Newmans Own: Our family's search for a house.

Home at Last

OK, for any of you who have been wondering: Did these people just stop looking or just stop writing? Or, more succinctly, WTF? So allow me to make an announcement: We have, at long last, found a house.

Actually, if I may disagree with myself, I don’t think it has been all that long. We only started looking in earnest a few months ago, and I don’t think five months is too long to find and buy a house. I have been known to take that long to investigate and purchase a radio for our kitchen. And real estate is slightly more complicated than a radio, even the fancy one I ended up buying.

We will dribble out details over the next few days, and then this blog will be the victim of a mercy killing. The main detail, of course, is—which house? This one. As you can see, it is a FSBO, pronounced “fizzbo,” as in For Sale By Owner. And we were BWAREA, pronounced “bwarah!” as in Buyers Without A Real Estate Agent. Because buying your first house isn’t difficult enough.

In truth, buying a house without a realtor was not so much difficult as time-consuming. There’s just a lot of stuff you have to learn about and do. But the chief value of real-estate agents, insofar as they have any, comes in negotiations: The term “arm’s length negotiations” is no longer an abstract idea to us. I would have happily paid a few thousand bucks—maybe not 3 percent of the sales price, but a nice piece of change—for the ability to pick up the phone, dial my agent and say, in my best Tony Soprano voice, “Get this done.”

It didn’t happen that way. More later. In the meantime, how about that kitchen? (I'll let Nora explain her newly nuanced position on the countertops.) And the back porch! And it has a new furnace! I’m not just saying this because we’re buying it: It’s a great house.

Bubble Blogging

James Surowiecki asks a question I have also asked (and that Dan Gross has long been pondering): What did the housing bubble give us? He reaches a conclusion similar to my own, though I picked on Las Vegas instead of Phoenix:

The housing bubble was unique, and uniquely awful. Each of the previous waves had come in response to a profound shift in the real economy. With the housing bubble, by contrast, there was no meaningful development in the real economy that could explain why homes were suddenly so much more attractive or valuable. The only thing that had changed, really, was that banks were flinging cheap money at would-be homeowners, essentially conjuring up profits out of nowhere. And while previous booms (at least, those of the twenties and the nineties) did end in tears, along the way they made the economy more productive and more innovative in a lasting way. That’s not true of the past decade. Banking grew bigger and more profitable. But all we got in exchange was acres of empty houses in Phoenix.

A Mystery on Brandywine Street

I was not impressed with this house. And when she looked at it in February, neither was Nora. It was a foreclosure special, and even though it was cheap relative to the neighborhood, it needed work. So we moved on, though I made a mental note to keep track of what happened to the place. If it sold for more than list ($629,900), I figured, then this market was still seriously out of whack.

I learned last month that not only did it sell for more than list price—it sold for 25 percent more than list price. (See also this site.) What kind of madness was this? Then I noticed the sale price—$789,000—was about what the property was assessed for. I chalked it up to my ignorance and inexperience as a first-time would-be homebuyer. Maybe the bank was obligated by its fiduciary duty to its shareholders to accept nothing less than assessed value on its houses. There was probably a provision to this effect in the TARP legislation. Tim Geithner drives a hard bargain.

Which was a ridiculous thought—I have a fair amount of those—because the bank wouldn't have offered it for less than its assessed value if it couldn't have accepted less than its assessed value. What was going on here?

The mystery only deepened when I learned—just today! (thanks, Frank)— that the house sold for $651,000. (See also this site.)  What happened to the earlier sale? Did someone buy it again? A check of the public record (you have to type in the address) shows only the earlier sale, from February.

Maybe the earlier price was a mistake. Maybe the later one is. Maybe there has been a glitch in the D.C records-keeping department. Maybe, hard as it may be to believe, I have uncovered a mistake on the Internet. Undoubtedly, there are things I do not know about the foreclosure process.

Oh well. It was near the top of our price range and needed a lot of work, so we weren't going to buy this house anyway. So no non-buyer's remorse for us. We'll save that for houses we could actually have afforded.

Still Here, Still Looking

Sorry for the long delay in posting. To answer the question many of you—OK, several of you—have been asking: No, we haven’t yet bought a house. We almost did. (This one, if you’re interested. And this one was also tempting.) And we’re getting closer. But we remain renters.

Part of the issue, obviously, is that we haven’t found a place we’ve both liked enough to want to spend most of our life savings on. But part of the issue is also, I admit, a lack of urgency (mostly on my part).

