What Damian's been up to.
Our house theoretically goes on the market in a week, but that's just to whet buyers' appetites. Our realtor is going to stipulate no showings until the broker's open house on Tuesday June 7th.
Let me repeat that. our house is going on the market. People will be walking through, strangers will be commenting on paint colors and flooring, opening closet doors and peeking into the bathroom. In less than two weeks.
This feels so strange.
I always assumed that we'd already have a new home by the time this happened. That we'd be in escrow and be planning furniture arrangements and landscape alterations on a house in some neighborhood across town, a place that would feel foreign but only a little bit. Instead we're planning a cross-country move to a rental as yet unknown. Cashing out, as it were.
I know some people (and have read of more) who are doing the same thing we are, only they're not moving to a new state, but rather into a rental in the same neighborhood. Why? Bubble, baby, bubble, bubble, boil and trouble. Many people believe we're at or at least near the top of California's absurd house price surge, that there's nowhere to go but down. They may be right. Even Alan Greenspan finally fessed up last Friday that there are in fact local bubbles (he calls them froth):
The Fed chief said Friday that he didn't see a national housing bubble and that the economy was not at risk, an assertion he had also made in February.
"But it's not hard to see that there are a lot of local bubbles," he said Friday, without specifying these local markets. Greenspan said price surges might "simmer down" as housing became less affordable.
"It's pretty clear that it's an unsustainable underlying pattern," the Fed chief said. "People are reaching to be able to pay the prices to be able to move into a home."
Greenspan hasn't been admitting any such thing until now. In fact, he's the one who's been keeping interest rates artificially low to stimulate the insane buying frenzy, and even urging people to refinance using adjustable rate mortgages so they'd have more cash in their pockets and therefore do more to stimulate the economy. If he's finally confirming the obvious, it means only one thing: interest rates will rise in the relatively near future. And if interest rates rise? Pop goes the bubble. People with those lovely adjustable rate mortgages that allowed them to squeeze into too much house for their income level will fall out of the market. Can't pay the mortgage? Put your house up for sale. Really really can't pay the mortgage? Hello foreclosure. Net result? More homes on the market. A glut of inventory? Prices go down. It's kind of simple, no? Kind of obvious, yes?
Funny thing, though. I keep talking to people who say, "Yeah, I think it'll happen. But not here, not in my little pocket of the city. We're immune." In West Hollywood, we're immune because it's become such a hot area, so desirable, it'll be at the top of whatever market there is. Well, maybe, but if the overall LA market falls, it will fall in this neighborhood too. You can bet your ten percent interest rate on that. They're apparently immune in the Jersey town we're moving to, as well. Because, you see, the Midtown Direct commuter train has made it so very desirable to live there. And it has. Home values there rose the instant the train to Penn Station stopped in town. Good schools and restaurants don’t hurt either. But if the New York bubble bursts? You can bet it's going to take Essex County, New Jersey with it.
There are certain markers when a market's about to switch from favoring sellers to favoring buyers. First, rentals become cheaper and more plentiful. I know this is happening in the New York area. Apparently rental apartments are staying vacant longer between tenants, so landlords have to drop their (still absurdly high) prices. And in our new home-town-to-be, I see the same thing. Lots of rentals available, and the listings linger.
Not only that, but even high rents are nowhere near as high as what you'd pay every month on a brand new mortgage for the same exact property. IE: a modest house in the pleasant neighborhood near Damian's school rents for $3300 a month. A lot of money, yes. But similar houses on the same block are selling for around $1.2 million. Assume twenty percent down. Assume six percent interest on a jumbo loan. You're looking at closer to $6000 a month. Drop that interest to five percent because maybe an ARM will be lower up front, you're still looking at a monthly payment of over $5000, and that's not including tax and insurance. Cheaper to rent than own? You bet.
Another marker of an unsustainable bubble: Housing prices in the hot markets have far outstripped median income. It has to self-correct. As soon as interest rates nudge up a point or two, wham bang crash.
On the other hand, some people say that there's no bubble – though there may be a bobble – and that it's all about supply and demand. More people are moving to cities, causing more demand, but cities are built up already, there's no place for more housing. Thus, a crunch. Thus, prices that go up and up and up. But then how do you explain the plethora of rentals and the wide gulf in price between a monthly rent outlay and a monthly payment on a newly minted mortgage? I agree with the prevailing wisdom: the housing market is overdue for a correction. I just can't see it any other way. The only question in my mind is when it'll happen and how big a correction. Well, and how it'll affect the economy and – okay, I do have some other questions, but I do believe this will happen, this giddy spending spree in California and New York and Washington and Boston and south Florida and all the other hot markets that has gone longer and higher than anyone expected, that it will in fact subside sometime in the next few years and that the money in people's houses right now is more Monopoly money than it is real.
