciation. I actually expect that the house we're buying will probably appreciate in value, as it's on the border of one of DC's hottest "emerging" neighborhoods. But one never knows what is going to happen, and any house that is a stupid purchase unless the value is going to rise at a steady clip, is a stupid purchase. We figure that as long as the thing doesn't lose too much value, we're okay.
So if we're not looking at our home as a sort of get-rich-quick-scheme-with-attached garage, why would we want to tie ourselves down?
1. We're committed to Washington DC Both of us have moved around a bit, and we're pretty committed to both policy journalism, and doing it in this particular city. We're unlikely to take a major hit to our labor mobility by tying ourselves down to a house.
2. We're sick of moving I never used to have any interest in homeownership at all. Then I was evicted from my New York apartment so that the landlords could convert it to condos (one of the factors that spurred my move to Washington). No complaints here--the landlords had every right to do what they wanted with their property. But it drove home the fact that any rental is subject to the whims of someone else.
3. The DC rental market is extremely hot. We are in the unheard of position of taking on a combined mortgage + property taxes + insurance (aka PITI) that is substantially lower than our rent was. Even if we budget $300-400 a month, every month, for repairs, we'll come out ahead.
Now, to be sure, we are moving to a larger house in a neighborhood with fewer amenities. But the general pattern that both of us have experienced is that rental costs are rising by at least 4% a year.
Obviously, there's no guarantee this will continue. But we decided we wanted to stabilize our housing cost at a level we could afford, rather than risk having to move every few years as gentrification priced us out of wherever we happened to be living.