(On mine, too. I’m happy with our apartment, our neighbors, our friends here. I like apartment living—being able to leave our door open and run down the hall to feed our neighbor’s fish or have that very same neighbor watch Joe while I’m running home from work. So what if the people upstairs use their exercise machine at 9 p.m.?—Nora)

Note I did not say a lack of desire: We’d like a bigger place, and will need one, and it makes sense for us, at this point in our lives, to buy. We have a pretty good idea of what we want, both in terms of house and neighborhood. We have savings. We have loan approval. We have a lawn-care catalog.

So what are we waiting for, you ask. (And if you’re a realtor, you don’t so much ask as shout it.)

A few reasons. One, prices are continuing to fall, and I don’t think we’re hurting ourselves by waiting. (Though I don’t think we’ll wait until 2010, despite this forecast.) Two, as Nora said, we like our current neighborhood, and we certainly can’t afford to buy here. But we can enjoy the sidewalks. Three, and most important, we have to find a place that all of us feel comfortable in.

(Michael, you might as well fess up: By the time we get into this place, there will be four of us.—Nora)

The President Goes Off-Message

When we wrote this headline, we were just kidding. But now President Obama has gone and pretty much taped an infomercial—complete with exhortations to visit his Web site—telling people what a good deal they can get if they refinance their mortgage. Low rates! Great service! Millions of satisfied customers! Actually, he didn't mention anything about great service, but since it's the federal government, you can count on it.

I'll let Dana Milbank expound on the political implications of all this. My only point is to note that the president refers to your house as "your single biggest investment," which it usually is, unless you're someone like Bernie Madoff, in which case you've got bigger problems (and more houses).

Obviously the president hasn't been spending much time lately with real-estate agents and doesn't realize that this think-of-your-house-as-an-investment line is no longer in the script. If I had a dollar for every time I've been at an open house and been told to think of it not as an investment but as a place to live—well, we'd have enough for a much bigger house. I realize that a house is not only an investment. Like a car or a box of breakfast cereal, it has a value all its own, separate from its monetary worth.

I also realize that it's the job of realtors to get people to buy houses. And in a declining market, property is not a good investment, at least for the short term. We weren't in the market a few years go—it may not seem like it, but we've been looking for only a few months!—but I imagine the sales pitch then went something like this: Don't think of this as a place as where you're going to live for the rest of your life—think of it as investment! And in a few years you can sell and move up.

Of course, neither perspective is entirely wrong. It's a matter of emphasis. Maybe buyers back in the boom years should have heard more advice like what we're hearing today. And maybe we ought to listen more when we're told not to think of a house as an investm... Nah. We should still think of our house as our biggest investment and as a place to live. Because that's exactly what it is.

Philistines at the Hedgerow

You can tell a lot about a real estate listing by its photos. And the few photographs in this listing are as enticing for what they don't show as for what they do. Namely: a kitchen. But I’m no longer daunted by kitchen renovations. In fact, after seeing so many over-the-top kitchens, like this one, I’ve actually come to prefer a kitchen we can make our own. It won’t have granite countertops or high-end appliances, but it will be comfortable and practical. In this case, we could even get a great view of a magnolia tree just outside the window.

Michael: The kitchen in the last place we liked was worth more than some houses in Detroit. But before we get there, I need to pause—as I did yesterday—on the front lawn. I was mesmerized by those two elephant-size hedges. A little boy could get lost for days in one of those things. His father could spend a month’s worth of Saturdays trimming them.

Nora: I liked the manicured lawn and hedges. They give the property a certain grandeur, making the Tudor-style house seem very English, very elegant, very expensive. Yet it’s in our price range!

The interior was equally elegant, though I didn’t necessarily feel that way walking around in my socks. (The floors had just been refinished, so we were instructed to leave our shoes at the door.) The vaulted ceiling, the wood beams, the stone fireplace—it was all very stately, and the attached sunroom was charming. I’d seen all this from the photographs, however, and was more enticed by the kitchen mystery around the corner. It looked like it hadn’t been renovated in decades.

Michael: I really like this place—it’s just different enough to be interesting, but not so different as to be impractical. Well, there was that one closet with a window. But in general, this house had well-used space—not a lot of overlong hallways or closets too big for the room. Sure, the kitchen was tiny and poorly applianced, but that’s fixed easily enough. The agent told me renovations would cost about $25,000. Or maybe it was $30,000. Either way—that was easy!

Redoing the floors was also a shrewd move. Something about newly finished floors makes a place feel shiny and clean. So the fumes were a little overpowering. But I got used to them. Also: New floors are cheaper than central air conditioning, which this house would also need. Now we’re spending more than $30,000 on renovations—but don’t worry; it’s all theoretical.

