MMM, bubbly...

A while ago, I predicted that there was one thing that would make the housing bubble burst - MadAnthony buying a house. As soon as I bought one, prices would drop.

Why am I always right about bad things happening to me, but wrong about good ones? The Baltimore Sun on Sunday has an article about how the housing market is softening in Baltimore.

What makes this funny is that about two months ago, the Sun was running an article about how Baltimore was going to run out of housing in the next couple years, to the point that prices would go so high that companies would start moving because their employees wouldn't be able to find a place to live. And last week's Perry Hall Observer (one of those free weekly newspapers that normally covers important local issues like zoning disputes and street fairs, had an article about how Perry Hall was going to blow up in the next couple years as the Aberdeen Proving Grounds grows with people from the Fort Momouth, NJ base closure.

Of course, these two things aren't mutually exclusive. It's not unlikely that the real-estate market will go down in the next few months/years, and then go back up, possibly (hopefully) to higher levels in the years after that.

And that's fine. My plan is to keep my townhouse for at least 10 years, for a couple reasons. First of all, the first-time buyer program I used takes a portion of any profits if I sell in the first 10 years. Secondly, moving expenses and closing costs are significant, so it's silly to sell too quickly. Plus, I hate moving, and except for the AC and a few minor things I can change or fix if I spend the money, I really like my townhouse. Long term I think buying the house was a good decsion, but the short term price fluctations are annoying.

But even though I know I shouldn't be checking them, I keep going to a local real-estate site and checking how many houses are for sale in my neigborhood. When I bought my townhouse 3 months ago, it was the only one for sale in my development - one other one had sold a few days earlier, after 2 days on the market. Now there are six on the market (although all of them are priced considerably above what I paid for mine, although they also have more features).

The irony is that the whole bubble is a sort of self-fullfilling prophecy - everyone keeps talking about how it's a housing bubble and it's about to burst, so now home sellers are all trying to sell their houses before the bubble bursts - which is causing tbe bubble to burst, because supply is going up and demand isn't. And (if my neigborhood is any indicator, and if a nicer kitchen and a bedroom in the basement isn't worth an extra $30k) it seems like people are pricing high, either because they want to get as much as possible before the bubble bursts or because they figure they might have to drop the price and want to leave a cushion).

So should I have waited to buy a house? That's a tough call - none of the houses currently for sale in my development are in my price range, although there may be one for sale somewhere that is nicer (ie, with a functional air conditioner). But trying to time the market buying a house is difficult, because you aren't just trying to guess when the market will go up or down, but also fit it into your life. The time I closed on my house and moved was perfect - I had 4th of July weekend to paint, I was taking an easy grad school class, I had a ton of vaction and personal time to use up, and my lease on my apartment was ending. Waiting to buy would probably have meant renewing my lease and waiting another year - which may not have been a bad idea financially but would have been a bad idea personally, as I was outgrowing my old apartment.

So I may not have made the best choice, but I think I made a reasonably good choice given my circumstances at the time. And since I can't go back in time and change it, I can't really do anything about it but blog anyway.