Washington Post Magazine: Take a Deep Breath
Monday, March 2, 2009; 1:00 PM
The economy is a mess, but newlyweds Jessalynn and Diego Gomez are ready to buy their first home -- and are hoping it's worth the risk.
Washington Post Magazine contributing writer Christina Ianzito and first-time homebuyer Diego Gomez were online to discuss Ianzito's cover story, "Take a Deep Breath."
Christina Ianzito: Hi -- I'm here for the chat about "Buying in," the story about Diego and Jessalynn Gomezes' first-home purchase. I see there are already quite a few comments, some critical of the Gomezes. I think Diego might want to respond to some of these, but want to note that from my point of view it was clear that they're thoughtful people who did do substantial research before deciding to buy this home (I hope the article made that clear.) And I hope that readers will consider that everyone has different priorities -- some of us would rather have a short commute and a tiny home, others are willing to put up with a long commute for a big house. So please be considerate of that before criticizing. Anyway, let's chat!
For Christina: Christina, how do you report a story like this? I assume you followed Diego and Jessalynn around as they explored houses -- Diego, did having another person tagging along and watching you explore potential houses impact your house-hunting experience for better or worse?
Christina Ianzito: Yes, I followed them around as they explored houses -- always interesting, to see what different homes are going for -- and they were very good sports about it all. Diego, your thoughts??
Cleveland Park, D.C.: Why Gaithersburg? The 'burbs scare me ...
Christina Ianzito: It's amazing how much less expensive homes are out there -- A house the same size in Cleveland Park, where I live (in a tiny condo, incidentally), I think would go for possibly 3x the amount they paid in Gaithersburg. Like I said, everyone makes a trade off.
Washington, D.C.: Why look for a house you'll only stay in for 10 years or fewer? Wouldn't it be better to save a little more and then get the better house you'll want to live in for 25 years? I've never totally understood the concept of "starter house."
Christina Ianzito: Diego can comment if he wants, but the reason most people get a "starter house," is because they don't want to wait the 5 or 10 years it might take to save enough for their big dream house. Renting, as any financial advisor will tell you, isn't a good long term choice.
Damascus, Md: While I certainly wish the Gomezes well, there is absolutely no way I would buy a yet-to-be-built house in this housing climate! I hope you'll give us an update when all is said and done, and I hope it will be a happy one, but I think the odds are pretty good it won't be.
Christina Ianzito: Everyone is so pessimistic! I know the housing climate is crazy, but the financial experts I spoke with (who don't have any vested interest in getting people to buy, unlike real estate brokers) emphasized that it's not a bad idea to buy now when the market has sunk. Smarter than it was to buy when homes were wildly overvalued, right?
Washington, D.C.: This is the best time in history to be buying a house. Interest rates are exceptionally low, inventory is great, and sellers NEED to sell!
Christina Ianzito: I'm not sure if this is from a realtor (?), but this is what you'll hear so often these days.
Washington, D.C.: Christina,
Do you think that first-time buyers are a special case in the market. It might be better for them than others?
Christina Ianzito: Well they have a big advantage in that they don't have to SELL something before buying in. Many people who need to sell are doing it at a loss right now.
Reston, Va.: I have to take issue with the comment that renting is not a 'good choice.' I sold my house in 2007 and have been renting a beautiful, four bedroom home ever since, largely due to the fact that we are in a recession, and I can't be sure my job will be in the same place next year. I have the ability to move anywhere to advance my career. It's a personal choice - everyone is different, and different times often call for different measures.
Christina Ianzito: I agree -- everyone has different needs. The main reason many say renting isn't a good choice is that you aren't building up any equity. But these are strange times...
Vienna, Va.: I'm not sure why people are so negative about the story. It certainly sounds like everyone did their research and knows what they are getting into. I wouldn't buy a house that hasn't been built yet, but I also wouldn't live in a tiny apartment in DC and plenty of people are perfectly happy with theirs, it's just a personal preference. Anyway, it was a well-done and interesting story, and I wish the best to Mr. Gomez and his wife!
Christina Ianzito: Thanks for your nice comments. I do think it's interesting how negative many of these readers are (and you should see a few of the ones I'm not including).
Hyannis, Mass.: There are many advantages to moving out to the burbs besides the economic advantage of dollars per square foot. Consider the school system, the option of a garden, easier parking, personal safety, fresher air quality, seeing the stars at night, and kids having the opportunity to ride their bikes down their own street. On the other hand, how far do you need to go to the library, grocery store or barbershop, and, especially to get to work? As you point out, Christina, there are indeed trade offs.
Christina Ianzito: true
Washington, D.C.: How long had you been house-hunting for before you bought? We've just started, and will probably be at it for awhile. But I've had friends who jump into the search and have a contract in hand in 2 weeks.
Diego Gomez: This is actually our second time house hunting. We spent a couple months the first time through, and probably a month all told this time around. We also went to Open Houses on our own during several weekends.
Washington D.C.: Should a first-time home buyer not spend their entire savings on the home purchase? Does it matter whether the buyer has just recently begun a high income job?