Nora: I wouldn’t be so sure about these renovations, Michael. I’ve been warned by many a friend and seen too many renovation shows to think fixing up is an easy or inexpensive task. And I have a feeling that this house needs more work than we can see in a quick walk-through. Maybe we should bring a contractor with us next time we look at a house? I’d really like to get a better sense of how much all this costs before I get my heart set.

Michael: Sure. Last but not least: After several background briefings, phone calls with anonymous sources, and predawn meetings in parking garages, our crack team of researchers has been able to learn the identity of the former owner of this house. I have jogged on the campus of her alma mater.

Nora: I would like to have met her. The fact that proceeds from the sale of the house will go to fund minority scholarships gives this place good karma. Still, just because I admire her doesn’t mean I want to live in her house.

Michael: OK. I suppose I can let this one go. But if it’s still here in a few weeks, I reserve the right to come back. This time maybe I'll bring a landscaper and get an estimate for hedge care.

With God As My Realtor

This study has been getting a lot of attention. Christopher Crowe, an IMF economist, suggests that evangelical Christians may have helped soften the impact of the housing bubble and bust in some areas. Their "strict interpretation of Biblical injunctions with respect to money and greed might make them less prone to speculative excess," he writes. While the rest of us pagans and heathens were buying or refinancing with five/one interest-only ARMs with prepayment penalties, evangelicals were making their payments on their 30-year-fixed mortgages, trimming their hedges, and waiting for the Rapture. (I simplify. But only slightly.)

One of the reasons evangelicals help smooth out the bumps in the economy, apparently, is that—like movies or Manhattan psychiatrists—evangelicals are countercyclical. To help illustrate this point, Crowe examined home sales in evangelical and nonevangelical areas just before and after 9/11, and found that prices rose in areas with relatively more evangelicals and fell in areas with relatively fewer. "This is consistent with the view that non-evangelicals viewed the attacks as bad economic news with negative implications for house prices," he writes, "while evangelicals may have been prompted by their ‘end times’ beliefs to interpret 9/11 in a more positive light, boosting their overall sentiment and leading to an uptick in prices."

Being neither an economist nor an evangelical, I don't know what to make of all this. I get the part about rapturous evangelicals seeing 9/11 differently. What I don't get is why this would cause home values to rise. If you think the world is about to end, you don't buy a house. You don't sell a house. You just sort of sit around and ... actually, I don't know. What do you do when you think the world is about to end? This is a question for another blog.

On the other hand, and from a purely selfish standpoint: If there are any evangelicals out there looking to quickly and cheaply unload a three-bedroom, two-bath house within walking distance to the subway in advance of the Rapture—by all means, let us know.

The Importance of Being Earnest

Long Live the Bubble

It has been more than a week since our last posting/confession, so please forgive us for the absence. Where have we been? Pondering making an offer on this house. Debating our real estate agent about the various components of this offer. Pondering again. Talking to lenders about this offer. (OK, Michael did that.) In the end, we made no offer on this house. It’s now under contract to someone else.

Michael: And we’re OK with that. At least I am. This man has never led me astray, and he says I should always be prepared to walk away from a deal.

Nora: This is a great house. Am I sad we won’t be living in it? A little. But I would be sadder living there knowing we’d overpaid for it, and $638,000 is too much for what we’d be getting. Could we have gotten it for less? Possibly—we’ll know when the sale price becomes public. But given the signals we were getting from our Realtor (which were about as reliable as our own intuition), we weren’t going to get it for the amount we were prepared to offer. We’ll keep an eye on how this one pans out. If we’re proved wrong, and the house goes for $600,000 or less, well, we’ll have learned a lesson. Though I’m not sure what. ... Not to not listen to a Realtor?

Michael: Three points. One, “overpaid” is a loaded term. The market will bear what the market will bear. If someone is willing to pay $638,000 for a house and we’re not, that doesn’t necessarily mean they overpaid. It just means they wanted it more. Two, sometimes the market will bear a lot of foolishness. And I think we both agree that this market is still pretty foolish. And three—always my clincher!—it doesn’t matter. We can make the argument, based on any given house’s rental value or replacement cost, that it is overpriced. But where does that get us?

Nora: I was feeling glum and frustrated when Michael passed along the uplifting news that we could get a loan for 3.99 percent. I guess this is what people mean when they say, “Money is cheap right now.” Money is never cheap to me!

