Dispatch: A home buyer surveys the field
I like to hear from home buyers and sellers experiencing today's unusual market, and I know many of you do, too. So gather 'round for Andrew Waldman, who answered my call to write a dispatch from the home-buying front.
A 27-year-old journalist who moved to Maryland about 18 months ago, he's been living in Baltimore since March. He's renting a place close to Penn Station, which gives him "a very easy commute" to his job near the U.S. Capitol.
Here's his tale of being early in the buying process:
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To be frank, I’m tired of paying rent when I could just as easily use that money to purchase my own home. It seems to me that there are lots of good reasons to buy now: the $8,000 federal tax credit for first time homebuyers, lower interest rates and close-to-the-bottom housing prices. I’m also a veteran, giving me the option of several different financing options.
I started my search about a month ago. The first thing I did was the only thing I could think to do ... I called my parents. I’m from a very financially conservative family (read: we’re all cheap), so I figured my accountant father would steer me away from purchasing.
His advice? "Go for it, and just remember that buying a house is just another way to pay for your living arrangements."
According to both Mom and Dad, it’s a bad idea to treat a home as an investment. Probably good advice, considering what we’ve been through so far with this recession and housing crisis. So, with that in mind, I’ve set a rough budget of $150,000. That price is a little lower than most lenders probably would give me. My location requirement is simple: I want to stay near Penn Station so my commute will still be simple. I’d also like a home with several bedrooms to leave me the option of taking on a roommate.
My Realtor and I have been shooting back e-mails about various properties in the area. What I’ve found is there are quite a few homes in my price range.
Many of them are REOs and foreclosures. Downside: Some of the homes listed appear to be recently (and hastily) rehabbed homes, maybe done by investors who simply ran out of money too soon. In the border area between Charles Village and Barclay, there are lots of houses on the market "as is" and look like they are halfway finished rehab jobs. That area has a lot of potential, but I’m wondering if the housing crash has set it back about five years.
Good example: The first home I looked at was on that side of Charles Village on 22nd Street – a five-bedroom behemoth that had recently been rehabbed. It’s a house that might go for a half million in the right part of town (it’s listed at $139,900). But there are a lot of problems with it – the foundation repairs were shoddy (halfway completed), there are roof leaks, and attention to detail was not impressive. And just around the corner were several unfinished and/or vacant rowhomes. Not a great sign.
After seeing the first house, I’m steering myself more towards non-foreclosure homes – there’s a lot of risk with foreclosures. But I’m not completely against the idea, as long as the home seems to meet a high standard.
At this point in the search, I’m looking at financing options. In the next couple days, I’ll have a really solid idea of what I can afford, and my agent and I will be able to properly move forward on a search. Stay tuned.
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Thanks for sharing, Andrew! If you Wonk folks have thoughts for him, you know what to do.
Got a buying or selling experience you'd like to share? Email me at jamie.smith.hopkins(at)baltsun.com.
Like to read other dispatches? Find them here.
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Comments
Andrew, looking for a home location that makes your commute easier certainly makes sense but then limiting that to just the Penn Station area is shortsighted.
Suggestion: Open the Marc map and then draw a 3 mile radius line (bike/walk range) around each of the several stations.
Suggestion: Expect to and plan on having a "housemate" for at least the next ten years. Look for homes that already have or lend themselves easily to a "mother in law" apartment or at least a large "en suite" bedroom arrangement (2 modest sized rooms and a private bath) where you share the kitchen etc. This income will go far.
Good luck.
Posted by: MrRational | January 14, 2010 11:44 AM
isn't the commute just as simple from Camden Station on the Camden Line?
might be limited to condos in that area with a $150k budget though
Posted by: Joe | January 14, 2010 2:17 PM
Sounds like Andrew should explore a little more before buying. Limiting himself to Penn Station ignores many far better places to live with similarly easy commutes.
Posted by: Doug | January 14, 2010 3:45 PM
I enjoyed this segment - I hope there are more stories like this.
I say if he can get something close to Penn Station go for it. Commuting to DC is not easy anyway but that would be the easiest option. The Light Rail is another thing to consider - there are great homes in Woodberry or near Hampden that are only about 10 minutes from Penn via Light Rail. I wish him the best of luck!
Posted by: Gina | January 14, 2010 5:23 PM
$150K is a tiny sum compared to what the realtors were juggling with not too long ago...nevertheless, I don't quite undestand why the prices don't go further down in the city. It is like a half-full glass (for optimists). Tons of new apartments around Fells, Cold Spring Lane, Little Italy, Sparrow's Point, many abandoned "investments" all around the place...??????????
Posted by: Ron | January 14, 2010 11:07 PM
He may want to consider West Baltimore MARC station also...I purchased over there because the taxes are much lower. Make sure you find out what your tax will be for that area...I considered Penn Station area when I purchased, but the taxes were prohibitive.
Posted by: Wallace | January 15, 2010 8:46 AM
Wow, great comments! Can you guys do this search for me? :) Seriously though, I appreciate the feedback. Probably looking to stay close to the Penn Station just because the Penn Line is the fastest way to DC (Camden is slower and less consistent). A light rail ride to Penn isn't out of the question. I have been considering it. I have ruled out suburbs and West Baltimore, however... just not my cup of tea.
Posted by: andrew | January 15, 2010 12:08 PM