Update From Housing Trenches – The 180 is Complete!

Update From Housing Trenches – The 180 is Complete!

Sacramento-area home owners beware…it may be time to prepare for the next leg down in the market!

I regret to inform you that yours truly – yes, the same guy who wrote an impassioned renter’s manifesto in 2010 – now has a “long” position in the housing market.

The cold hard math tilted so much in favor of buying when compared with continuing to rent that we had to make the leap.  For an equal total monthly payment, that includes taxes, and does not even factor in the interest rate deduction, we were able to procure:

  • 40% additional living square footage
  • An actual house vs. an apartment
  • .14 acres vs 1000 total sq ft
  • A better location, closer to restaurants and bars
  • Large basement and yard

Amazingly we paid less than the previous owner’s bought the house for in 2003…and this was before they put a lot of money into bringing the 100 year old house up to speed.

This was all made possibly by our boy Ben’s zero interest rate policy, which dropped the gift of a 3.62% fixed interest rate in our lap for the next 30 years.

The main tradeoff here was a 10% down payment, which was likely an important factor in our successful bid, as this market quickly became hot over the span of just a few months.  As you know, 10% is not a trivial sum in the People’s Republic of California – so this cash out of pocket remains one advantage of renting.

All-in-all the opportunity to lock in a payment for the next 30 years became preferable to playing “rent increase roulette” for even one more year.  I accept that home prices could very well decrease nominally if and when mortgage rates rise.  But the combination of relatively low prices with low interest rates made the monthly payment too good to pass up.

Locally here the market has continued to move higher since our purchase two months ago, and many markets across the country appear to be following suit.  As long as rates stay relatively low, this could prove to have been a very brief “V-shaped” housing bottom and bounce back.  If you’re renting as we were, and your lease is coming up soon, it’s worth taking a look at your local housing market…even if you’re as dialed in to renting as I was!

A trip down manic housing memory lane…

  • Scott Bergquist

    Well, as long as you don’t consider your house a means to making money, but instead looking at it as setting the cashflow valve at a fixed position for the next thirty years, then no one can fault your reasoning for buying a house.  Remember, the tax code is tilted toward home ownership, and real property in general, so you are also managing your taxes somewhat, by buying.  And Sacramento is a nice place to live, compared to 70-90% of the country.  Ten percent down…still a better use of your money than buying an expensive automobile that sits 97% of the time.

  • Scott, exactly – viewing it here as an expense rather than a way to make money…which may have been unique to the 00’s.

About Author


Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

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