Michael: There is some fine print, but we can probably get the rate. Money we don’t have, burning a hole in our pocket—this is what 2005 must have felt like. But I resist the notion that, just because we can get it, we should spend it. I also resist the compliments that accompany a good credit score. I feel like that character in a spy novel who has been secretly monitored for the whole book and at the end the bad guys tell him he’s OK, and he’s supposed to be grateful for the compliment, but really he’s mad that they’ve had him under surveillance all this time. I have been reading too many spy novels lately.

Nora: But while rates may be going down, prices in desirable areas are not. A three bedroom with no backyard on a busy corner for $669,000? A two-bedroom Cape for $725,000? Are the lower rates meant to encourage people like us to buy overpriced houses—yes, a squishy term, but I’m using it anyway—simply because our payments would be easier to handle? Isn’t that what got us all into this mess in the first place?

Michael: My own personal barometer of the bubble is this house, a “foreclosure special” that is sagging and peeling and needs a lot of work. Yet it sold for an astounding 25 percent above the asking price. I don't know the details, and they could change my assessment, but for now I look at this place and think: The bubble is dead. Long live the bubble.

Cheaper by the Dozen

Is the Perfect the Enemy of the Good?

We may have finally found a replacement for the yellow house. When I saw this house come on the market Friday, I wanted to make sure we got to see it before the open house. But this time, in an effort to elevate Michael’s enthusiasm and tamp down mine, we decided that Michael would see the place first without me (since one of us had to be home with the napping Joe) before we went to see it as a family.

Michael: I was honored: I felt like the scout sent ahead of the rest of the traveling party. Growing up, I always wanted to be an Indian scout, and when told that would be impossible, I wanted to be a plain old scout. Sad to say, seeing this house a day ahead of time may be as close as I’ll ever get. When I got there, I met the seller’s agent, and we wandered around like we didn’t own the place.

Nora: We’ve looked at quite a few houses in this neighborhood—at least five by my count, including one right around the corner that looks like its twin. I liked that house, too, though I was concerned about the lack of central A/C, the small kitchen and backyard, and the absence of a bathroom on the lower level. But that house (which was taken off the market), like this one, had very spacious bedrooms with nice views and a great main-floor layout. For one thing, the stairs don’t hit you in the face when you walk in the door.

Michael: I liked this place as soon as I reached for the handle of the screen door. I am a sucker for a wooden screen door, especially if it slams.

Nora: Funny, screen doors make me think of sleepover camp and mosquitoes. Still, when Michael got back from his scouting mission, I was even more worried: He liked the house as much as I did. So, in a role reversal, I took it upon myself to curb our enthusiasm. My objections boiled down to one: This house was too nice. OK, maybe two: It was too expensive.

Michael: That’s what the Internet says, too. And when it comes to “comps,” I trust the Internet as much as any real estate agent. Maybe more. (What is so frustrating about “comps” is that, like Iraqi WMD intelligence reports, people use them to reinforce what they already thought in the first place.)

Nora: When we all went to see the house on Sunday, I was swooning. Even the small kitchen, probably smaller than the one we have now, didn’t bother me so much—it opens into the dining room. Still, there wasn’t a whole lot of counter space, and while the expanded pantry is useful, we’d have to do some serious paring down. I may even have to throw away that box of spaghetti that’s traveled with me from Brooklyn to Manhattan to Los Angeles to D.C.

Michael: Not your ancestral spaghetti! I will part with my World Series Champions Red Sox Wheaties box (the 2007 version, not  the 2004) before I allow that to happen.

Nora: A bigger concern about the kitchen was that, in this small space, the owners have managed to cram in some serious, high-end equipment: an Asko dishwasher, a Bertazzoni chef stove, and a Fisher & Paykel refrigerator. These additions have no doubt added to the price of the house, but I’d be perfectly happy—in fact happier—with good old GE. I don’t need such a fancy kitchen.

Michael: It’s sort of a U.N. kitchen: stove from Italy, refrigerator from New Zealand, dishwasher from Sweden. (What’s that joke about the difference between heaven and hell? Oh, here it is.) Like you, I never would have bought these high-end appliances—and with the money we’d save on good old GE, we’d be able to afford an extra fridge or freezer for the basement, which we’ll need because if we live here we’ll have to do all our grocery shopping at this place. But I would request that we still get a refrigerator with an ice-cube maker. I’ve never had one of those.

Nora: I don’t know. Do you think we could tell the owners they can keep their appliances if they lower their price?

Michael: Sure. Or we could just offer a lower price. It’s not as if this is a perfect house. Besides the kitchen, for instance, there is the matter of puny upstairs closets: The current owners have basically given over most of a wall in their bedroom to shelves and hangers. Then again, as Sarah Susanka says, there is no such thing as the perfect house. There’s just a house that we like that we can afford. I don’t think there’s any doubt we like this house. The question is whether we can afford it.