If we loved our house and our city, we'd stay put despite this. It doesn't hurt to live in a house valued at half the price you paid if you have no intention of moving. Who cares what it's worth? It's just a number on a piece of paper. But we don't want to stay. So we go. I'm not one of those people who would sell our home and rent instead just to ride the wave. I'm not that much of a gambler. And we might be mistiming this. Which doesn’t matter, because this is what we need to do and when we need to do it. And we'll figure out a way back into homeownership, one way or another, even if prices continue to rise. But hey, if this adventure does happen to time out so we cash out at the top and then can buy in our new town when the froth has subsided? How cool would that be?
My father had a health crisis recently. I found out about it when his wife called me Monday night. During my subsequent freakout and various intense discussions with friends and family, Damian naturally wanted to know what was going on. We told him a little. I gather he asked Dan more about it on the way home from school yesterday, because when Damian came in the door, he gave me a big hug and told me that Daddy said I was sad because my daddy was very sick and maybe dying. He then immediately started chattering about how you get sick if you don't take care of yourself. True to a point, certainly, and far easier to talk about than any other ramification. So we talked about the things you can do to keep yourself healthy and left it at that.
Later yesterday afternoon, I was on the phone. As is his wont, Damian wanted to know who I was talking to. I told him I was talking to his grandpa, my father. Then I winced, wondering what he was going to say next and what my dad might hear. ("Oh, him, he's dying."? Which he isn't, by the way. That part was, shall we say, inaccurate. Thank god.)
Damian said, "Oh, he's the one who doesn’t take good care of himself." In a very clear, penetrating voice.
My father laughed. Because it's true, he hasn't been.
Kids don't shade the truth.
The TV networks announced their fall lineups this week. Dan's show got cancelled. Which is sad, because it was an extremely likeable show. But honestly? I'm relieved. Can you imagine walking away from a guaranteed job, a reliable gig with people you've become comfortable around, for… well… the great unknown? No sure thing, this move. No guarantees at all. Just contacts, connections, friendship, and a sense of rightness. And so we go. I told Damian that's it's all a huge adventure. I meant the house sale, the move, the drive across country. But really, it extends way beyond that, doesn’t it? New town, new school, new life, new weather pattern, new definition of self and work and everything, almost.
I think now about Toronto, about how serious we felt this past winter, how it felt like a tangible, appealing option. I feel some regret, admittedly. I still think this country's current government is freaky-scary and I worry how far things will go before the hoped-for, longed-for shift back to the middle, back to some semblance of sanity. But this move to New Jersey, which really means New York, which means a return home, even this move, which has so much comfort built into it (an immediate and rich social life! familiar places all around us!), even this feels like diving into a cloud with our eyes closed, the sensation imaginable but unknowable, nothing to grip onto, nothing to do but trust that we'll float and not fall, that the cloud, balloon-like, will buoy us up. And with this transition we're not just moving away from a city that hasn't ever jelled for us but also moving toward a place and people that do.
If we'd gone through with the Canadian immigration paperwork, how would that have felt two months before the big move? Much, much harder than this, I think. Toronto sounds like a very pleasant city and maybe we would have adapted, found a social circle, found work, found a good school for Damian. Maybe. But it would have meant starting over in the most elemental way. Ground level. Build a life. Hard in your forties. Doable but hard. And to choose it just because we want to leave a city and a country? I'm not sure that's enough, at least not for me. I want to go to, not just away from.
I think some people have a sense of adventure built into their DNA, they wake up as infants, and as their eyes learn to focus they learn to crave change and newness, and as a corollary, they seem to know how to build worlds around them wherever they go. My cousin has more friends in LA than I do, I think, and he's only been here half a dozen times. I know I'm capable of making friends; at certain points in my life it's happened easily, though maybe that was because I was in the right place for me, or maybe because I felt comfortable with myself (though perhaps these are two ways of saying the same thing). But I find that I don’t want that big an unknown. I want my adventure life-sized, manageable, imaginable. This is huge enough, to uproot my family like this with no immediate jobs on the horizon, no tangible reason except that it's what we want and maybe need to do for ourselves, our careers and our son. This is huge enough, and it comes complete with a social safety net, friends to support us through our inevitable panic attacks, even family nearby. This is huge enough, and anything that makes it feel saner and more secure is a good thing.
