|Fall Real Estate 2002
Publication Date: Wednesday, October 16, 2002
Breaking into or opting out
by Jessa Vartanian Aubin
I sometimes wonder what my husband and I will do on Sundays if we ever manage to buy a house in Palo Alto. Open house trolling in the 94301 zip code has been our weekend routine for 10 months now. We're so seasoned we know to wear sandals -- easier to slip off when faced with those "Please Remove Your Shoes" signs.
This isn't the first time we've been in the market for a house
in Palo Alto. When my husband and I (he's a D.C. transplant, I'm
from Woodside, we're both 38) got engaged three and a half years
ago, I sold my Willow Glen bungalow and moved into Paul's one-bedroom
rental duplex on the corner of Cowper and Lytton.
We walked everywhere: Zibbibo for happy hour, Blockbuster for movies,
Pasta? for dinner, Whole Foods for fresh fish. We walked to the
dry cleaners, bank, post office, drug store, library, bookstore,
movie theater, and more. Granted, I'm a self-employed writer who
works out of the house, but in the year we lived on Cowper I put
less than 5,000 miles on my car.
The house hunt began in earnest post-wedding in September 1999:
Newlywed Couple Seeking 3/2 in Palo Alto for $800K or Less.
Unfortunately, we didn't realize how much we'd miss our "within-walking-distance"
lifestyle when, in April 2000 -- the height of the frenzy -- after
a torturous seven-month search that brought me to tears more than
once, we gave up on Palo Alto and settled for a house in the foothills
of San Carlos. We beat out nine other buyers in two rounds of bidding
to own a 1940s-original, 1,200-square-foot ranch with full basement
on a premier tree-lined street. Our prize featured pink walls, pink
carpet, a Daffy Duck chandelier, and an 8,000-square-foot lot of
wall-to-wall weeds. We closed in five days (got to make your offer
Woefully under-priced to incite a bidding war, a photo of our new
home was showcased on the cover of USA Today several weeks later
as proof of the real estate madness in the Bay Area. The caption
blurted: "2 bedrooms, 1 bath. List price: $599K. Sale price:
$797K." We prayed no one we knew would see it. The immediate
feeling of winning that bidding war was sweet. We speed-dialed friends
and family: The search is over! A day or two later, however a sinking
feeling crept in. We'd forked out more money than anyone else had
been willing to. Nor did it help that the week we closed escrow,
the NASDAQ plummeted 25 percent, "the worst weekly performance
of all time" shrieked CNN reports -- and the bear market began.
The house had incredible potential and we decided to make it ours
and enjoy it. But, after 14 months in San Carlos, we found we missed
Palo Alto. We missed being able to walk everywhere, the bustle of
University Avenue, the mix of students, singles, families and retirees.
So after sinking thousands of dollars and untold hours of sweat
equity into our new house -- new Pella windows and doors throughout,
new landscaping, a 300-square-foot Home & Garden-worthy deck
with stainless steel railings Paul constructed single-handedly,
a professional Thermador gas cooktop, and lots more -- we put it
on the market in June 2001.
Buy at the high. Sell at the low. Not exactly an ideal financial
strategy, but we figured if we moved fast enough, we could take
advantage of the low and land a house in the town where we'd wanted
to live all along. And it isn't that my husband and I are cavalier
about money, because we're not. We have one credit card and pay
it off in full every month. We maintain a larger-than-recommended
reserve for emergencies such as unemployment. Heck, we've been agonizing
for months whether or not to buy a new TV. In our minds, moving
back to Palo Alto boiled down to quality of life, and we were willing
to lose money to achieve it.
In what was a long overdue stroke of timing karma, to stage our
search we managed to score a 3/2 rental house in Professorville
that my father and aunt own, as their long-term tenant gave notice
at the exact same time we sold our house. Just 10 blocks off University
Avenue, the house was built by my now-deceased immigrant grandfather.