Odd Lots

Nora and I did see a few houses last weekend, about which more later. In the meantime, here are a few odds and ends I have come across. I will try not to get too technical.

—Thought experiment: You have been saving for more than a decade to buy a house. When you finally start looking, however, even though you're in the midst of one of the greatest real estate busts ever, the housing market still seems ludicrous. In fact, in most cases it's still cheaper to rent. Meanwhile, the stock market has crashed and is at historic lows. Do you take the money you have been saving for a house and put it in the market? Keep looking for that house? Both? Or just buy an annuity from AIG? As usual, Felix Salmon's perspective is worth reading.

—Which leads to my second point: The price of a house is no reflection on its owner. It is simply a function of the market. I am surprised, as a first-time would-be homebuyer, at how emotional people get about the value of their house. (This is different from getting emotional about the house itself, which I completely understand, especially if you have lived in it for a long time.) It's a piece of property. It may not be worth as much as you would like it to be. That's OK. Most of your other possessions aren't, either. I know, I'm a buyer, I would say that. But really, it shouldn't be this hard for a real estate agent to tell his client that his "mid $300,000 range condo" is worth about $60,000 less than he thinks.

—I know you were joking, Nora—weren't you?—when you suggested we move a house from Washington to Pittsburgh, where it would be cheaper. But maybe you're on to something: Deborah Sarnoff and Robert Gotkin just moved a house, designed by Robert Venturi, no less, from the Jersey Shore to Long Island. And they only paid $1 for it. (Moving, of course, was extra.)

If anyone has a house they'd like to sell us for $1, even from an unknown architect, leave a note in comments, and we'll get back to you.

The Yellow House That Got Away

Why Buy When We Can Swap?

Nora, maybe we've been going about this all wrong. We're focused on this binary buy vs. rent decision, consulting complicated interactive charts and calculating the difference between monthly payments, when there is a third option: swapping.

Yes, swapping. It's not just for vacation homes anymore! We could move to Seattle. Or Houston. Or even near Disney World.

Apparently this kind of swapping is becoming more common. (Actually, the story doesn't say whether it's becoming more common. But it's good copy!) The one catch, of course, is that we don't own anything. But I have a plan.

What we can do is buy a nice, spacious house in, say, Tampa or Phoenix—beach or desert? So long as it's a place where the market is at rock bottom—and then swap that for a similar-size place here. Or maybe we can do one of those player-to-be-named-later trades, except it's a house-to-be-named-later swap, and the house we get is the equivalent of David Ortiz and the one we name later is like Doug Mirabelli, both of whom were involved in player-to-be-named-later trades and both of whom played for the Red Sox, although they were not the players eventually named and one of the trades did not involve the Red Sox. The key would be to get a good house now and convince the buyer that the house we intend to swap later is a positive influence in the clubhouse, I mean neighborhood, and can come through in the clutch, even if it doesn't look great on paper.

Still, I'm sure you see where I'm going here. How complicated can this be?

You Call This a Bargain?

Thank you for all of the diligent research you did last week, Michael. Unfortunately, the picture you paint is a not a very optimistic one: We shouldn't buy a house we can't afford (of course!), and the landscape of what we can afford (barring an unexpected windfall) won't be changing anytime soon. Add to that the thin inventory of houses in our price range and, well, I'm not feeling terribly hopeful.

Michael: Break out the violins! What's the name of that song?

Nora: Then along comes an intriguing listing: a five-bedroom, four-and-a-half-bath house not far from our current apartment that has been reduced by $800,000. This is more than the asking price of every house we've looked at.

I know what you're thinking, Michael: Wait—is this house free? Well, not exactly. But its price has dropped more than $800,000 since it was first listed almost a year ago.

Of course we can't afford this house. But why not take a look anyway? If nothing else, it will give us a sense of what makes a house worth (a little more than) three times one in our price range.

Michael: I had two questions in mind. 1) Is this house really three times better/nicer/more valuable than this house? It is not even yellow. 2) Why do rich people get all the discounts? If houses in our price range start selling for 31 percent off, we could get this house for $662,000.

Nora: I felt a little awkward about going to this open house, knowing full well that we weren't going to buy the place. Should we pretend we're very serious, dress the part? (What do people who buy such houses look like, anyway? Do they even go to open houses?) I decided, no, we'd just be ourselves. I didn't even shower, and Joe was wearing his best $3 "Thomas the Tank Engine" T-shirt.