So I'm sorry that Dan's show got cancelled, but in a way, selfishly, I'm not. I wish everyone luck finding jobs on quality shows easily and quickly. And I wish us luck in our metamorphosis into… whatever happens to someone who hitches a ride on a cloud.
I have a new hat. A straw sunhat with a slightly rolled brim. I set it on the printer cart in my office and Dante immediately started stalking it. When he began licking the brim, I removed it to the bookcase. When he wedged himself onto the shelf, I squirted him and chased him off. He can't have it. It's mine.
I like this hat. You can fold it, sit on it, crush it into a suitcase, and it'll unfurl, unfold and look just as good. I got it at the travel bookstore today, along with an updated Rand McNally US Atlas, a huge fold-out road map of the same terrain, a Frommer's and also a Rough Guide to, yes, these United States of America.
We're going on a road trip, yes we are. We're going to drive across the entire country. Stem to sternum, tip to top. Well, okay, not quite top. But it's a long drive with a seven year old, no? So I can exaggerate. I'm entitled. Also giddy. Also bewildered. Is this my beautiful life? How'd this happen?
We have a few scenarios right now, timetables and scheduling issues, and this has never been that kind of personal blog so I'll gloss over that part except to say that in all likelihood, sometime before mid-September and quite possibly as early as a month from now, we'll get into our minivan and set out for a long, very long, oh so long drive. This is not to say we're moving in a month, I don't see how we could possibly be ready that soon, but if we do have the freedom to go then, it's a nice time of year to make the drive (and then fly back to LA to pack). The car has to get there somehow, right?
Whether in June, August, or September, I know certain things about this trip. It will take approximately two weeks. I will take lots of pictures. Damian will complain about being bored in the car. We will listen to a lot of music. When I'm in the passenger seat, I will sometimes take my shoes off and put my feet up on the dash. We will stop a great many times in many towns and at overlooks and trailheads. We will visit Bryce Canyon in Utah. We will drive through the Colorado Rockies and look down. We will see Mount Rushmore and look up. We will drive and walk through the Black Hills and the Badlands in South Dakota. We will visit Chicago and eat well. We will eat a lot of greasy road food and I hope some of will even taste good. We will be very tired at the end of the road. I will wear my new hat.
Small birthday party for the seven year old Sunday (yes, it was Mother's Day, what's your point?). Homemade chocolate cake (frantic IM to Diane: Know any good chocolate layer cake recipes?). Decoration conceived and supplied by the birthday boy:
The cake was yummy, and a good time was had by all (I think).
It's funny, really. The last couple of years we've had larger parties; fifteen kids or thereabouts, plus parents. We've put on a good spread and came up with interesting party projects. And I think everyone had fun... except Damian. Or rather, he kind of sort of had fun. He enjoyed the idea of it more than the event itself. A whole bunch of kids invading his room/toys/house/yard, that part overwhelmed him a bit. So this year: six kids, including him. A total of four families, including us. And he had a great time. Sometimes you have to put aside your own preconceived notions, your own idealized version of what something should look like and see it from a seven year old's point of view. This particular seven year old. A successful party is one that the birthday boy enjoys. A successful life is one that fulfills and satisfies the person who lives it. You can't judge based on externals.
Damian turns seven tomorrow. He told me today was about saying goodbye to six and tomorrow will be about saying hello to seven. When Dan came in with a shopping bag full of presents, Damian hid his eyes. Even when he came into the bedroom later, he walked in with his eyes closed. "I don't want to accidentally see any of the presents." And so he didn't.
I wish we could make more of his birthday this year; we just got back from our life-altering trip east and first Dan, then Damian got stomach-wrenchingly ill. Still, we'll give presents and hugs tomorrow and make much of him, and Sunday we'll invite a few of his friends over to communally demarcate the division between six and seven, and we'll take him to Legoland and Sea World next week and call it a late birthday present. And I hope it will all feel like a true birthday, like a celebration, like love.
Seven years ago this minute, as I write this at ten p.m. on May 4th, seven years ago I was deep in labor. Transition, in fact, where it gets so painful and so sustained you think you're going to split wide open, cra-aa-ck, like an eggshell. Seven years ago an hour from now, I started to push. Not the end of the journey, it turned out, but a deeper descent into a nightmare night. But the story ends happily, with a healthy baby and a scar across my lower abdomen.
