Buy a house now or wait ?

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SmyleBogle
Posts: 14
Joined: Mon Nov 04, 2019 3:24 pm

Buy a house now or wait ?

Post by SmyleBogle »

Me and my wife live in Bay Area and make roughly ~400K combined salary (both late 30's). No kids right now, will have 1 in future.

We currently rent an apartment for 2500 per month. We have enough $$ saved to make a downpayment and regularly pay the mortgage.

We have been thinking about buying a house in Bay Area for quite sometime, but the real estate market for past 3 years has been at a record upward pace :moneybag :moneybag . We are looking at a single family house in the range of 1 million.

I understand that many people subscribe to "best time is to buy it now" philosophy, but given that it will be one of the biggest purchases of our life, we have been cautious.

We do want to live in a house, sooner than later, so there is an emotional element to it.

Have you had to make a similar decision? Trying to evaluate whether we should buy right now or wait for some more. Any tips from your journey of buying a house that you can share would be helpful.

Apologies if this belongs in a separate forum.
ohai
Posts: 1327
Joined: Wed Dec 27, 2017 2:10 pm

Re: Buy a house now or wait ?

Post by ohai »

Do a breakeven time analysis. Usually, buying makes sense if you stay in the house for X years, when the transaction costs and such have time to be averaged over some years. Let's say the breakeven in Bay Area is 10 years. Do you plane to stay there for 10 years? Ignore most other factors.
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simplesimon
Posts: 3926
Joined: Mon Feb 25, 2008 8:53 pm

Re: Buy a house now or wait ?

Post by simplesimon »

I am one of those people who say to rent as long as you can in HCOL areas, but we bought six months ago in a similar situation as you and I'm actually pretty happy about it. It's nice to be settled.

Being a first time homebuyer was stressful though. We were very picky and got something that checked the key boxes for us (big reason why we're happy with it) and we looked at a lot of houses to get there.

As you say it's a big purchase - do as much research and thinking as you can about what you want. You're obviously ready financially.
deikel
Posts: 1119
Joined: Sat Jan 25, 2014 7:13 pm

Re: Buy a house now or wait ?

Post by deikel »

Why do you really want to live in a house vs an apartment ?

For most people that's when the kids arrive AND are mobile (couple of years old) AND you want to settle down in a specific area (IMO good reasons),

then there are plenty people who want it just because that's what everyone does (bad), because its the way to get rich(er) (statistically true, still bad), because they want to speculate in their local housing market (really bad), because they love to deal with contractors or love to fix plumbing, paint, roofing, electrical ect (hey picking up a new skill, why not)

You see where I am going with this....if there is no true need to own a house, why bother ? But its like picking a car...way too much emotional baggage involved and social pressure exerted
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wilked
Posts: 1772
Joined: Thu Mar 24, 2011 1:50 pm

Re: Buy a house now or wait ?

Post by wilked »

Scenario:
You buy a house. One year later you have a child. The child is severely autistic to the point where you and your spouse decide that one parent should stay home with the child full time.

Can you still afford that house?

There are other scenarios, but my neighbors had that same one and the dad (PhD Physics, was a high earner) has been at home with the children (one autistic) for the last few years since their son was born.

My suggestion: Keep renting, keep saving. If you want to experience living in a house, rent a house. Have a child, and once the child starts crawling / becomes mobile you might consider a larger place and to buy a house. I wouldn't rush it though

Anyone that says "best time is to buy is now" is misled or a realtor (or both). People see home ownership as a sign of success, and that is an inaccuracy that is bound up in marketing / society. In reality buying a home changes nothing for your financial state and often puts you in a worse state as a 4 bedroom home undoubtedly is a larger financial draw than a 2 BR apartment besides being a massive roadblock to your career mobility.
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JoeRetire
Posts: 5744
Joined: Tue Jan 16, 2018 2:44 pm

Re: Buy a house now or wait ?

Post by JoeRetire »

SmyleBogle wrote: Wed Jan 15, 2020 2:57 pm Me and my wife live in Bay Area and make roughly ~400K combined salary (both late 30's). No kids right now, will have 1 in future.

We currently rent an apartment for 2500 per month. We have enough $$ saved to make a downpayment and regularly pay the mortgage.

We have been thinking about buying a house in Bay Area for quite sometime, but the real estate market for past 3 years has been at a record upward pace :moneybag :moneybag . We are looking at a single family house in the range of 1 million.

I understand that many people subscribe to "best time is to buy it now" philosophy, but given that it will be one of the biggest purchases of our life, we have been cautious.

We do want to live in a house, sooner than later, so there is an emotional element to it.

Have you had to make a similar decision? Trying to evaluate whether we should buy right now or wait for some more. Any tips from your journey of buying a house that you can share would be helpful.
If you have at least 20% for a down payment, can afford the mortgage, have stable income, won't be kept awake at night by the thought of having a mortgage, and can find a house in your price range where you would be happy for at least 10 years - then go ahead and buy now.

It would be hard to guess when a local housing market will no longer be on an upward pace (which seems to be the reason you are hesitant). You would just be guessing and you might get lucky, but you might not.
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