Michael: Can you believe she was actually worrying about what to wear to an open house? Unfortunately, as my tux was at the tailor, I had to wear my running stuff. My sneakers are relatively new.

Nora: From the front, this house looks like an average 1920s colonial. Very nice, yes, but not $2-million nice. Some of that value, no doubt, comes from the simple fact of its neighborhood, which is among the priciest in the city. Nearby houses have sold recently for more than $7 million. It's lovely over here: close to a Metro stop, near Rock Creek Park, in a good school district. These things cost money—lots of it!

Michael: I note here for the record that Joe's T-shirt got a compliment from the agent.

Nora: Once we stepped inside, it was clear that this was no ordinary 1920s colonial. The footprint of that house was there, yes, but it was barely recognizable. Everything had been opened up and gussied up with the finest of finishes. The kitchen had custom-made cabinets, two dishwashers, two sinks, and a fabulous window seat overlooking the main selling point of this house: an enormous landscaped backyard, complete with trampoline and swing set. Joe parked himself right there and began sucking his thumb with glee. (And I must mention, here, too, the powder room, where the toilet and sink were embellished with hand-painted leopards.)

Michael: I found that bathroom (note to Nora: We're not the kind of people who have "powder rooms") creepy. I do not want leopards, or anything else with eyes, painted on my toilet.

Nora: All of this was part of a huge renovation that was done about 20 years ago. It continued on the second floor, where the master bedroom featured a fireplace and large deck, and the master bath, decked out in marble, included a picture window and Jacuzzi tub that Joe thought was hilarious. (How come he doesn't get so excited when we turn on the bath at home?)

Michael: Joe clearly liked this place better than either of us did. It met almost all his requirements: Stairs? Check. Easily opened kitchen cabinets? Check. Jacuzzi faucets? Check. Private playground for intimate, catered play dates? Check. On a bus line? Uh ... sorry, buddy. But we can have the agent call Metro and see about rerouting the L1, 2, or 4. Anything to make a sale!

Nora: Walking through the rest of the second floor, I was reminded that this was once a small, plain house. The other bedrooms and an office were tiny compared with the lavish addition in back and looked a lot more like those in the $600,000 houses we're used to looking at. There was also a large finished basement with its own kitchen, I assume to help with the cooking for a knockout party, since this was clearly not meant to be a mother-in-law apartment.

Michael: It did feel like we saw two separate houses. The bottom two floors fit together better than the top one. It's a question of taste and finances, I suppose: When you add on to a house, how much do you want people (including those who live there) to notice the difference between old and new? I guess Nora and I fall closer to the not-noticing end of the spectrum.

Nora: No question: This is a very nice house. Is it $1.9-million nice? I guess so. (In 2008, its improvement assessment was $1.5 million.) But if we picked up this house—and its yard, including the trampoline and swing set—and moved it, to say, Pittsburgh, or even five miles out in Takoma Park, what would its value be then?

Michael: That's a brilliant idea, Nora! Maybe we could move this house and find out.

Welcome to the Neighborhood, Mr. Spitzer

As it turns out, we aren't the only Slate writers looking for real estate in Washington. Nora and I never looked at this building—it didn't come up in any of our searches!—and now we find out that our fellow columnist Eliot Spitzer has bought it for $180 million.

If you had asked, Eliot—as colleagues, we can be on a first-name basis—we would have been happy to show you around, maybe introduce you to a broker or two. Nora knows a lot about the pros and cons of various kinds of kitchen countertops. I could have told you about what kind of paperwork to have handy when you talk to a lender. Maybe we all could have attended an open house or two. But you seem to be doing OK on your own. And you probably get some good advice from your dad.

Still, we're here if you need us. And to return the favor—if you ever decide to get into the local residential real estate market, can you give us a heads up? Just so we don't make any competing offers.

By the way, I notice the place you got is what is known as "a distressed property." (Another thing Nora and I can do: guide you through some of this real estate jargon. It's not that hard once you get a few key concepts.) Which got me to wondering: How much would you pay for this? Nora looked at it a couple of weeks ago and didn't much care for it, but I wonder if it's worth a second look.

Stat of the Day, Continued

Like Mickey, I was struck by this fact: The median sales price of a house in Detroit is $7,500.

That figure comes from December. For the three months that ended in January, according to Trulia, the median sales price was $10,000. Slightly higher, but still shocking. The average listing price for a house in Detroit, according to Trulia, was $77,426 for the week ending Feb. 25. (All of these figures are for the city only.)

