buy my first house or condo

I was recently looking at property prices in places around the greater LA area, which have been experiencing a much needed downward correction the past few months. Working out the numbers, I’m excited to see that it looks like I can actually afford something fairly decent now – not just the monthly mortgage payments but also something like a 20% down payment (which has been a bigger obstacle). I also find that I don’t need to limit my search to just condos, but houses also look like realistic choices in neighborhoods comparable to where I’m living now or somewhat better. I was never willing to live in worse area just for the sake of owning something, and now it looks like I don’t have to.

I’ve been thinking a lot about responsibility. I find the reality of owning my own place a bit scary in a couple of ways. For one, it makes it more difficult for me to suddenly decide to pick up and leave and randomly settle somewhere else one day should I ever decide to do that. Well, considering that I’ve been living in the same place for 9 years and haven’t come close to doing anything like that, I shouldn’t allow that objection to hinder me. I should either accept that I’m established where I’m at (at least for the forseeable future) or finally make up my mind to make a drastic move. Second issue… If I suddenly found myself without a job, I have enough savings that I could conceivably afford to not work for a couple of years (if I live more meagerly than I do now). If I bought a place, most of my savings would have to go toward a down payment and I would have a monthly mortgage and annual property taxes hanging over my head. I think I’ll feel more trapped and under more pressure to maintain a certain level of income.

Those are the minuses, and I do think about them, but I don’t think they will be enough to stop me. I’m going to be giving serious thought to what it is I want exactly in a place to live, and maybe by this summer I can complete this goal.

I’m tired of renting, but I think that prices haven’t bottomed out yet and probably won’t for another year or so, so I’m holding on until then. Also, it takes some time to save for a down payment, and I’m not quite there yet with the amount I would probably need.

Foreclosures are going up, which is a good thing. I don’t mean to sound cold, but this housing bubble that built up over the past few years was ridiculous in two very obvious ways. One, financial institutions became too loose in extending credit (zero down, no proof of income – what were they possibly thinking?!). Two, people forgot that prices don’t continuously go up and that as with any investment there is an element of risk with buying a home and thought that even if they couldn’t afford the payments when the interest rate went up, with appreciation they could just sell and make a profit.

Now, finally the market is going through a much needed correction that will hopefully remind banks that they really need to underwrite their risks and remind consumers they shouldn’t take on debt they can’t afford to pay off (come on, who realistically thought they could buy a $500K or $600K house on no more than a $50K or $60K income per year?).

And hopefully, I will finally be able to afford to buy a home. :-)