- 5 years ago
- Wedding: May 2011
I don’t think you should buy before you are ready just because of the market. the market has taken forever to rebound, and is doing so very slowly, so it’s unlikely to skyrocket in the next 2 years. plus, your desires may change, and since you are very undecided about exactly what you want, you just may not be ready. buying is a tough decision, and involves a long term commitment, so you want to be sure!
i totally agree about the theoretical kids thing – it’s the reason we are still renting, we just didn’t want to make a decision for nonexistent children right now! your tune may change once you have a kid, but it’s impossible to know exactly how much/when.
It sounds like you’re not finding what you really want and you’re not willing to drastically change your lifestyle and spending habits in order to afford what you really want. So, I’d think it’s best to wait awhile rather than get stuck with a home you don’t love or in a neighborhood where you wouldn’t want to raise your kids.
I think you should wait until you’re ready to make these cuts without hesitation. It’s not a good idea just because it’s a buyers market! FI and I have been going back and forth on this and finally decided that we’re waiting until after the wedding, even if the market is rebounding a bit.
From your post I say no. You don’t want to adjust your spending habits and buying a houses requires sacrficies. The housing market won’t just one day soon jump astronominally. It’ll be a buyers market for a while to come.
We are buying by the end of this year/start of next. We aren’t any where near kids. We will buy and want to get ahead of the mortage before kids.
It’s not a buyer’s market everywhere, so be careful with that assumption. Where do you live? It’s definitely not a buyers’ market here in the San Fran Bay Area.
The fed has said interest rates aren’t going anywhere until 2014. So, you still have time to take advantage of the record low rates.
I would weigh how much you’ll save buying now vs still renting but spending thousands on vacations (we love to travel too, so I totally understand that!!). If you buy now, are you locking in a price that saves you that many thousands a year when you factor in home value escalation and interest rate increases on the increased price? If so, maybe buy now. If not, wait.
@EleanorRigby: Never buy before you are mentally ready for the challeges and sacrifices that come with owning a home. Just because it is a “buyers market” doesn’t mean you are ready to be a buyer.
We rent and your lifestyle sounds very similar to ours. We spend a great deal of money on travel, living the good life, eating out etc. We are not in a place where we are willing to put in the time and effort that is required of owning a home. We are also not ready to have children…give it atleast a year if not two.
I love renting. I don’t understand the hate towards it. We can live our lives with a great roof over our heads but should something happen that roof is not our responsibility. Our place is in a great area and is simply for living and we aren’t there very often. Renting is perfect for us right now and there is nothing wrong with that fact.
we live in the Baltimore area. Some of the places we are looking at sold for 100k more than the currenr asking price before the market dropped.
I guess we should try to find out how values are expected to escalate in the coming years. Im also not sure how much the mortgage interest deduction would help. We’re going to owe money this year.
It depends on the cost to rent vs buy and how much you’d have to cut the vacation budget. I would definitely not settle for a house in a crappy neighborhood just to have a house, unless it were equal to the price of rent though. Keep in mind though that you can deduct your mortgage interest and property taxes.
Just because something is on sale doesn’t mean you need to buy it; same thing goes for real estate.
Don’t buy until you are ready to commit for ten years to that house! My aunt told me this. We were looking to buy in the suburb I lived in for our DD to continue to go to school. We kept the condo downtown and are renting it out. Our plan though is to be back in the city in 4 years(when DD graduates HS) but if we bought we would be stuck depending on the market, etc. We chose to rent for the next 4 years and will buy later.
FYI- since everyone is TTC make sure you buy a house in a good school district. Harder to change districts once you’ve already bought the house!
@EleanorRigby: I too am in the Baltimore area so I know exactly what you mean on the pricing thing. I want to buy a house very badly, but even with the lower pricetags, it realistically is still too much for the better neighborhoods for my budget. I was considering just going for it, dealing with a lower standard of living, but I think it is worth the wait to remain comfortable and happy.
You have to be able to itemize to get the interest deduction. On a $500k condo, we pay roughly $1k/month in interest. Which juuuuuust eeks us over the edge of the itemization level. You can also claim your property taxes, which puts us fully over that line. Some closing costs are also deductible. All that means is that you save the taxes you would have paid on that money ($12k of which you were already getting). So, we basically save about 30% on our property taxes since that is really all that’s over the line, and that part of our income is in a high tax rate bracket.
@EleanorRigby: The real estate market is changing as we speak; at least in my area. APRs were as low as 3.5% last week, and now they are 4.0% minimum. I know because we just put an offer on a house and are doing a bunch of paperwork to lock it down. We could only get it for $10K less than it was listed because buyers are so aggressive, and we had to step up our initial offer although it was really good to begin with.
I say go with your gut. A house is a committment and an expensive one. Don’t buy because the market is good, but consider the pros and cons. Since even with the low cost of homes and the low interest rates you still can’t afford a decent house in a decent neighborhood, then what does that mean when prices change, and they will, very soon. If you can’t afford a home in a good school district right now, I suggest you wait and save (a lot) so you can put a comfortable down payment on the home you want later.
There are ways of investing that are connected to the housing market without actually buying a house or condo. You could do that so at least whatever you would use as a downpayment would increase at a similar rate to the housing market.
I agree with PPs, you shouldn’t buy just because the market is good. To me that thinking is similar to we should get married because we’ve been dating for a while.
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