These two figures leave us with at least two possibilities. Either homebuyers are getting discounts of about 83 percent in Detroit, which seems unlikely, or the only houses selling are the ones that are very, very cheap. Trulia currently lists 399 houses for sale for less than $15,000 in Detroit. Which got me thinking: How many houses for that price in Washington? Exactly three.* The average listing price for Washington is $753, 241, while the median sales price is $349,865.

Two more numbers—the last two, I promise! Detroit's median household income (from a 2003 Census survey): $26,157. Washington's: $42,118.

I still believe real estate prices are too high in Washington. But that doesn't mean I wish for D.C. what's happening to Detroit.

*As several readers have pointed out, these properties are for rent, not for sale. So it appears there are no houses for sale for less than $15,000 in Washington.

It's Too Late for Us

So, to answer my own question—should we buy a house we can't afford?—we now have our answer, Nora: No.

It was a silly question anyway. As you know, I am opposed to spending too much on many things, such as toys and computers and even boxes of cereal. It's not as if I was going to change my mind on something as big as a house. And now that the president has unveiled Operation Save Our Homes, we also know that the government isn't going to help us: You had to have bought your house before Jan. 1, 2009, to qualify.

Which makes sense. Otherwise, as I noted, there would have been a perverse incentive for people like us to buy more house than we could afford, in the hopes that the government would step in and make things more affordable. Of course, there have been perverse incentives to buy more house than you can afford for most of the last decade, but that's another story. As the president says, we need to look forward, not back.

The one thing I will say about Operation SOH (note: not its real name; it's called HASP) is that it is as complicated as it needs to be. Possibly more. On the government Web site that attempts to explain it all, there is a series of questions that start out simple enough—"Is your home your primary residence?"—and end up purely speculative: "Do you believe that the amount you owe on your first mortgage is about the same or less than the current value of your house?" There's no way to give a solid answer to this question, really, though this site will help. Maybe the best answer is, "I'm not sure. Make me an offer and let's find out."

The questionnaire is designed to funnel you into one of two programs, though in both cases the government ends up recommending that you gather up as much paperwork as you can find and call your lender. By Monday, I predict most will have phone trees already set up: If you can't afford your mortgage and would like to refinance, press 1. If you have already refinanced and would like to negotiate a lower payment, press 2. If you lost hundreds of billions of dollars in the real estate market in the last five years though your own greed, corruption, and stupidity, and would like government assistance to help you avoid bankruptcy, please press 0 and ask to speak to Secretary Geithner.

There is also a sad little Web page where you end up if it is determined that you don't qualify for any federal assistance. This plan "will not help everyone," it says, though you can always call "a HUD-approved housing counselor" to find out just how screwed you are. "In certain cases," it reads, "you may need to sell your home and move to more affordable housing."

 I have an idea, Nora! How about we move into affordable housing to begin with? 

Benefiting From the Bubble

I mentioned this chart the other day, reproduced here with Robert Shiller's permission. (It's from the second edition of his book Irrational Exuberance.) I like this chart mostly because it confirms my own experience, which is to say that it shows with national data dating to 1890 what I have observed anecdotally in Washington since last month: The housing market is irrational. The correlation between home prices and interest rates, population, or building costs is very weak. And though prices have fallen a lot since their 2006 heyday, they still have a ways to go. The bubble lives.

About this last point, prompted by reading Daniel Gross (shameless plug: you can get that book here, and his new book here), I have been wondering: What worthwhile legacy will the Great Housing Bubble of the Early 21^st Century leave us with? The main legacy of previous bubbles, Dan writes, is infrastructure—both physical and mental. Not only do we have all this leftover stuff (telegraph lines, railroad tracks, Internet bandwidth), but all this stuff helps us think in new ways. (Why send a letter when I can send a telegram? Why ship these crates by barge when they can get there faster by train? Why waste money at the Brookstone in the mall when I can waste it at brookstone.com?)

With the housing bubble, the legacy is less obvious. Yes, there are a lot of empty houses in America, and they're getting cheaper. And as Dan says, the housing bubble has changed the way Americans think about debt and real estate. First we learned that if we used our house as collateral, we could borrow money more cheaply. Now we're learning that if we used our house as collateral, we could lose our house.

To which I say: Is that it? Maybe we're too close to the bubble to know how it will help us. But unlike bandwidth or telegraph transmission lines or (to a lesser extent) railroad tracks, real estate is not a national resource. Thanks in part to mistakes made by now-bankrupt telecom companies in Mississippi and California, I enjoy relatively cheap Internet access in Washington. I get no benefit from the mistakes made by overzealous developers in Miami or Las Vegas.

