Buying house - Very important decision

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watchnerd
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Re: Buying house - Very important decision

Post by watchnerd » Mon Jul 10, 2017 1:18 pm

FoolMeOnce wrote:
prettybogle wrote:Our thinking behind 535k is it is "only" 80k higher than that and we get brand new house.
I'd prefer ten-year-old to brand new. That allows time to get the kinks and defects worked out. Brand new will cost more up front, and could likely cost more dealing with problems that take some time to discover (even considering a builders warranty). You are looking to spend $80k more, which you might not be able to afford, to acquire extra headaches.
Also, a well maintained older home can often have great structural quality -- our house has main beams and framing of pure redwood, which you can't even buy anymore.
Tweaked 3-Fund: 35% US Equities | 35% Total International | 30% Intermediate Treasuries

prettybogle
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Re: Buying house - Very important decision

Post by prettybogle » Sat Jul 15, 2017 12:57 am

prettybogle wrote:
wrongfunds wrote:I am getting the feeling that OP *really* wants the house, has already made the decision to go for it and is looking for validation of her decision on this forum.
Wrongfunds, we are actually quite okay living in a 2 bed room apartment. As I said in earlier post, our worries are 1. Rents will go even higher and higher every year 2. House prices will go higher and we may be priced out of the housing market
Well hubby is now negotiating with leasing and they *may* only increase rent by 1 or 1.5%. Keeping our fingers crossed. That 530k house is still active and is tempting us, especially me, a lot. I am worried we may be passing over a pretty good value for money in terms of price per sqft

rgs92
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Re: Buying house - Very important decision

Post by rgs92 » Sat Jul 15, 2017 2:42 am

I would say the deciding factor would be if the buyer's income was from a secure job, preferably a gov't job with a pension down the road.
If the income was secure without a possibility of a layoff, and you could take a good, honest look at your home budget and calculate that you could do it, I would say OK.

The difference between what the other posters here are saying would be a reasonable cost (for a, say, $435K house) and your projected cost is like $100 a month, most of which would be deductible as it's mainly extra interest for 10+ years, not principal, so it's like $80 a month more in net cost.

So I kind of see where your realtor is coming from with his advice.

So bottom line, this really comes down do your personal budget. If you can happily give up all vacations and drive basic cars and avoid eating out much and paying for kid-activities (just use the park and library), then I would say you will be fine.
[Just IMHO here, all of the above are things I personally wouldn't care about at all, but YMMV. I opinionate, you decide.]

Also, do you have a decent retirement fund for a real out-of-the-blue emergency so you wouldn't lose your house if something crazy bad happened?

If all these things are true:
1. secure job
2. honest budget
3. dire-emergency fund via retirement assets

I would vote yes, get the house.

wrongfunds
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Re: Buying house - Very important decision

Post by wrongfunds » Sat Jul 15, 2017 7:33 am

Well hubby is now negotiating with leasing and they *may* only increase rent by 1 or 1.5%. Keeping our fingers crossed. That 530k house is still active and is tempting us, especially me, a lot. I am worried we may be passing over a pretty good value for money in terms of price per sqft
Well, my wife never lets me forget the one house which we did not get in to even after 20 years :-( It was over what I felt comfortable in purchasing at that time. Every single and trivial argument about *anything else* in our daily life and I hear about that house even though we are pretty happy with the decision we made.

As every single person has told you, you absolutely need to let go of the probable rent increase from you head. This just makes you sound as if you have NO capability to do any rational or logical analysis of the situation. My RE has gone up every single year, along with every single monthly utility bill such as electricity, gas, water, home insurance and quite a lot more than 1-2%. Right now, my RE+INS of my mortgage payment is higher than the PRI+INT ! Rent going up is red herring. The sooner you accept that fact, better it will for you and your family's mental health.

I do understand the attraction to the $530K house and for all we know, 10 years down the road reflecting back it could be worth over $1.5M and you might have been able to barely afford to keep afloat *but* looking at right now it is a fools strategy. Don't do it.

MoonOrb
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Re: Buying house - Very important decision

Post by MoonOrb » Sat Jul 15, 2017 8:33 am

Price per square foot is not a helpful metric for you when you're buying many more square feet than you need.

Gufomel
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Re: Buying house - Very important decision

Post by Gufomel » Sat Jul 15, 2017 10:08 am

rgs92 wrote:I would say the deciding factor would be if the buyer's income was from a secure job, preferably a gov't job with a pension down the road.
If the income was secure without a possibility of a layoff, and you could take a good, honest look at your home budget and calculate that you could do it, I would say OK.

The difference between what the other posters here are saying would be a reasonable cost (for a, say, $435K house) and your projected cost is like $100 a month, most of which would be deductible as it's mainly extra interest for 10+ years, not principal, so it's like $80 a month more in net cost.

So I kind of see where your realtor is coming from with his advice.

So bottom line, this really comes down do your personal budget. If you can happily give up all vacations and drive basic cars and avoid eating out much and paying for kid-activities (just use the park and library), then I would say you will be fine.
[Just IMHO here, all of the above are things I personally wouldn't care about at all, but YMMV. I opinionate, you decide.]

