Some websites have fancy segments like "Wealth-building Wednesdays" or "Fun Fridays" or "Tasty Tuesdays." I'm going to make today "Story-time Sunday." I doubt this will be a weekly thing, as stories take a lot of work. But...I'm feeling inspired. Enjoy.
Irving Elleson was a very smart, practical young man. He had just graduated from Seattle U with a degree in Economics, he watched CNN and CNBC religiously, and took everything his professors and the talking heads on CNN said as gospel truth. He liked quoting theories and using the glossary from the back of his econ book when he talked with people.
Like so many fresh college grads, Irving was a bit scared. Armed with his degree from a prestigious University, he tromped out into the world, got married, found an apartment, and began working in a small cubicle on the 18th floor of downtown Tacoma financial building. Irving was making okay money, and with his wife's salary as an elementary school teacher, they were starting to accumulate a nice little chunk of savings. His job wasn't ideal, but it was a good place to start, and could very easily lead to his dream job someday.
One Saturday while Irving and his wife were taking a drive through Gig Harbor, they saw a "For Sale" sign in front of a cute little house in a cute little neighborhood. When they returned home, they looked the house up on the internet and Irving's wife fell in love with it. It had the hardwood floors, the window seat where their cat could sit and watch all day, a nice master bedroom with its own bathroom, a perfect little room for future Ellesons with a window looking out on a beautiful fully fenced backyard. The yard even had a child's big toy that came with the house. The neighborhood was quiet, backed up to a pretty greenbelt, was well kept, and right across the street from some of Gig Harbor's finest schools. The house was small (only 1500 square feet), but perfect. Listed at only $319,000, Irving's wife knew it was something they could afford, too. It'd be tight for a while as they got started, but certainly do-able.
As I said before, though, Irving was practical and treated the talking heads as gospel givers. CNN had a segment just this morning on how bad the real estate market was and how 3% of homes in Nevada were in some form of pre-foreclosure. Irving explained to his wife that now wasn't the time to buy. They'd wait until the market showed signs of recovery, when they were sure prices had hit bottom, and then they'd look at buying. It was his practicality that attracted her to him in the first place, so Irving's wife agreed and looked forward to the day when the market began to shift so they could come back and buy this home.
Meanwhile, Irving told a co-worker about the house they saw while driving through Gig Harbor that weekend and explained in detail to his co-worker that CNBC showed Florida's real estate market was at an all-time low, so he wasn't going to be suckered by the NAR's "Buy Now" campaign. Iriving's co-worker looked the house up online, called his Realtor and went and looked at the home. The house had just had a price reduction from $319,000 down to $309,000. They offered $299,000 and asked the sellers to pay the nearly $9000 in closing costs. Knowing that the market was tough, and knowing that they'd still make over $55,000 on the sale, the sellers agreed and Irving's co-worker bought Mrs. Elleson's dream home for essentially $290,000.
Mrs. Elleson was disappointed but still fully trusted her husband's knowledge of economics and respected his decision to stay in their apartment they rented in Tacoma for only $650 per month. 
One year later, the Elleson's had a little baby Elleson on the way. The housing market was still unstable, so the Elleson's remained waiting in their 2 bedroom, 1 bathroom apartment, which was actually quite comfortable. When the baby was born, the Elleson's proudly brought their baby home to their little apartment. It was a bit troublesome dragging the car seat, stroller, diaper bag, and baby up the 3 floors to their apartment, but that wasn't a huge deal. Irving's wife was no longer teaching so she could remain a stay-at-home mom, so money was a little tighter, though Irving had just received a comfortable raise.
As time went on, Mrs. Elleson was getting more and more impatient with their living situation. Last night, when all 3 were sleeping comfortably, the downstairs neighbors had a fight, and the noise woke up the baby. This afternoon, while Irving was off at work, Baby Elleson had just fallen asleep for his nap when the neighbor upstairs began assembling a new bed frame. The constant rattling of tools and clunking of falling parts, and the occasional loud cursing, woke Baby again. Mrs. Elleson had had enough. 
So Irving and his wife and baby began looking for a new home. They drove around Gig Harbor (Mrs. Elleson wanted to live in Gig Harbor where her parents still lived) house hunting and checking out each different neighborhood. They were online every day, searching for the perfect house. Mrs. Elleson couldn't help but think that the perfect house sold about a year and a half ago, but she wasn't angry because she trusted her husband. It appeared as though he was right, too, as similar houses to the one she loved that had been listed at $319,000 were now listed in the $290's.
After about 5 weeks, the Elleson's finally found a home that they liked. It was in the same neighborhood as the first house, but wasn't quite as nice. There was laminate flooring instead of hardwoods, but that didn't much matter. There were no window seats, and the master bathroom only had a shower, not a tub, but it was still a nice home in a nice neighborhood with a nice big yard. Best of all, it was only listed at $292,000! Irving and his wife offered the sellers $280,000, and asked that they pay up to $6000 in closing costs. The sellers, knowing that the market was showing signs of shifting, countered back at $287,000, no closing costs. Irving, his pride stepping in the way, re-countered at $283,000 with $5000 in closing costs. The same day as Irving made his re-counter, another buyer offered the sellers $287,000, no closing costs. The Ellesons had missed their 2nd home in their dream neighborhood. 
