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Heartbreak houses

Heartbreak houses

Getting a foothold on the property ladder can be a very slippery business.

This feature article first appeared in the June 2015 issue of Metro. Illustrations by Lauren Marriott.

 

Our return to the real estate market began at an impractical three-bedroom place in Glen Eden. The kitchen was in the lounge and the third bedroom was all but imaginary. It shared a driveway with several other houses and was in a cold, damp hollow. It didn’t really have any lawn, but it had been nicely renovated. We knew it would go beyond us and so it did. So did everything in those dark days.

I was full of anger and regret. Two years earlier we had been on the verge of buying when we had quit, beaten and broken, heavily pregnant with both our first child and the fear of several lifetimes of debt.

Every day since then, every single day, the Herald had run a story saying “Auckland property prices reach new high” and by the time we recommenced our search, it was clear that our inability to overcommit ourselves financially to a house we didn’t really like in an area we weren’t especially enamoured of had cost us around $150,000 in forgone capital gain.

I had read article after article quoting New Zealand Institute of Economic Research (NZIER) principal economist Shamubeel Eaqub. I had even written one. He talked about how he thought the property market was a giant Ponzi scheme, but he thought it was still going to keep going up for a while, but he was going to continue renting, although he was going to buy eventually.

For someone like me, who doesn’t have a sound understanding of economics, these were messages that could only be characterised as mixed, and I didn’t know what to do with them. My first impulse in times of such confusion is to not make a decision, but not making a decision when the average house is earning significantly more per year than the average person is also making a decision, and it looks like a bad one.

During our two years of inaction, I had tried to shut out thoughts of property. It wasn’t hard in the months after our daughter was born but, as she grew, so did our anxieties. Zanna would often comment about how we needed to do something, but all I could think was that we had missed the boat and now it was too late, which was also what I had thought two years ago, before we had first joined the open-homing hordes.

The primary motivations for joining a Ponzi scheme are fear and gullibility. I was open about my fear but I was not gullible. I had the detached and reasonable air of someone who had read and spoken with Shamubeel Eaqub, principal economist at the NZIER.

I liked to think of myself as smarter than those who had paid inflated prices for property but it was increasingly apparent that I was much poorer and probably also dumber. The definition of “inflated” was increasingly unclear.

We ended up, as do so many of our age and income bracket, receiving an offer of family help. This had been the case two years ago as well, but back then we had ideas of value and worth that were fundamentally at odds with everybody else in the market. Whether the money was ours or someone else’s, we had refused to overspend.

Now things felt different, more urgent. Life felt more real. We couldn’t fit two children in our tiny two-bedroom flat. With the buffer of the family financing, we expanded our search to New Lynn and Green Bay, areas that appeared to be floating free of the tethers of even our expanded financial reality. The notion of overspending started to appear quaint, something I could imagine my kids laughing about in 20 years’ time.

 

We fell hard for a house on the Glen Eden border and I did due diligence on it. Over and over, lying in bed at midnight, gooey with real-estate desire, I Google-mapped the walk to the train station and the excellent local cafe, Humbug. It was 10 minutes to one and 12 to the other. On that basis alone, I could have justified almost any price.

It had a white picket fence and a scrap of barren back section. It had no bathroom or laundry to speak of, but both were beautiful and basically part of the galley kitchen. The third bedroom was all but imaginary. The open-plan kitchen and living area were divided by a wall, but there was a white picket fence and the Trade Me ad mentioned character.

At the first open home, on a blue-sky weeknight in midsummer, I asked the agent about price. It’s better than five, he said. It wasn’t; it was worse than five, but what did that matter? The number of attendees at the open home set a record for the agency and the second open home set another record.

As I battled out the back door and saw a middle-aged couple sitting on the home-staged deck around a couple of home-staged empty wine glasses talking about the lovely aspect, I knew that I couldn’t afford this house and that I must have it.

We went to the agent’s office to put in our offer four days before the deadline and that was a huge mistake emotionally. After we told him our offer was $550,000, his face lit up and he told us it was a great offer and the owner would accept it right now, if they weren’t required to wait for other offers.

We left in a daze and I spent the next four days moving in. Zanna told me she found herself driving along with our daughter and redecorating the lounge.

The agent was presenting all offers to the vendor at 4pm Friday and from about 10am Friday I did little but stare at my phone. About 5.30, Zanna called him. “The good news is,” he said, “you’re number two.”

We had planned a takeaway dinner on Friday night because we were far too excited to cook. We had described it as a “celebratory/commiseratory dinner” but the “commiseratory” tag was only there as psychic protection. The look on the agent’s face, the enthusiasm of his pronouncement: I had known that house would be ours. But then it wasn’t.

Being second best didn’t cut much cheese in my galley kitchen, but I held onto it, because I was gullible and desperate. The best offer was $50,000 more than ours, but it was conditional. The agent told us he was scheduling one more open home for that weekend, “Because I can, basically,” he said.

My brother, the richest person I know, told me we should set a sunset clause and play hardball, but I instinctively recoiled from one of those things and had to Google the other, so I just made a weak call to the agent in which he told me some facts and I came away having not understood any of them.

The weekend passed as an eternity and by Wednesday the next week, when Zanna heard from the agent that the house had sold for $600,000, my life felt fundamentally broken.

