My real estate story

I often joke that my wife and I bought our home at the
absolute apex of the housing boom, the precise moment after which all prices –
at least in Oakland — moved downward.

It was June, 2005.

We knew it was possible, even likely, that we were paying too
much. But this wasn’t exactly like buying Homestore at $150 a share. Our
daughter was now walking and our old house was feeling small. We wanted to move
into one of Oakland’s
only good public school districts before things elsewhere got even worse.

We had gotten to this point the old fashioned way. We bought
our first house in 1999 with 20% down. Our 30-year fixed – which started at
7.5% — was refinanced down to 6.0. No cash out for us.

We felt that we could now take a flyer. So we sold our first
home, profited nicely, and ploughed every penny into the new one. The mortgage
broker we went to first tried to sell us on some scheme involving two loans,
one of which was adjustable. Her estimate of what we could “afford” was about
double our own calculations. I can’t remember the argument she put forth,
exactly, but I emailed her afterward to tell her we were going to work with
someone else.

This time our 30-year fixed came in at 5.625%.

Today, we know our house is not worth what we paid for it. We’ve
done our second guessing, but right now we’re just grateful. Some in our set of
30-something parents are really hurting. They took advantage of “innovative”
mortgage products to shoehorn their way into the Bay Area housing market. We
know one couple that went the interest only ARM route and now pay 50% more each
month than they did just last year. They
wonder how they will ever get out of the mess they’re in. Another regrets
dumping $80k into a kitchen using a HELOC that was “flexible like a credit
card”, and could “never go two points above prime.”

Who’s to blame here? I don’t know. Aspirations and profit
motives make a complex blend.

As I write this, sitting on an airplane after three days
away from my family, I’m just glad I’m going home.

— Brian Boero