Well, it happened. I am sad to say I bought a house. I am officially a knifecatcher. I’m sure prices will be declining more and it is really difficult for me to make this purchase. I am not convinced we are at bottom (at least at the high end) and I feel that TPTB are trying to get everyone to succomb, to lure the last hold outs before we have a collapse. Please no congratulations. If you must, congratulate me on saving a marriage. My husband has wanted to buy a house since before I met him in 2005.

I’ve had many battles w/him in those peak bubble years. It was tough holding my ground. It’s tough to swin against the stream. In this case it was more like walking against a stampede and being jostled and knocked down and bruised. Everyone was pressuring to buy. Relatives, tax preparers, realtor friends, mortgage friends and even exes. And let’s not forget the government pushing the American Dream. Basically felt like everyone was insisting we buy a house we couldn’t afford.

I remember vividly one instance at his accountant’s office where she was chastising us for not buying real estate, how we can do a 5-yr I/O ARM and we can always refinance b/c real estate was going up to infinity and beyond. I remember in 2006 he made me to look at some condos w/him in Sabre Springs w/huge HOAs and MR. Oh, the arguments we had b/c I refused to buy. This was before I even discovered Piggington. I really am thankful I came across Piggington . For a while there, it really felt like I was the only sane person around and I was taking crazy pills. I remember recently looking at those condos he wanted to buy back then. They have come down over 200k.

Anyway, the past 2 years we have been actively making lowball offers. I did not start threads every time we made an offer. It would’ve been burdensome. Sorry I didn’t share all the painful details. I can say I really appreciated scaredy’s/walterwhite’s posts. I definitely related to them. Many of our offers were rejected. My DH would be disappointed every time. But I was very relieved b/c I always knew there would be something better to come along. There were only 2 places I really wanted. One was in PB that I had a thread about way back when. It was a major fixer, units. The guy from Flip This House bought it (hard to compete). The other was a really awesome Victorian. It was a little out of my price range, but I would’ve eaten rice every day just to have it. I was hoping it would reduce, but they were able to find a buyer after a few months. I was very bummed. Those old houses are my kryptonite. All the others, I was very good about not being emotional.

One of the offers we made was on a condo short sale in the complex we’re renting in Nov ‘09. My DH saw it for sale. He contacted his realtor friend, not the LA. It met the criteria of minimum 2 bedrooms, 2 baths and garage, plus a view. But it was a condo and I really wanted a house w/a yard. Plus the rent versus own ratio still didn’t pencil out. The bank had accepted our offer after a very long escrow. In the end, after the inspection and realizing what it would cost to fix, I convinced him to wait to buy a house for almost the same monthly amount. I did not want to pay HOAs and deal w/the CC&Rs.

There were many places that were in our price range, but few that met all of our criteria. Then there were battles about not buying something just b/c it was in our price range. There were a few I really liked, but my DH did not want. We also made an offer on one of sdr’s short sale properties. Very cute Spanish style north of Adams. Even though it was somewhat of a major fixer. We were excited at the prospect of that place. It was a good deal. It took quite a while to hear back. We waited, but still kept looking.

We made a low offer on a place that I thought was overpriced, but my DH loved the view. It was a very small place and tiny lot. But the view was great. They refused to accept our offer. It sat on the market for a long time. Eventually they did get what they wanted, but in the end, I think factoring in the carrying costs, they might have been better off just accepting our offer from the get-go.

We made an offer on some units in OB. It was a back-up offer. The LA seemed sure that the other offer would not qualify. For a while, that looked like it was a possibility. That was not my dream home, but it definitely penciled out and would work for us. It was a good price. We waited to hear on that. (still haven’t heard anything. LOL)

Then one of the properties I was watching that had a NOD finally went to foreclosure. It was a place that met most of our criteria. We made a lower offer w/the LA. We had to get prequalified w/their lender. Then the LA tells us he got a call from another realtor w/a higher price. I told him to submit the one we made. If the other guy submits a higher offer, then so be it. That was all we would offer. Their lender tells us we are qualified for more. I told him that was all we were going to spend and stuck to it.

As far as I’m concerned, it was still more than I wanted to spend. It was 33% off the 2006 price. Anyway, it was maybe a few days to a week after that that we got the call that the bank accepted our offer. Don’t know if they were bluffing about the other offer or not. Supposedly they ended up submitting their offer after the bank already accepted ours. I was already moving on, continuing to look. That was about the time sdr’s came back w/an accepted. We had to decide between the 2. We decided on the bank owned.

It is in one of the ZIPs I was looking in. It is NOT in PB. I think after my accident, I pretty much decided against PB. I was sick of the traffic in and out of there and the water main breaks and congestion. The city continues to allow SFRs to be destroyed while developers build 4 to 6 condos in their place. Which all would be tolerable if they would only do something about the infrastructure. And sadly, all the money spent on permits and taxes and whatnot have not been going towards any infrastructure. I just became less and less enamored w/PB. It’s not the place it used to be. This last bubble really changed PB and not in a good way.

