As you may or may not know, depending on whether you’ve read the pages on the tab at the top, this blog has been mostly run on autopilot since I I stopped blogging regularly in 2011. However, to keep non-forumites informed, I’ve written the occasional update to inform those who may care what I’ve been up to since then. You can find the updates by googling this site for “update ?”, where ? is a number.

Now, this is update 5 informing you that we’ve bought a house. The house is a 3bd/1.5ba 1200 sqft 1950s Georgian. If that particular architectural style doesn’t ring a bell, and why should it, click on the link. We’re essentially talking about a symmetrically looking brick cube (highest volume to surface ratio of any building unless you live in a sphere) of two stories (+ a basement) with a closed floor plan and a footprint of about 24×24 ft. This makes it large (1200 sqft is large to us!) without making it feel that way since each floor is only 600sqft which feels more reasonable to us.

It’s located about 10 miles west-south-west of Chicago downtown (close to the Metra BNSF line) in a neighborhood classified by as “somewhat walkable” which seems to mean that banks and supermarkets are an entire block away. I’d classify it as “eminently walkable yet without the pedestrian congested sidewalks you find downtown”. I can get to downtown in 45-75 minutes depending on whether I take the bike, the train, or the subway (L); bike is fastest.

As with any decision, buying the house was due to a confluence of reasons and timings, specifically (in no particular order of importance)

  • With an aggregate P/S of 1.2, I believe US markets have become substantially overvalued and with no QE to inflate prices further, I wanted to reduce my exposure.
  • The NAV of Chicago real estate is cheap (compared to rent). Buying a house should allow us to reduce expenses significantly. The aim is to get below $10,000/year for the two of us ($4,000 of which will be RE taxes, a lot of the rest being various insurances) which will set a new low in terms of spending (cheaper than the RV).
  • One of the most surprising aspects of Chicago is how many are into ERE or ERE like ideas compared to other places I’ve lived (including the SF bay area). Maybe due to midwestern frugality? While we’ve also been looking to move to other places (Puget Sound, WA, and Lake Ontario, NY), this was a big factor.
  • We get space for a garden. We really missed this aspect of apartment living. Hopefully we will be able to grow close to most of our food. All we’d need to buy on top of this would be rice and beans (which I still prefer to steak which usually gives me heartburn), so food costs should drop far below, even for ERE levels.
  • I get a garage. I can finally start experimenting with welding and smelting.
  • We bought a semi-fixer-upper, so it’s a chance to learn some skills and also build some sweat-equity. We’re tearing out the basement and it needs a new kitchen (there’s essentially nothing there).
  • Chicago is one of the most progressive/informed green cities and one of the few that proactively takes climate change seriously. Not that this says a whole lot, but at least they’re trying. Geographically, this is an excellent place for all the projected calamities (climate change, peak oil, food shortages), except the zombie apocalypse (the population concentration is high).
  • Since neither of us need jobs anymore, we feel comfortable putting down the heavy anchor (more like beaching the boat) of buying a home. We no longer need to retain the flexibility of being able to relocate for a job.
  • We’re sufficiently far out from Chicago that prices have dropped already—for example, gas prices are 40 cents cheaper here—yet close enough to get into the city.
  • We were getting really tired of apartment living. For the past 2 years we’ve been living in a vintage building.—Here’s a tip. Never live in a vintage apartment building. There’s no sound insulation and you can hear everything, most of all the squeaky floor boards when people upstairs walk around.

Selling overvalued stocks and using the money to buy a reasonably valued house that would give us some advantages that apartment living couldn’t and remove some of apartment-living’s disadvantages therefore made sense. Naturally, we paid in cash, about 100k, it’s the biggest check we’ve ever written. (Well technically it was a wire transfer, but you get the idea.) Incidentally, I can now fully appreciate how nice it is to have an effective market for securities. Buying a house is such a hassle compared to buying a stock. It took us six months and five offers before we finally succeeded. Fortunately we had the help of a superpatient RE agent who drove us around to look at houses almost every other weekend since January. Let me know (by email) if you want need his contact details. Highly recommended! He operates in the area that follows a straight line between downtown and Naperville.

In conclusion, the plan, now, is to stay here at least 5-10 years. Learn some useful skills, fix the place up and make it close to self-reliant as possible (see Borsodi). Use it as a base for adventures. Protect assets from US market valuations and hopefully realize some ROI (fixing up a foreclosure) too.