Also, do you have a decent retirement fund for a real out-of-the-blue emergency so you wouldn't lose your house if something crazy bad happened?

If all these things are true:
1. secure job
2. honest budget
3. dire-emergency fund via retirement assets

I would vote yes, get the house.
A 530k house with 20% down would be a $424k loan. At 4% interest, the principle + interest would be $2024 per month.

A 430k house with 20% down would be a $344k loan. At 4% interest, the principle + interest would be $1642 per month.

That's a $382 difference per month. Yes, the interest may be tax deductible. And part of that additional payment is going to principle, but that's not helpful whatsoever from a cash flow perspective for someone whose cash flow is going to be VERY tight with this $530k house unless the remainder of their budget is incredibly frugal.

This also doesn't account for increased property taxes (relatively minimal in Tennessee, but would still be something on the additional $100k). Or the additional furnishing/upkeep/heating and cooling on the larger house. Or the fact that the less expensive house allows them to keep an additional $20k in their pocket after the 20% down payment. They've said this 530k house would wipe out their emergency fund, so this is huge.

I'm not saying a $430k house is what they should get. I'm saying that's the maximum they should even consider. $530k is out of the question.

Let's not fudge the numbers. "It's only an additional $100 per month" is what they're already having fed in their ear by their crook realtor. They don't need to hear it here too.

OP, a $1 million, 8000 sqft house would be better value per square foot than this house you're looking at. Would you consider it?

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Hawaiishrimp
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Re: Buying house - Very important decision

Post by Hawaiishrimp » Sat Jul 15, 2017 12:26 pm

I think you can afford it, but not necessarily wise to do so though. Buy a smaller, cheaper house so you have more money for other family needs.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

HornedToad
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Re: Buying house - Very important decision

Post by HornedToad » Sun Jul 16, 2017 12:55 pm

prettybogle wrote:
prettybogle wrote:
wrongfunds wrote:I am getting the feeling that OP *really* wants the house, has already made the decision to go for it and is looking for validation of her decision on this forum.
Wrongfunds, we are actually quite okay living in a 2 bed room apartment. As I said in earlier post, our worries are 1. Rents will go even higher and higher every year 2. House prices will go higher and we may be priced out of the housing market
Well hubby is now negotiating with leasing and they *may* only increase rent by 1 or 1.5%. Keeping our fingers crossed. That 530k house is still active and is tempting us, especially me, a lot. I am worried we may be passing over a pretty good value for money in terms of price per sqft
At this point it's fair to say your going to do what you want to do. What people can't understand and why they think you are a troll post is you are looking at this as a binary decision. Either rent or buy a $535k house. Have you even looked at cheaper houses in the 350-400k range to see what is available?

It's like you've decided you need a means of transportation and the options are to either ride a bike or buy a Bently without even considering the in-between options.

If you buy it, hopefully it all works out fine, you are happy not having money going on vacation or saving much for college, the housing market doesn't take a hit, there are no employment issues or emergencies that occur and you buy cheap cars and drive them for 10+ years. Or maybe your husband will get 10% raises for the next 5-10 years and then it'll work out. Unrealistic sure, but if that's the gamble you want to take then best of luck and hopefully you don't roll snake eyes.

prettybogle
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Re: Buying house - Very important decision

Post by prettybogle » Tue Jul 18, 2017 9:47 am

After more searching, we found an almost new house, 2016 built, 2455 sqft, 4 bed 3 bath and a office room. Price is 420k. But there is no backyard and garage is detached. Good schools and close to work. Will really appreciate feedback please!
Last edited by prettybogle on Tue Jul 18, 2017 9:58 am, edited 1 time in total.

KlangFool
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Re: Buying house - Very important decision

Post by KlangFool » Tue Jul 18, 2017 9:54 am

prettybogle wrote:After more searching, we found an almost new house, 2016 built, 2455 sqft, 4 bed 3 bath and a office room. But there is no backyard and garage is detached. Good schools and close to work. Will really appreciate feedback please!
prettybogle,

What is the price of the house?

KlangFool

stoptothink
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Re: Buying house - Very important decision

Post by stoptothink » Tue Jul 18, 2017 9:54 am

prettybogle wrote:After more searching, we found an almost new house, 2016 built, 2455 sqft, 4 bed 3 bath and a office room. But there is no backyard and garage is detached. Good schools and close to work. Will really appreciate feedback please!
You left out the most pertinent information: cost.

fishmonger
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Re: Buying house - Very important decision

Post by fishmonger » Tue Jul 18, 2017 10:01 am

I think you've received enough advice. Bottom line is you need to try to be rational, and not emotional. It's hard when house shopping, but your original post about buying a $530k house because your rent might increase is the exact opposite of rational

prettybogle
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Re: Buying house - Very important decision

Post by prettybogle » Tue Jul 18, 2017 10:06 am

KlangFool wrote:
prettybogle wrote:After more searching, we found an almost new house, 2016 built, 2455 sqft, 4 bed 3 bath and a office room. But there is no backyard and garage is detached. Good schools and close to work. Will really appreciate feedback please!
prettybogle,

What is the price of the house?