 

It wasn’t my reserves of strength or determination that kept me going, but those of my wife, who wouldn’t stop sending me Trade Me ads. We debated the wisdom of going beyond our agreed financial limits and then we debated the importance and relevance of wisdom.

We saw a basic prefab weatherboard three-bedroom in a quiet Green Bay street. It was tiny and had no dishwasher, but there was a great block of shops at the end of the street and a fantastic playground a short walk away. It was in zone for a good high school we would have no need of for 12 years, but that didn’t stop us from factoring it in.

Bidding slowed in the early $600,000s and Zanna raised her hand, but so did three other people, so technically we never bid. We were well beyond what we could realistically afford but this was not a time for realism; this was a desperate, elemental struggle in which we were battling forces that didn’t want us to have happiness, security or a decent life for our children, and in that maelstrom price started to feel like the least important consideration.

The person who overpaid for that Green Bay house paid $680,000 for it and good luck to them, but also bad luck to them. I felt like I should have been happy for them, but I wasn’t. We can only have so much control over our feelings.

Our search settled back in Glen Eden. Why? Why not? This is a flippant answer, of course, but whither reason? Entering Auckland’s property market requires not due diligence but blind faith.

If you pushed me, I could say we chose Glen Eden because of price, but that is a half-truth because prices there were acceptable only in a relative sense and acceptable in an absolute sense only thanks to our family’s help.

I could say we chose Glen Eden because of the family vibe or the fact it had a thriving ramshackle town centre and a great used bookshop, but those would be lies.

 

The ad was headlined, “My kind of love” and I was suddenly prepared to pay any amount of other people’s money for it, which was lucky because I would probably have to. It was 100 years old, had three bedrooms and a study, a big back lawn and a reading nook in the lounge.

A few days later we found another prospect, a much inferior house but on a big flat section in a great street with a park at the end of it. The two auctions were on the same day. If we didn’t get the one we wanted, we would get the other and we were no longer even crushed by the unbearable financial pressure that would impose. We had either come to accept a post-reality market or had been overwhelmed by it.

Then, on a grey morning the day before the two auctions, my inbox turned up a miracle.

It had three good-size bedrooms, an asking price of $549,000 and a series of beautiful photos. Two years’ experience told me there were no miracles in the Auckland property market, but the place was bright and light, had a heat pump and HRV, was fully insulated and renovated and less than 10 minutes’ walk from the train and shops. There was a fully fenced backyard perfect for our toddler and our soon-to-be-born second daughter and there were decks at front and back for the barbecues we would no longer have any time for.

I forwarded the ad to Zanna but soon after it went up, it disappeared. Because it was so familiar, the hurt was dull, closer to numbness.

But like any good miracle, the ad reappeared that afternoon and Zanna jumped on it, contacting the agent and arranging for me to view it the next morning.

She told me to ask about storage, which I did, and I was told there was lots of it. I wasn’t sure of the reality of that claim, but questions of practicality had come to seem meaningless in the face of existential questions about the fundamental human need for shelter.

As I left the house, a guy in his late teens or early 20s walked out of the place opposite. I asked him whether it was a good street. He told me it was. He looked trustworthy and didn’t offer me drugs. At this stage, I wasn’t looking for reasons to not buy a house.

I drove around the corner and parked and called Zanna. “It’s perfect,” I said. “What do we do?” The two other auctions were both that afternoon and we suspected they would drive us into the $600,ooos.

“I don’t know,” she said. “What do you think?”

The guy from across the street came around the corner and walked past me, toward the town centre. I waved. He waved back, no drugs apparent in his hand.

We debated what to offer. We thought 10 grand less than the asking price seemed sensible but then we reassessed, based on nothing so ridiculous as what was sensible, and decided to offer the asking price.

The Trade Me ad for the house had a list of recent sales in the area at the bottom. One of the recent sales was the house itself: it had sold for $486,000 just a few months (or even weeks?) before. We found pictures of the place pre-renovation and it was pretty gross.

Was it worth $63,000 more? That was a question we might have asked ourselves at a different point in history. It felt like we were making a scramble for one of the last decent homes in Auckland.

That afternoon, I called the agent and arranged for a building inspection at eight the next morning. At the building inspection, the builder told me the house was solid but needed a new water heater and some new roofing iron. I called the agent and told her we wanted to make an offer right away.

We walked into the lounge that afternoon and stood at the kitchen island with the agent and some forms. It was around 48 hours since the ad had first appeared.

“Do you want to look around the house first?” the agent asked Zanna, who had just stepped into it for the first time. She walked most of the way down the hall and stepped briefly onto the back deck, then came back to the kitchen. She wasn’t looking for reasons to not buy the house.

We wrote our offer in the space provided and the agent called her husband, relaying the figure to him. It was exactly the asking price but we knew enough about the Auckland property market to know the emptiness of numbers. An open home, at which anything could have happened, was scheduled for that very night.

An infinity still stood between us and home ownership. I had long ago learned the uselessness of hope. But as the agent put her phone down and said, “It’s yours,” the unbridgeable was bridged and I felt the house filling with our future lives. We cried and hugged each other and the agent. The rush was almost audible and it was comprised of both joy and fear.

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