Monday, July 28, 2014

The Chronicles of Nannia - Episode Three

       With Kiley away for the summer I am afforded the opportunity to get some things done around the house that are difficult to get to when there is a baby around. Painting the inside of the house was something I was loath to do with Kiley here because of the fumes and all. I am getting all of that done. We are doing a lot to the outside of the house as well while we have the chance – painting the deck and a lot of landscaping. The biggest project is having a new roof put on. It is expensive but it is not something you can put off. It's a new roof this year and new windows next year. That should take care of the major expenses for the house for the next thirty years or so. We are trying to get those out of the way in preparation for my husband's retirement in a few years.

       This house has been our home for the past twenty-four years and is the house our two youngest children more or less grew up in. They were eight and ten years old respectively when we moved in and so many of their formative experiences happened while living here that this house is what they think of as their childhood home. Not so for our oldest daughter. She was sixteen when we moved here and when she thinks of childhood she thinks of a different place, our first house, the one we bought thirty-five years ago. My God! It can't possibly have been that long ago. Can it?

       The year is 1979. The song "YMCA" by The Village People peaks at no. 2 on the pop singles charts. Sony introduces the Walkman. Mother Teresa is awarded the Nobel Peace Prize for her work with the poor of India. The American Embassy in Iran is seized and ninety hostages are taken as the Ayatollah Komeini declares the U.S. to be "The Great Satan". A major accident at the Three Mile Island nuclear power plant in Pennsylvania sends a chill through the collective heart of the nation. The space probe Voyager 1 reveals that the planet Jupiter has rings. My first daughter is five years old and I am twenty-three.

       In 1979 we have been living in our present apartment for three years. Our daughter, not yet three when we moved in, is now not yet six. This is beginning to worry me. The apartment is great but I never envisioned raising my children in anything but a single-family home – a house. I want my children to have room, to have a yard to play in not a parking lot, to have a neighborhood that they call their own not a brick building. I am concerned that my daughter is about to start school and we are still living in an apartment.  Added to this we have decided to wait until we buy a house before having more children - and I want more children.  I feel time slipping by. Believe it or not, at the age of twenty-three I am hearing my biological clock ticking.

       This worry I am experiencing is due in large part to the state of the economy. In 1979 things look grim, especially for potential homebuyers. The big problem is inflation. Ever since before I was an adult inflation has been accelerating. Now it is getting truly damaging to the general economy and people's lives. The inflation rate is over %12 (compared to less than %2 today) which means that everything from furniture to clothes to food is noticeably more expensive than it was just a month ago. This makes it hard to save money and the value of whatever money you are able to save is being constantly eroded. In '79 everyone talks about inflation in the same way that everyone talks about unemployment today. It is on everyone's mind.

       This situation impacts potential home buyers in particular because, as is usually the case, the government (in the form of the Federal Reserve) tries to lower inflation by raising interest rates. I am desperate to buy a house for my present and future family but the interest rate on a thirty year fixed rate mortgage is %12.83. This makes the monthly mortgage payment on any house we would consider buying so high that we can't afford it. The only way to offset that cost is with a large down payment which, with the constantly rising cost of living, is getting progressively harder to obtain. I don't see any way out of our predicament and I don't know what to do.

       Then I hear about a new state program that is designed to help first time home-buyers. I forget what it was called but essentially the state raises money through a bond offering then funnels that money through local banks to first time home-buyers who qualify for the program. The mortgages generated carry an interest rate of %8.75. By today's standards %8.75 is huge but compared to the %12.8 going rate at the time it is way cheap. This is just the opportunity we need to solve our problem and may be our last chance to get our foot in the door of home ownership so I jump on it. I make all the necessary contacts and gather all of the necessary information and once I have figured it all out I present the facts to my husband. The proposition is scary because of the amount of money required to make it work but he has learned to trust my judgement in such matters and is as desperate to own a home as I am so he agrees with the plan. I make all the arrangements to get us involved in this (I won't bore you with the multiple problems that had to be overcome) and we start looking for a house to buy.

       Initially we go through a real estate broker to find a house but after some time we are dissatisfied with the houses he is showing us. He assures us that he is showing us the best that we can afford but we disagree. We drop the agent and start looking on our own. We quickly find a nice home in a pleasant community that is "For Sale By Owner" – an opportunity for negotiating a deal. The house is a bi-level with three bedrooms, one-and-a-half baths, hardwood floors and a family room with a fireplace. Yes! We negotiate a deal to buy it for $39,000, which will result in a mortgage payment of about $333 per month. Yikes! That's a lot of money! Things will be tight at first but as our income grows it will become more manageable. We will have our foot in the door and that will reap large benefits in the future.

       After leaping through many legal and financial hoops (we beg, borrow, and steal every penny we can get our hands on) we get the deal done and happily move in and settle down. The following year Ronald Reagan is elected president. He will lower taxes, the Federal Reserve (after much pain to the economy) will finally start to get inflation under control, and the economic boom of the 1980's will bring us prosperity. Over the next ten years the value of the house we just bought will triple, increasing our net worth and creating equity that we will be able to draw on to improve our lives. Even more importantly our daughter has a house to call home. In the next few weeks she will make friends (and enemies) in our new neighborhood that is full of kids. There is a swing set in the backyard and eventually there will be a pool and a deck. The school she will attend is within walking distance. Her future husband is a little boy who lives a few suburban blocks away. We soon acquire a German Shepherd pup that will be our beloved companion and protector for the next twelve years. In another year we will have our second child and two years after that our third. We are homeowners. The future looks bright.



  1. Hi from Kawartha Lakes Ontario Canada! we found you through the Bloggy Mums August Blog Hop.
    It's interesting to think about all the changes that have happened over the past years, and wow haven't housing prices changed!
    Good luck with your home renovations!

    1. Hi. I'm glad you found me. You are right, things have changed over the years but some things have not. It is still hard for young couples to get into that first house even when depressed prices and low interest rates make this a prime time to do it.