Yesterday I took the first step toward buying a townhouse: I wrote a check for nearly $17,000. This check reserves my specific townhouse unit. On Monday I go in and sign the sales contract, a 25 mm-thick document. I’m very nervous about the whole thing.

The townhouse (legally, a condo) is a KB Homes Cielo at Terra Serena Plan 5. As of this writing, the base price is $562,000, plus options, with a $50,000 incentive, which I can use to pay for a lower interest rate, buy options, or pay closing costs (I can’t use it to reduce the sale price below the base price, however).

I’ve posted some pictures of the framing work.

It’ll be done sometime around November, but move-in is scheduled for May. They (the sales office) say this is because the City of Milpitas does not allow move-in when adjacent buildings are still under construction. After spending some time with a Milpitas building inspector yesterday, I think this is true, but he was difficult to understand (I wasn’t sure he exactly understood my questions, either). He said that landscaping work is acceptable, as there’s little likelihood of falling objects and no deep excavation into which one might fall.

I’m going to the KB Design Studio on Saturday morning to pick up my options price list, and have a look around. Apparently July 27 is the framing choices cutoff date, meaning that certain options must be selected by then (however, Leona? at the Design Studio said they often give a few extra days to a recent buyer). These types of options include the type of stairway bannister rail, whether or not you want arched doorways, the built-in appliances you want (like a trash compacter) and most importantly, additional outlets and other electrical options. I’m most concerned about the latter, and hope that I can make my choices known in time. I have an official appointment on Tuseday the 28th, so we’ll see then.

Why Buy?

There are a lot of things going on in the nationwide housing market today that would indicate one should wait before buying right now. Record foreclosures as subprime borrowers (borrowers whose credit worthiness is below average) default on loans, or forced sales because borrows can’t make their rising mortgage payments, suggest that more homes will be on the market and that prices will fall. In fact, they’re falling in many parts of the country.

But the San Francisco Bay Area is a special place, and it seems that, while prices are holding steady, or even falling a little, declines are not nearly as dramatic here as in the rest of the country.

I got a new job in San Jose. I hate my current crappy one-bedroom apartment in San Carlos, and didn’t want to commute to work. So I started looking around the area (primarily Santa Clara) and found that rents for a nice, new (or nearly new) two-bedroom apartment ranged from $2200 to $2400 (including the ever-so-enraging pet rent they all seem to be charging now). After running some numbers, it became clear that a $500,000 to $600,000 property would end up costing me only a few hundred dollars more, including the property tax, HOA fees and insurance. It seemed clear that I should buy.

My friend Bob, who’s been in the market for over a year, showed me some manufactured properties (like the KB Homes stuff—there are many others). I’m drawn to the fact that they’re band-new, and generally have nice interior layouts (although, for some unfathomable reason, they rarely lend themselves to large entertainment systems with a couch opposite (there’s always a fireplace, or stairway, or door, or dining room preventing optimal viewing).

More importantly, KB Homes is offering very compelling financing incentives, and thanks to that I’m able to get into a nice, if not perfect, home with very little money out of pocket. This lets me keep my stock portfolio in the market, making me much more comfortable about the whole thing. If I lose my job (and the stock market doesn’t tank), I can live comfortable for a year, longer if I scrimp. Because of the higher interest rate I’d have to pay going with a different lender, I’d have to put more money down up front, and that leaves my portfolio uncomfortably small. I plan to move in five years, but can stay longer if forced to. All in all, I think it’s the right move to make.