I want to talk for a minute about the global economic crisis. I will start by saying that I have not been terribly inconvenienced by the implosion of our economy. The only thing that happened to me was that I was unable to sell my house and move my family with me to start our life over in a new town with my new job. Incidentally, that is how this blog started. I started it to chronicle quitting my job, getting a new one, selling my house, buying a new one. Instead it turned into me living apart from my family working at my new job and eventually quitting to be a SAHM for a few months while I looked for work back near the house we still owned. For the record, I am a terrible SAHM. Hats off to people who can do it and like to do it and are good at it.
But I don’t want to tell you the story of me not selling my house. I want to tell you about the time I did sell a house. But first, I’ll tell you about how I came to own a house.
When I was fresh out of college, I moved from Chicago to Ohio. I lived outside of Akron. I rented a $425-a-month 2BR 1Ba apartment with car port. I was living large. This was right after the stressful break up with 343, wherein I was living in an $860-a-month (gorgeous) 1BA 1 Ba apartment with spotty on-street parking and windows that barely closed and clanking radiators.
My new apartment had air conditioning and electric baseboard heaters. A garbage disposal. A double-sided sink for handwashing dishes without a dishpan. It was awesome. Except it wasn’t home. It was an apartment. It was bland. It had no character.
That apartment I couldn’t afford back in Chicago…it had built-in glass-front cabinets, a built-in China hutch, Tiffany light fixtures, plaster, a cute little woodburning fireplace that was not allowed to be lit, original oak floors, and barrel back walls in the spacious kitchen.
The new apartment had off-white, paper-thin walls and beige carpet. It also featured avocado green appliances and Mediterranean-style kitchen cabinets.
I worked hard that first year, deprived myself of many things, and saved up a lot of money for a down payment on a house. Why did I want a house? This is where I play Monday Morning Psychiatrist on my 22-year old self. I came from divorced parents. Life and home had been in turmoil for many years. I had just planned on setting down roots and forming our own family with 343 and that went horribly wrong. I wanted to buy a house, have stability, permanence, and a place for my geriatric cat to live.
Just before my 23rd birthday, I made an offer on a cute, 1400 sf Cape Cod with 3 BR and 1.5Ba. It was all-brick and had a true 2-car garage with opener. It had hardwood floors throughout, a gas fireplace, natural gas forced air heat, and central air conditioning. It was built in 1952 so the walls were an inch thick. I bought it for $96,000 two weeks after I turned 23. I put a conventional 20% down payment on it thus cleaning out my entire savings account. That first month as I needed things (so many things: a locksmith, a plumber, a garbage can, a snow shovel, a rake, mulch, washer/dryer, blinds, insulation, etc), I just kept thinking about my Citibank bill. Eventually, I rebuilt my savings and went on to love that house. It was cute. I had little slopey ceilings in my bedroom which was the whole second floor.
Eventually, Mr. Long-Suffering moved in with me. I made him pay rent. We had a lease contract to protect us both. Mr. Long-Suffering is 6’4”. He didn’t like the cute little slopey ceilings and he didn’t like that his shoulders almost touched both walls as he walked down the hall. But, since the entire mortgage payment was less than his rent had been (and he was only paying half), he liked it just fine. I owned it, and I let him tinker with the plumbing and wiring to his heart’s content. He is not a good renter because he likes to wire things. And hang ceiling fans. And cut holes in the wall. He made a great tenant for me. He would do any household projects I needed done, including adding outlets where there had been none.
Time wore on, and we married. We started to think about having a family. We decided to relocate back to Chicagoland. Mr. Long-Suffering got a job first, I put the house on the market and started looking for work. Eventually, we found a house in NW Indiana close to his work, and we bought it without selling our first house. After a few months, I found a job in Chicago near our new home and moved to Indiana as well.
Our home in Ohio still hadn’t sold. We were confident we’d find a buyer. It was a cute house, updated, and lovingly-maintained (tear-off and new roof with architectural shingles! Remodeled bathroom! Refinished floors!). We could afford the two homes for at least a year. (I could afford the entire Ohio house by myself obviously, and Mr. L-S could handle the new house without issue, so it was fine. Stressful, but fine.)
A buyer came along and made a great offer. We couldn’t refuse. We accepted. They didn’t get the mortgage. They still wanted the house. They asked us to give them $3,000 credit at closing (that’s where they pay you more for the house but you don’t get the money, you give it back to them and they get a bigger mortgage…basically, they finance the down payment). The offer was written up for $115,000 but we would only be seeing $112,000 since we were giving them $3,000 back.
Well, the couple still didn’t get the mortgage. So, the brother of one of them came in and was going to buy the house and the couple would live in the house and pay the mortgage and the bills. The brother, it turns out, had a bankruptcy on his record so all 3 of them had to complete credit counseling to get the mortgage.
At this point, if I had been financing the sale of the house myself, I would have run away. But, this was 2003. Times were different. Banks were throwing money at people who were not credit-worthy. The couple who were going to live in the house were both in their 40s. And together, they didn’t have money for closing costs or any sort of down payment. That tells me they had no savings. Any unexpected bill or home repair could derail them. I have no idea what kind of jobs or income they had. I don’t know whether they had medical bills or legal costs or student loans. I don’t know why they didn’t have the money for the house, but I know they didn’t.
I would’ve given up on this for the time being, rented something nice, and saved money for a year. But, this couple was undeterred. Perhaps, like I had wanted 4 years earlier, they wanted to put down roots and establish themselves as a family unit. The couple who wanted to buy the house was a same-sex couple. Maybe they wanted to prove something to someone by getting a house together. Maybe I decorate in a way that makes my homes irresistible to lesbians. I have no idea.
The credit counseling was done. I think they skipped the home inspection because it cost too much money. I transferred the warranties on the roof, the garage door, and the bathroom fixtures to them. We closed on the house. I have never in my life been so anxious to cash a check before it bounced as I was that day.
The next time I was in town, I drove by the old house. They had done some landscaping and added a window air conditioner to the slopey ceiling bedroom (brilliant!). The house looked nice. They got a dog. My old neighbors told me that they were good neighbors (no loud parties, kept the grass cut, parked in the garage). I was glad I sold to people who kept the neighborhood up.
A year or two later, the police had been called. The one whose brother owned the house was throwing the other one out. The house slipped into foreclosure. Recently, I looked it up online. In 2010, the home that I bought in 1999 for $96,000 and sold in 2003 for $115,000 (officially recorded sales price) sold at auction for $85,000. Whenever I think of the housing crisis, I think of this story. A bank or mortgage broker made a loan to people who were clearly unqualified for a mortgage, and it backfired. If this sort of thing (medical bill, divorce, job loss, etc) were to happen to all the sub-prime borrowers out there, I understand how so many homes are in foreclosure. I understand how home values are plummeting (I can only imagine how horrified my old neighbors were when a house on their block sold for $85,000 thus bringing their property values down and wiping out all the equity they had earned).
What I don’t understand is why the bank gave the brother the mortgage in the first place. Why? Sure, there probably was money to be made, but I can’t imagine that closing costs and jacked up interest rates can make up for the fact that so very many mortgages were made to people who could not afford to repay them. I’ve heard it said that the banks assumed that if people couldn’t pay, they would foreclose but be able to resell the homes for loan value. Perhaps true if 20% down payment were still required, but in a market where borrowers need credit and credit gets scarce, it just isn’t happening.
Anyway, that is the story of my first house.