Christina Ianzito: There are always extra expenses when buying a house ("don't forget the garden hose"), so it would surely be unwise to spend all your savings on the down payment.
McLean, Va.: There seems to be a weird psychological affect that makes people eager to buy when prices are high.
My husband and I are shopping for a house right now. We waited out the bubble, but during the bubble were constantly bombarded by people telling us to buy now, now, now!!! It's like some kind of gold-rush fever.
So now that prices have dropped and interest rates are low, why are people critical of those of us who are now house shopping?
Christina Ianzito: That's exactly what I've been thinking. The people who bought high weren't criticized like this at the time.
Fairfax: The idea of a starter home is that you build some equity and have a place of your own. You can then use the equity (which we used to assume would be growing as prices rose) as the down payment on the next, likely more expensive, home. It used to make sense if you were going to stay at least 3-5 years. I don't know if that still holds. We were in our first home only 16 mo (job change) but still came out ahead.
Christina Ianzito: These days it seems like experts are saying it's a good idea to stay 5-7 years in your first home, to make it worth while. I am not an expert, obviously -- but a few reputable market analysts told me that odds are the economy will start to improve within 2 years. Time will tell.
For Diego and Jessalyn: If I were married, I'd likely be weighing the same decisions you are right now. My job seems stable despite the bad economy, and it seems like the chance of a lifetime to get a home at rock-bottom price. But do you still have fears about your jobs? About the market dipping further? Do you have a backup plan if things go badly?
Diego Gomez: Those are 2 of our concerns. We feel our jobs are stable, but we know we're not bullet-proof. Economic times are scary. We have enough saved up to cover expenses for a few months if something were to happen. As far as the market, we hope to be in this home for several years. Hopefully by that time things will have turned around. If not, this house is a decent enough size that we can stay in it indefinitely.
Va.: Re: The starter home concept... I would also add that it's probably a good idea to at least buy something that you -could- stay in long-term if you needed to. We bought our "starter house" in 2003, and 6 years and 3 kids later, we are thinking we will just stay here unless we move out of the area. While our space is small, it is big enough to meet our needs and we would prefer to have more disposable income than a larger house. But if we had bought anything smaller (like one of the 2-bedroom condos we looked at), we would have no choice but to go through the hassle and expense of moving.
Christina Ianzito: Good advice. I know I'm in a 2-bedroom with 2 kids, and probably not able to move for a while! I love the neighborhood, at least.
Scary!: Seriously, the economy is frightening right now, so it takes some chutzpah to commit to a purchase these days. What kind of homework did you do in the run-up to your house hunt?
Diego Gomez: One of the first things we did was figure out how much mortgage we were going to be able to afford. Then we got a mortgage lined up through Jessalynn's credit union, and then started some preliminary searching by looking in the paper, on the internet, and going to open houses to give us a better idea of what was out there and what we would be able to get within our price range.
Boston, Mass.: There's a sweet moment in the story where Jessalyn and Diego mention that they're picturing their kids riding bikes up and down the street, and Halloween. Diego, do you think the emotional excitment of starting a family played a major role in when and where you chose to buy?
Diego Gomez: It did a bit. Like the artice mentions, Jessalynn and I just got married and we want to get our lives together going. We don't want to wait too much longer to start a family and we don't want to do it where we live now. That gave us a bit of motivation to look now, and we found something we liked and decided to move on it.
Reston, Va.: Are these really "rock bottom" prices? We bought our townhouse in '03 for $265k, and our next-door neighbor just sold hers for $140k more than that, and it was only on the market a week. It's hard for me to imagine that this is "rock bottom" when the houses are still selling for so much more than they did just a few years ago.
Christina Ianzito: It seems like there are pockets in the suburbs unhurt by the downturn, but I'm surprised by those figures. Are there other factors that might have pushed values up in that particular area?
Bethesda, again: My concern is not about buying a house, but about buying a yet-to-be-built house. I know so many people who have been burned doing this that I think the negativity is justified for this scenario.
Diego Gomez: I did some research on M/I Homes before we committed to anything. They were actually rated highly by JD Powers I believe it was and it seems like they're handling their finances in these rough times pretty responsibly. Our house is actually pretty far on its way to completion already and we expect to move in by the end of April.
Arlington, Va.: When searching for a home, did you feel like people thought they were entitled to a certain percentage of their asking? When I have been looking to get into the housing market, people seem to be looking at how much of a discount they are giving from when they bought, not how much further the prices may drop. Did you find the price of condos in this area to be abnormally high?
Diego Gomez: It's not that we found that prices for condos were abnormally high, it's that a townhouse seemed to come out a bit cheaper on a monthly basis if you took condo fees into consideration. Also, we prefer a townhouse over a condo.
Washington, D.C.: Congrats! I remember buying our first home, it's funny how much "owning" rather than "renting" can change things ... have you moved yet? Best of luck, I hope everything works out.
Diego Gomez: Not yet, we move into the new place in a couple months. Thank you for the support!
Christina Ianzito: Thanks to everyone for contributing your thoughts today. Let's just hope for the best in this economy, and wish Diego and Jessalynn well in their new home. Cheers, Christina
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