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Sunday, August 19, 2007

How the other half lives

The reality show House Hunters, on the Home & Garden TV cable network, ran another episode out of Portland last night. This one was quite a bit different from the one we wrote about on Tuesday.

It was the difference between having $200,000 to spend on a house, and having five times that much.

In the latest episode, a young couple had moved to close-in Northwest Portland from Washington, D.C. a short time earlier. They bought and fixed up a nice Victorian, which they flipped for a handsome profit indeed. (I could be way wrong, but this may be the place.) The idea was that they were going to take their Portland bucks and move back out of town. But then they decided to stay, and with the closing getting ever closer, they had only about a month to find another house.

A tough situation, but since they had a budget of $800,000 to $1 million, it could have been much worse.

As usual, on the show they cruised around with a realtor and narrowed the choices down to three houses, this time all in the Westover Heights area. This is up in the West Hills, where you must remember to keep your pinky in the air as you're sipping your pinot. The husband talked for a while about the beauty of walking to work or to the groovy NW 23rd scene from their current house, but it was hard to see that being quite so convenient from the new 'hood they were checking out. There was definitely some elevation gain there.

The first two houses were grand old Portland things, built around 1913. They both had great views, with the first having a better layout and better yard. (These guys had two puggy dogs who needed some room to yipe around in.) Its only drawback was the kitchen, which was not the spacious modern oasis that the wife wanted. Having endured a blowout of the home they just sold, a kitchen tearout was not something they wanted to deal with again for quite a while.

The second house had some funky rooms, and a couple of bathrooms that were a bit scary, and so it didn't impress them.

But the third house really showed how far Portland had fallen. New construction. Some kind of hotsy totsy hardwood floor, but you just knew there was particle board lurking under every surface. Massive modern kitchen -- the wife was deliriously happy with it -- and grand room, but then a dinky dining room, stuffy little bedrooms, and a small yard that was dominated by a pointless, giant waterfall that promised to make nothing but noise and expense until it fell apart (probably in a couple of years). Adding to the faux-ness of the whole thing was a fake fireplace that appeared to be a display screen playing a video of a fire -- shades of the Yule log on TV, only with no other channels. You saw the realtor with the remote in his hand. Hideous.

The couple chose the first house, and did a few cosmetic things to help the kitchen. At the end of the show, they were seen enjoying their view after they both had driven home from work, and then entertaining friends. Nobody in the picture looked much more than 30.

You often hear Portlanders wonder, "Who are these people who can move in here and afford these places?" Well, here they were. I came in a little late, but nowhere did I hear a peep about where they got their dough.

They were just kids. It must be nice.

Comments (16)

Likely is they inherited grandma's 3 bedroom, 1.5 bath, 1100 sq. ft. ranch in San Jose which the dropped for $800,000. cash as it was in a bad neighborhood.

I didn't see the show, but if the pugs were their only dependents, its conceivable a couple of DINKS could manage to swing enough combined income to make the payments required. And at least up until a few months ago, lending institutions were more than happy to lend money at a high LTV ratio, expecting that market appreciation over time would reduce their default risk.

The real question here is, why did this young couple voluntarily choose to put themselves on this treadmill, with mortgage defaults so high, and the market in such turmoil? And why such urgency to close on another house? Given their sitution, I think I'd sit it out for a while, count my blessings that I did so well flipping the previous house, rent a temporary place, and get ready to bottom feed when the price deflation hit Portland.

Ugh. I'm around their age, divorced and have nothing to show for the house I used to own. But I'm really super happy that they'll spend the rest of their money filling that home with super important stuff!

Was the wife carrying one of those ubiquitous and ridiculous Coach handbags? Was she watching the E! channel in any of the footage? I've got $5 that she committed one of those offenses...

They seemed to be really busy types who couldn't bring themselves to commit to making two more moves. I think the remodel of the Victorian took some serious energy out of them.

But at the high end, which is where they are, I don't think prices are doing so well now. It might have paid to wait.

I wonder when the show was shot. The trees were bare, but it didn't seem too cold. Maybe this past March or so?

Had to have been before 2/2006. The middle house with the great view sold February 23, 2006.

I have wondered the "how do they manage" thing before, but I have figured out at least one wya it happens. One need only get that first job in a place with upward mobility, and be patient. Heck, if I had stayed in my first job and moved upward, instead of going to grad school (twice), I'd be in the same situation instead of just hitting the workforce with a house, two kids, a wife, and no savings.
My friends from the first grad school could easily drop the money for the house you described, as two DINKs, and they haven't been in the game all that long. The jump gets even easier if you turned a prior home (or two) for a profit.

It is not just the 'kids' who are over extended. We have friends in their 60's who are over mortaged, make car payments, go out to meals all the time, have to buy 'important stuff', take expensive vacations and 'pay for' all of this with 22% credit cards.
These younger adults learned it all at their parents' knees from infancy.
My 96 year old mother has been predicting the 'second great depression' ever since I can remember (nearly 60 years) and it may just come to pass the way things are going.
How much more money can the governments of the world print before it all falls apart and we are all buying bread with wheelbarrows full of dollar bills?

How much more money can the governments of the world print before it all falls apart and we are all buying bread with wheelbarrows full of dollar bills?

Money isn't printed, at least outside of places like Zimbabwe. It's raised through government debt obligations that our children and grandchildren will be compelled to pay back to others, particularly foreign nations. I suggest they learn Mandaran Chinese.

I went to a fancy import car place (in Wilsonville)last week with a friend on our lunch break (after a $1.50 Costco dog). I just wanted to gaze at the beautiful machines. While I was in there a guy, my age (late 20's, early thirties) came in and said he had talked to some guy and was coming in to look at a Ferrari. What!! We went outside, got into my 1989 Jeep Grand Wagoneer and went back to work.

The "printing money" remark was a figure of speach; and yes, the Chinese language seems like a good bet for the future.
The current and future US government debt obligations are more than overwhelming.

"This is up in the West Hills, where you must remember to keep your pinky in the air as you're sipping your pinot."

Wow, Jack...a little reverse snobbism? I used to live in the west hills, and all of my neighbors seemed like pretty nice, down to earth people, even though most of them made piles of money. Didn't know that you flatlanders had the edge on virtue. Sheesh!

As for "how they afforded it"...there's plenty of money in the world, and it's yours for the asking. Everyone has skills that they can monetize.

Didn't know that you flatlanders had the edge on virtue.

It's not about virtue. It's about style. Just because you keep your pinky up doesn't make you a bad person.

It's basic supply and demand: right now there is a huge demand for people who have the ability to inherit money. This is not an easy skill to acquire, but if you work hard enough, and make the necessary sacrifices, inheriting can be a very rewarding career choice. And since we are in the midst of one of largest intergenerational transfers of wealth in human history, it follows that in a free market it will naturally be the smarter, tougher, younger, more ambitious and harder working wealth recipients that are going to see the greatest returns on their inheriting skills.

"It's not about virtue. It's about style. Just because you keep your pinky up doesn't make you a bad person."

Well, I never saw anyone drink their pinot (or anything else, for that matter) with their pinky up. Hrumph.

See? You just aren't hotsy totsy enough.


Technically, I don't think it's a "half" who lives that way, Jack.

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