As far as the house we ended up buying, we were told if we went w/their lender, they would pay 3% of the loan amount toward closing. We locked in at a rate of 4.25%. We had to produce a lot of docs and keep producing, W2s, 1099s, bank statements, etc. more than a couple of times. It was supposed to be as-is. We did FHA, so at least I’m minimally invested (JIC the market drops more). I still continued to look b/c you never know what could go wrong. The inspection had some issue w/termites and the bank agreed to spend 2700 to remedy it.

I guess after everything they paid for, when all said and done, it probably amounted to more like 35% off. The appraisal came back and they say that it appraised 10% higher than the purchase price. I did not expect that. The home just needs some updating. It is not my dream home, but my DH is very happy. He thinks we got a good deal. He likes the house and the location. I wish I could share his enthusiasm. I fear we are just helping to bring down the comps. He is mad when I say we’re knifecatchers. He says we’re spooncatchers or butterknife catchers. I absolutely could NOT have purchased this house 2 years ago, or even a year ago. It was not in our price range. The sellers were attempting to sell at peak prices back then. Even the bank started out very optimistically and it took many months and reductions.

I do not feel like waiting all this time was a waste. I am glad I followed the market and paid attention to listings and relistings and stale listings. I knew which properties were languishing, which were likely to accept lower prices. Being aware of which properties had NODs was a good heads up on what would eventually come to market, inevitably much lower than peak. The average is a year for non-owner occupied and 2+ years for owner occupied. I still know some people who are trying to do loan mods, not paying their mortgage and still not receiving NODs. However, the NODs do continue unrelentlessly in the ZIPs I follow. I just did another check this evening. It is astonishing how there is no let-up. It is alarming at the dollar amount. Makes the recent 2 billion seem like a drop in the bucket. The patient is bleeding to death and we just keep giving blood to keep it alive. Very disturbing and troubling.

While some flips were happening, most listings in the ZIPs I followed were either short sales or REOs and all were considerably lower than peak. And every one that sold for less was a new comp for the next one on the street that would come to market. I’m not able to give percentages, but from what I’m reading, looks like only a handful of folks were successful in loan mods. And even those ended up failing. I just don’t know all these NODs will resolve. The choices are loan mods, short sales or REOs. And it looks like the latter 2 are the most likely and those have been for less than peak. I guess there is a fourth option. We have another bubble and everyone is back to 2006 prices and no longer upside-down. Well, for those who are in neg am territory, they have to get greater than 2006 pricing. I don’t think that fourth option is likely to occur. So we’re back to however many years the banks take to unload all their inventory. I honestly believe it would’ve been better to do a dump, take our medicine and move on. But they have chosen to prolong the pain.

I could not have endured all this w/out CAR’s help. She has been extremely helpful and tolerated my numerous emails. I really appreciate her support and handholding (and I plan on reciprocating when she buys). I was very stressed out over this and sick to my stomach over it. She and I share similar thoughts about this market. This purchase was NOT easy. This is not my first rodeo. I have bought and sold houses in the past. There were many delays. We had to jump through so many hoops, I was starting to feel like a dolphin at Seaworld. They did a lot of background checking and there were a few letters of explanation we had to write. I can say that they are definitely scrutinizing loans. They are many years late in doing so, but they are really cracking down now. Overall, I think the lenders liked our high credit score and minimal debt. I put off getting another car so we would be better qualified.

I truly believe that the high end, anything over 600k has not seen bottom. While some ZIPs in San Diego county have seen 40 to 50% off and many condos have seen some pretty big drops in some of the ZIPS I check, I think many SFR have a ways to go. Though I have lately seen some surprising drops in 92106 and 92103, which I was not anticipating. What’s more surprising is those ZIPs don’t have as many NODs as other ZIPs I check.

Anyway, when the high end reduces, I agree w/CAR that there will be a squish down and there will be more reductions on the median. When all this will transpire is anyone’s guess. The government is definitely hell bent on propping this market up however they can w/stimulus and delayed foreclosures and trickling of inventory, etc. And anything else they can conjure up as soon as one program ends, kicking the can in perpetuity. (you’d think their leg would be tired by now) I admit TPTB have done a good job dragging this out w/their pretend and extend, but I am very weary of how precarious this market is and anyone who doesn’t think so is not really paying attention, as far as I’m concerned. At best we’ll be bouncing along the bottom for a very long time, w/some dips here and there.

I bought this place very reluctantly and b/c my husband is not very patient and it was becoming trying on our relationship to fight over getting a house. It has been very frustrating watching prices come down ever so slowly so most people wouldn’t notice. Like watching paint dry. I am disappointed to not have waited for bottom in the high end and get a home I really love. I wish I could be as excited about this purchase as some of the others on this blog who have bought. I am settling, but I think I did the best I could to minimize our financial losses and hedge JIC we do inflation.

Anyway, I guess I’ll be busy doing some remodel and gardening now instead of checking listings and NODs. I will have to turn a blind eye to the NODs to keep my sanity.