Frustrated, Incorporated!

shangrila

This is Shangri-La, oh, oh!

Jumbo mortgage rates are down.  Lenders are opening up their vaults.  Loan to value requirements are loosening.  ShadowBuyer has liquidated all of his equity positions, and is ready to pull the trigger on a home purchase.  Whether you think prices in Santa Monica still have further to fall or not, you can’t disagree that now seems like a better time to buy than 1 or 2 years ago.  There’s no telling what the winter and first half of 2010 hold, but if we can find a place that we like, and that’s big enough for the next 5-7 years or more, then we would feel  good about getting a deal done.

So, what’s the problem?  My problem today is inventory.  5% of homes turn over each year.  We are halfway through the 1-year window in which we are really ready to buy.  That means that every 40th house, give or take, has come up over the last six months, and that another 1/40th of the inventory will come up for sale in the next six months.  Unless you want to live in a planned community where all of the homes are more or less identical, that scarcity of turnover can feel severely limiting.  For example, until this week, we had seen exactly 0 homes within our price range that included enough bedrooms and bathrooms, any kind of move-in-ability, and the look and feel of something that is actually worth more than the $2 million we are going to pay for it.  Today, I toured the first home to meet that rather broad set of specifications.  It still needs about $200K worth of upgrades, but they could be deferred for a couple of years with no problem.  Oh wait, one problem.  This home sits frustratingly out of reach, priced (and with a pending offer very near its asking price) about $200K north of where I  can get to it.

So, what’s a guy to do.  Sit tight?  Keep renting?  Find some more money?  Be patient?  Wait until the next wave of loans go bad?  Wait until California unemployment spikes further (currently 12.2%, and headed higher, they say)? Broaden my horizons and consider living somewhere outside my primary area of focus?  I’m going to do (or try to do) all of the above, but, as frequent readers of this blog know, I’m on a schedule here.

Or, maybe you can help me out.  If you or a friend own a home that meets my specs, drop me an e-mail, and let me know.  If it’s your home, I’ll give you a giant pile of money for it.  If you provide a referral that leads to a deal, I’ll let you write your name in any cement we pour in the first few years we live there, and I’ll buy you the newest iPod, a Wii, or a two-night stay at the newly remodeled Shangri-La Hotel in Santa Monica.

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