It took a long time to heal both physically and emotionally from that night, but now, seven years later, it finally feels distant enough, separate from me, simply the story of my baby's emergence into the world. At 4 a.m., my child was born. At 4 a.m. tomorrow morning, he will turn seven. The top of his head reaches my armpit now, his dark hair is thick and straight, and his laugh contagious. He has so much to say, and such bright eyes when he says it. So now, finally, yes. I can celebrate the anniversary of the day he was born, not just because it was the necessary prelude to parenthood but because it is simply what was, part of the pattern, the weave, of my -- and his -- life. And what is now comes from that, past is prologue and present is a child's kiss on my cheek and a sweet goodnight.
Picking up and moving an entire family across a large continent is no simple thing. Picking up and moving with no certainty of employment at the other end? Raise that complexity by a factor of ten. We have a lot of decisions to make right now. Some feel easy. Others, not so much.
Take our living situation. Two people (one in comments and one in email) have suggested we hold onto our house in LA, rent it out till we're ready to buy in New Jersey. It's the sensible thing to do. It's what we should do, in fact. Housing prices continue to skyrocket. Our bungalow has more than doubled in value in the past four years. How can we sell but not buy again right away, knowing that with prices rising 20 to 25% per year, we could easily be priced out of our new local market? We should either buy right away or hold onto what we have now.
But we can't. We need the money to cushion our transition and ease our stress level the first year or so. I'm not a big fan of equity lines. They're just like Visa debt. You take the money now but you have to pay it back plus interest, giving you yet another monthly bill, another headache. The only way to get that money out cleanly is to sell. And if we buy right away, that nest egg vanishes again, right into a new house, leaving us with too high a burden once again. Because though houses aren't as expensive there as here, property tax is much worse. I did the math before we went east on this exploratory visit. We can buy a pleasant house there, around the same size as our current house but on a much nicer street, and end up with the same overall monthly payments we have now. Which sounds fine but isn't. We may not have any income some months, we may have half the income other months. We don't know how long it'll take Dan to get established there, we don't know what kind of work I'll do and what income that'll generate. We won't be able to afford the monthly outlay we have now. In fact, we need a serious cushion in the bank for hard times. Otherwise, we're looking at debt and fear and despair and man, do I not want to go there.
Besides, what if we hold onto our house and there's another earthquake? After the Northridge quake, house prices plummeted. Even without a shaker to crack prices and send everyone rushing for the door, it's not a sure thing. Most economists think real estate prices can't keep going up. And when they stop rising… well… There was an article in the LA Times a month ago about how people are struggling to get into this insane market. How are they doing it? More and more people are going for the low-interest-to-start ARMs, and on top of that, they're choosing interest-only loans. Translation: they're going to get screwed two ways when the terms change. First: An adjustable rate mortgage WILL go up after the first few years, especially because rates have been artificially low for too long. They're going to go up. And even a point or two could devastate people living on the edge. Second: An interest-only loan means you're not paying off any of the principal. You're counting on the housing bubble to provide equity and planning to refinance when you reach the magical 20%. Well, okay, I guess, but that interest-only period has an end date. And when it comes? Your payment goes up. And the people interviewed in this article all pretty much said, "I did it this way so I could borrow more, I'm stretching to pay this amount." The artificially lowered amount. Which WILL go up. Uh huh. Can you say "foreclosure"? I have a feeling the word's gonna become really familiar not too long from now.
Is this a California-only phenomenon? I don't think so, not entirely, but it does seem to be more pronounced here. And if that's true, then California's going to be hit first and worst by the bubble bursting. Which means if we own here and not there, we could lose big time.
Makes your head hurt? Mine too.
We're toying with the idea of buying, though. But buying a multifamily dwelling. Two to four apartments in one building. We live in one, rent out the other(s). This kind of house seems to cost less than a single family home. If we do it right, we might even be able to have our mortgage and tax nut covered by rental income. Wouldn't that be cool? And that way we're sheltered against a continuing surge in the real estate market. Our home's value goes up with the market, we ride the wave.
But I don't know. From poking around online, it seems like it might be hard to find something we like. Far too hard to do it long distance. Maybe we could rent short term and look around town once we're there. How fast can prices go up, after all? (Don’t answer that.)
I'll admit, the idea of renting feels extremely odd after four years as homeowners. I love transforming a place, painting the walls and changing the fixtures, making it our own. I love that there's no landlord peeking in the windows, judging our furniture and mentally deducting our security deposit. I love the feeling of ownership. I'll miss that dreadfully. And of course there's the risk we may never get that back. If the market stays this out of control. If the bubble doesn't burst after all. If. But man, the equity transformed into cushion is an awfully comforting concept during such a huge transition. I'm not sure we can do without it.
Lots to decide. Lots to learn. Lots to do.