May 30, 2012

STILL House Shopping 18 months later

My wife and I started house shopping in Sept 2010.  We were still shopping in March 2011.  Our home search continued in Sept. 2011.   We're still looking after about 18 months. 

The market was fairly slow over the winter months and the house shopping slowed down since nothing much appealing came up for sale.   There were a few houses that came by that were interesting but not a lot.    In the past month or so the market has really started to get more active and we're seeing several homes put up for sale each week. 

One failed offer

After many months of searching we actually finally made an offer on one house only to end up being outbid by a competting offer.   That experience was a little frustrating.  We actually looked at the house then didn't make an offer fast enough before someone else made an offer and a sale went pending.   Losing it disappointed us, but then a few days later that deal fell through and we were able to put in our offer.   But the day after our offer the original deal was back on and we lost out.   It was a nice house in a great neighborhood.   The price was around $450,000 and I don't recall exactly how much we offered.   Since it was priced pretty low, I don't think we offered much lower than asking.

Loan pre-approval

This week we finally gathered up all the documentation required to get a pre-approval on a loan.   I submitted the documents to our mortgage broker earlier this week and I'm waiting on the results.  We have had a pre-qualification for a long time but thats not the same as a real pre-approval.   The pre-qualification is more of a 'rough estimate' on our qualifications.   At least thats my view of it.   The pre-approval however is an actual approved mortgage amount.    We wanted to get pre-approved for a couple good reasons.   First it will help us make a quicker purchase.    Second, having the pre-approval already done will also tell us how much of a mortgage we can actually qualify for.     The broker indicated we'd qualify for a loan much larger than we really want, so I don't expect a problem.  

More cash, cheaper houses, lower interest rates

The whole time we've been looking our cash balance has gradually grown.   At the same time the prices of homes have gone up and down a little bit.   Today interest rates are at 30 year lows at around 3.7% level.   Combined these trends have made a house more affordable as far as impact to our bank balance and in terms of the monthly mortgage payment.

Here's the trend in finances over the period we've been looking :

Feb-11 Mar-11 May-12
Cash on hand $120,000 $150,000 $175,000
Cost/ sq ft $164 $166 $161
Cost for 2500 sq ft $410,000 $415,000 $402,500
Mortgage rates 5.10% 4.00% 3.75%
Down payment $82,000 $83,000 $80,500
Mortgage payment $1,780 $1,585 $1,514
Cash left $38,000 $67,000 $94,500

The cost / sq. ft. figure quoted above is the median for the ZIP code we're looking in.   The actual homes we've looked at vary quite a bit.   In the past coule weeks we've seen homes that would come in at $148 / sqft versus $193/ sqft.    The first was a foreclosure that needed some work and the other was a pretty nicely updated home in a nice neighborhood that was probably over priced.

Looking for 2700 sq ft up to $500,000

Right now we've mostly settled on a home of around 2700 sq. ft. in size.   It seems that what we want in a home fits at that size roughly.     We've also gradually increased the price of homes we've looked at up to the $500,000 level.   As we looked at more and more homes and failed to find what we want, we gradually looked upwards in price.   This is of course not a great trend, I'd of course much prefer that we could find a home we want for dirt cheap.   But we're found that the kind of homes we want are closer to $450,000 to $500,000 range.    The lower interest rates and more cash in our bank account has made it feasible for us to consider spending a bit more.


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