My parents, newlyweds at the time, were the first tenants in 1958,
and they plan to move back in if the day comes when they can no
longer drive. It's a nice feeling, knowing my parents cooked dinner
in the same room we do now.
We've been searching the MLS Web site on a daily basis ever since.
I e-mail MLS numbers to Paul. He fires numbers back at me. We take
virtual tours. We map properties. (Railroad tracks? Now the price
makes sense...) We tour open houses. We scour the Weekly. We e-mail
Erika, our wonderful-not to mention patient-agent, for details on
any listings that interest us. And yes, we write offers, four or
five in the last 10 months, beaten out virtually every time by deeper
What are we looking for? At the bare minimum, three bedrooms (one
for us, one for potential kids if we decide to have them, one for
an office/guest room), two baths, and a yard bigger than a Cal-King
mattress. Yes, we've considered condos but I like to garden, and
Paul, whose passion is woodworking, needs space for his tools and
saws. And we both abhor the thought of $200-$600 per month homeowner
Even though we asked Dennis, our mortgage broker, to approve us
for a $1.2M purchase price, mentally we consider $1M our top limit,
as we'd still like to go out to dinner once in awhile. Theoretically,
if we bought a $1.2M house and put 20 percent down, our monthly
out-of-pocket housing costs assuming a 30-year fixed rate mortgage
at 6.875 percent, plus property taxes and insurance, would add up
to more than $7,600 per month-three times what we now pay in rent
(tax advantages notwithstanding). According to Dennis, at that price
point most people put more than 20 percent down. Still, Paul and
I value being able to sleep at night.
The thing is, a million bucks doesn't buy much in Palo Alto. Honestly,
we'd be depressed to move into anything we could afford. "Within-walking-distance"
of downtown we might get a 1,200-square-foot house on a 4,500-square-foot
lot with a one-car shed in a flood zone leaving little if any room
for expansion. And yes, we've considered Midtown, College Terrace,
Southgate and all the other lovely areas of town, but for now, perhaps
foolishly, we're sticking with our dream of 94301.
There have been days when we're really discouraged, such as when
we see sellers raise their asking prices by a hundred thousand dollars
when, in the first week on the market, the bidding war they hoped
to create fails to materialize. My husband, a high-tech sales manager,
would debate the legality of sellers being able to refuse full-asking-price
offers. Being from the East Coast where asking price means the price
you'd be thrilled to get, the poor man still can't get over that
Admittedly, after nearly a year of searching I've become a tad
jaded. But at this point, we've begun to wonder if tying up all
our assets in a home here is worth it, if -- in the big scheme of
things -- home ownership is the end-all-be-all that we've been conditioned
Maybe we should just rent for the long haul and buy a vacation
home in Sonoma or Tahoe. Sure, we'd miss out on tax write-offs,
equity and appreciation. And there are a lot of changes we'd make
to this rental if it were ours -- getting a dishwasher to start,
a new front door and maybe a second story.
But we like the idea of having assets on hand to fund business
ventures (Paul would like to be his own boss); time-off-work, nannies
and college tuition (if we decide to have kids); and an early retirement.
Renting affords us a higher degree of life flexibility. We could
also relocate our life to a more affordable state like many of our
The whole problem is -- absurd cost of living aside -- we love
it here. We love the local shops and restaurants, the farmer's market,
the well-regarded schools, the energy of Stanford University, the
lack of snow and humidity, the opinionated residents, and the gorgeous
neighborhoods. Most importantly, we have friends, jobs, and family
-- my parents, four siblings, five nieces and nephews, grandmother,
and countless aunts, uncles and cousins -- here.
Which is why we continue to slide into our sandals most Sundays and make the rounds.
Possible drop quotes:
Buy at the high. Sell at the low. Not exactly an ideal financial strategy...
Maybe we should just rent for the long haul and buy a vacation home in Sonoma or Tahoe.
The whole problem is -- absurd cost of living aside -- we love it here.