Unless, of course, we move. How about it, Nora? You don't like the cold anyway, and I am beginning to think that America's bust will prolong Washington's bubble.

Our House, in the Middle of Our Street

Nora: I think we need to lay down some rules here. First: Our house must have at least four standing walls. Second: Renovations on said house must not cost more than $50,000, depending on the asking price, and be minor enough that we can live in the house while they're being done. (Read: no asbestos-removal projects.) We can't afford to pay rent and a mortgage while we wait for that central air to be installed or for parts to be shipped in from wherever.

Michael: I prefer to think of these as goals, not rules. All other things being equal, yes, we should be biased in favor of four walls and what real estate agents call move-in-readiness. But we should also be mindful that some types of houses have historically been discriminated against.

Nora: OK, so with these "goals" in mind, I was drawn to this house, which is roughly a mile from a Metro station and in a good school district, I think. (Question: Why aren't agents required to disclose which schools are connected with addresses in their listings?) And with a list price of $575,000, it's within our budget, and interestingly, only $4,000 more than what the sellers paid for it.

Michael: The sales history is more interesting than that. Today's price is seven times—that is not a typo—what this house sold for just 10 years ago. The current owners are going to lose money. (They put in that nice new granite-countertopped kitchen! How come you haven't mentioned that yet?) But the previous two owners did pretty well for themselves. Wonder where they are now.

Nora: Michael and Denise expressed skepticism about this place even before we visited. As they both noted, its biggest flaw is that it's on a main street. But Michael: We live on an even busier street now!

Michael: But Nora: Our apartment's in the back! And at least now it's a busy street with a lot of buses. Joe has requested that we stay on a bus line.
 
Nora: I admit, driving to the open house on Sunday, I nearly got into an accident trying to pull into the driveway. Backing out was even more hair-raising. But such obstacles can be overcome, especially when the house you're pulling away from is as charming as this one.

I was won over by the quirkiness of this house's layout. In an area glutted with brick colonials, townhouses, and Capes, it's refreshing to walk into a cottage-style house with a little bit of personality. There was no center hall here, just rooms flowing into each other in a stream-of-conscious way (kind of like this blog!). And then there was that kitchen: new and spacious, with room for a table as well as a view of the yard. Granted, the countertops were granite, but I'll take it if it means I'll be in a kitchen open enough that I can feed and talk to Joe while I'm cooking.

Michael: I was wondering when you were going to mention that granite.

Nora: And how about that spacious master suite with the skylights?

Michael: Don't try to change the subject! You campaigned against granite countertops, yet now you appear ready to accept them! Did the granite lobby get to you?

Nora: Love the pun link, Michael. But let's get back to the matter at hand. I don't want this to turn into a paean to décor, but it's so hard not to fall for a house that feels so, well, homey: that wrought-iron bed, the beautiful dining table, the cool art. Of course, this is why we have stagers—and TV shows about stagers (I can't stand that show—Michael), and even an association of stagers. (Is there anyone without an association these days?) According to a recent study by that association, staged houses spend 89 percent less time on the market than nonstaged, occupied houses. Given the source, one should take this statistic with a grain of salt, but you can't dismiss the power of good taste. The reasons aren't purely psychological, either: Cosmetic changes are costly, too. Carpeting, paint, bathroom vanities, kitchen cabinets—they add up. And given our limited do-it-yourself skills, there's also the contractor, and the money we'd pay, say, eating out for a month while our kitchen's being finished. As I said, it all adds up.

Michael: I had the opposite reaction. You're right, the house was nice and homey, but it felt crowded to me. Of course, when I went to the open house, it was crowded—at one point I had to wait for another guy to come down the stairs. I think I would have liked it better if it had been empty. Also because it would then have been easier to picture how we would fit into it. And by the way:  Who says our do-it-yourself skills are limited? I look forward to the opportunity to test my skills in an environment that doesn't involve Allen wrenches and directions translated from Swedish.

Nora: I have a feeling Michael's going to focus on the drawbacks: the street, the fact that there's only one bedroom on each floor (Do we really want Joseph sleeping alone on the first floor, just steps away from the cookie jar—and oven?), the lack of grass in the backyard. (Can we replace the hot tub with a swing set?)

Michael: That's a good point about cookies and the oven. Though I'd be more worried about ice cream and the freezer.

Nora: It's just that after months of house-hunting, I'm getting tired. I just want to curl up in that wrought-iron bed and call this place—someplace—home.

Michael: Don't worry, Nora! Wherever you lay your head each night—that's home for us.