Real estate blues
Posted by jsmill on July 9, 2007
Ok, I bought my house a few years ago. It is located in an ok suburb not too far from the city. It has glimpses of the river from the front yard and is a stone’s throw from Curtin University here in Perth. It is also on a reasonable sized block.
It quite a nice little house and has been our home for some important years in my young family’s life. Unfortunately, it is only a three bedroom one bathroom and is now clearly too small for my expanding family.
I (like I suppose several other families) thought when I bought my little house that in a few years’ time I would keep that house, use the equity I had built up in it, rent it out, and buy a bigger house slightly further out from the city. I was reasonably confident that, in my chosen suburb, I would see moderate capital growth and would never struggle for renters.
What I experienced instead was massive capital growth – but this growth has been spread across the entire Perth metro area. So, while my house has increased in value by approx 400% so has every other bleeding house in Perth.
This means there is no way I can possibly keep my existing house – no-one I know could afford the repayments on the type of mortgage I would need to take out if I tried. I have to sell my house and use the equity to buy back into the market. Now, I have a good job and my pay certainly isn’t bad – my wife is a stay-at-home mum to our four children (ages 18 months to 7 1/2), but our income would only pay for less than half the borrowings we’d need.
Now I am thinking about moving and have been looking around. For the price I could get for selling my house I simply can’t find anything that I could live in.
I am perfectly prepared to move slightly further out but not to the boondocks and not to a hovel. Why can’t I trade in my small-ish but well situated home for a slightly bigger house further out??? Maybe I’m too fussy. Maybe I need to lower my expectations or move further out or maybe just push the finances and borrow more, or maybe send my wife back to work and let strangers raise my children… Is that what I need to do?
At least we’re in the real estate roundabout. I worry what my children will do – will incomes have caught up (or prices fallen) by the time they’re old enough to worry about it?