Another 3 weeks went by, and it was very clear now that the real estate market in Gig Harbor was beginning to get healthy. It wasn't anywhere close to the frenzy of 2005 and 2006, but the inventory was shrinking, homes were selling quicker, and the talking heads were being silenced. Mrs. Elleson was becoming more and more impatient, as the apartment next door now housed a smoker, and the smell would drift into their apartment through the vents. She wanted a home, with no noise, no smoke, and without 3 levels of stairs to walk up, and she wanted it now.
Finally, the Elleson's found another home that worked for them. It wasn't in the same neighborhood as the other 2, but it was still nice. The house wasn't quite as perfect as the 1st one they found last year, but they liked it better than the 2nd one that they put the offer in on. This one was a 3 bedroom, 1.75 bathroom, 1600 square foot home on the other side of Gig Harbor for $294,000. Not wanting to miss out on another house, the Elleson's offered full price, but did ask the sellers to pay up to $8800 in closing costs. The sellers agreed and the Elleson's were now home owners! They got a nice home in a nice neighborhood and ended up paying about $285,000...not bad!
Mrs. Elleson was thrilled with their new home. One level, no stairs, no noise, no smoke, closer to her parents...it was REALLY great. But she couldn't help thinking back. 18 months ago they had the perfect house get away. Irving's co-worker got that house for $290,000, only $5000 more than what the Elleson's bought theirs for, even though the list price varied by $15,000. In that year and a half, the Elleson's had paid $11,700 in rent and had to deal with the annoyances of apartment living for the first 6 months of their baby's life.
Ironically, all of Irving's economic heroes, the professors, the authors, and the talking heads, all owned their own homes. Most of them owned multiple properties. All of them had lost money on investments at some point in their lives. Yet it was these very people who spoke fear into Irving, causing him not to buy 18 months ago, causing him to miss out on his wife's dream home, costing him the opportunity to bring his baby home from the hospital to their first real "home."
5 years later, there were now two little Elleson's running around. It was time to move into a bigger home, and Irving had just received a promotion so they were financially in a great spot. Their little home was now valued at $361,000, and they were certain they could get full price and get it quickly. Irving's co-worker also decided to sell at the same time. His house, the one he bought for $5000 more than Irving's, was now worth $382,000 as it was in the better neighborhood. It didn't really matter, though. Both families had gone to reputable and ethical lenders, so their home payments had been well within their comfort levels. Both families were now making more money, and both homes had predictably appreciated over time. That $5000 that Irving saved (minus of course the $11,700 he paid in rent) was a non-issue now. He had calculated their total payment over 30 years, but had neglected the reality that most families move every 5-7 years. Looking back, none of it really mattered now. He had a great wife, two great kids, was getting closer to his dream job, and was ready to move up into a new house. Life was good. His only regret was those 18 months lost in the apartment when he could have had the perfect home.
The end!
Irving and the Ellesons are not real people. The homes described here are hypothetical, not really currently listed. The Ellesons are based on real stories I hear, and the homes are very much like what is currently listed, however. So is it a good time to buy? Should Irving have bought that first home? Isn't my scenario a little Utopian and unrealistic? Who knows? The reality is that if you find a home that you want, it is a great time. Inventory is high, prices have leveled, sellers are growing restless. You can choose to wait, as the Ellesons did, and be just fine. You may even save a few bucks. Or you can choose to buy, as his co-worker did, and get that home of your dreams. But it may cost you a few bucks.
So how can it always be a good time to buy? Because a house is more than a down payment, it's a home. It's more than a 30-year mortgage, it's a long-term investment. Gig Harbor is unique. It is close to Boeing, Amazon, Microsoft, and more. It is beautiful, surrounded by water and has a very mild climate relative to most places in the country. No floods, no fires, no earthquakes or tornadoes. People want to live here. It doesn't matter what Florida's or Nevada's real estate market is doing. It doesn't matter that the economic experts (who own 4 homes each), tell you not to buy even though they earned their fortune partially through real estate. What matters is you. If you're ready to buy a house, now is a great time. If you're not ready, don't buy! The Ellesons probably wouldn't have been any better off had they bought the first house, because while Mrs. and Baby Elleson would have been giddy, Irving would have been a miserable stress case, wondering when he'd get a raise, how he'd make the mortgage, and did he buy too soon. Buying a home is a huge decision, and it is an emotional one. Be prepared for that, and be okay embracing that. A real estate agent's job is to be the practical one. I am here to balance your emotion. That's partly why real estate agents have a bad reputation...too many have preyed upon people's emotions and led them into bad decisions while they were emotional. That's why it's important to INTERVIEW multiple agents. Find one you trust, whom you're comfortable with, and whom you're confident knows the market and is competent at his/her job.
Hope you enjoyed story time!
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