KlangFool
Sorry, updated post. Price is 420k

Gufomel
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Re: Buying house - Very important decision

Post by Gufomel » Tue Jul 18, 2017 10:58 am

With limited information, it does seem more reasonable for your needs.

As much as you have it within yourself to ignore the possibility of your rent increasing, answer this question: Do you want this house?

thangngo
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Re: Buying house - Very important decision

Post by thangngo » Tue Jul 18, 2017 11:14 am

prettybogle wrote:After more searching, we found an almost new house, 2016 built, 2455 sqft, 4 bed 3 bath and a office room. Price is 420k. But there is no backyard and garage is detached. Good schools and close to work. Will really appreciate feedback please!
I think it's more reasonable. Good school district and close to work are two important factors that I'm willing to stretch my budget to get them. Try to negotiate the price down even more and don't have a I-gotta-have-this house mindset when you negotiate.

prettybogle
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Re: Buying house - Very important decision

Post by prettybogle » Tue Jul 18, 2017 11:23 am

Gufomel wrote:With limited information, it does seem more reasonable for your needs.

As much as you have it within yourself to ignore the possibility of your rent increasing, answer this question: Do you want this house?
Honestly, we feel it as a compromise as the house does not have backyard and we are concerned about resale

Dottie57
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Re: Buying house - Very important decision

Post by Dottie57 » Tue Jul 18, 2017 12:36 pm

prettybogle wrote:
Gufomel wrote:With limited information, it does seem more reasonable for your needs.

As much as you have it within yourself to ignore the possibility of your rent increasing, answer this question: Do you want this house?
Honestly, we feel it as a compromise as the house does not have backyard and we are concerned about resale

Is it a "compromise". Compared to where you are living now?

Just remember, most peopledon't buy the house of their dreams. They buy something that is better than what they currently have. Don't believe all you see on hgtv.

P.S. i did not buy the home of my dreams, But I have been happy with it for 30 years.

stoptothink
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Re: Buying house - Very important decision

Post by stoptothink » Tue Jul 18, 2017 12:38 pm

Dottie57 wrote:
prettybogle wrote:
Gufomel wrote:With limited information, it does seem more reasonable for your needs.

As much as you have it within yourself to ignore the possibility of your rent increasing, answer this question: Do you want this house?
Honestly, we feel it as a compromise as the house does not have backyard and we are concerned about resale

Is it a "compromise". Compared to where you are living now?

Just remember, most peopledon't buy the house of their dreams. They buy something that is better than what they currently have. Don't believe all you see on hgtv.

P.S. i did not buy the home of my dreams, But I have been happy with it for 30 years.
Exactly. Think about everything else you'll have to "compromise" to afford this home.

Dottie57
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Re: Buying house - Very important decision

Post by Dottie57 » Tue Jul 18, 2017 12:46 pm

stoptothink wrote:
Dottie57 wrote:
prettybogle wrote:
Gufomel wrote:With limited information, it does seem more reasonable for your needs.

As much as you have it within yourself to ignore the possibility of your rent increasing, answer this question: Do you want this house?
Honestly, we feel it as a compromise as the house does not have backyard and we are concerned about resale

Is it a "compromise". Compared to where you are living now?

Just remember, most peopledon't buy the house of their dreams. They buy something that is better than what they currently have. Don't believe all you see on hgtv.

P.S. i did not buy the home of my dreams, But I have been happy with it for 30 years.
Exactly. Think about everything else you'll have to "compromise" to afford this home.
I've had a nice life with smaller home. Few worries about money. Fully funded retirement. New cars when needed. A few very nice vacations.

wrongfunds
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Re: Buying house - Very important decision

Post by wrongfunds » Tue Jul 18, 2017 2:07 pm

But you have to be happy about the house that you are buying otherwise it would be a total disaster and will drive a huge wedge in your life.

sls239
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Re: Buying house - Very important decision

Post by sls239 » Tue Jul 18, 2017 2:17 pm

There is one good way to know if you can afford it.

Pretend you made that decision, then live with it. That is - take the estimated housing cost, out of that pay your rent, then put the remainder in the bank.

Do that for 6 months at least.

After those 6 months, you'll know whether you want to continue, and you will be on your way to having a nice emergency fund.

Trust me, they will still be building houses in 6 months.

And I laughed when the brick / vinyl question came up, because I much prefer brick, but I currently live in a house with vinyl siding. Why? Because it is a neighborhood filled with nice people and nice children and we share a philosophy about letting the kids play outside on their own. And that is much more valuable than brick, especially for my only child.

Gufomel
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Re: Buying house - Very important decision

Post by Gufomel » Tue Jul 18, 2017 2:32 pm

What are your concerns about re-sale value related to? The backyard, or something else?

wilked
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Re: Buying house - Very important decision

Post by wilked » Tue Jul 18, 2017 2:36 pm

Gufomel wrote:What are your concerns about re-sale value related to? The backyard, or something else?
I thought that was strange as well.

Why would you buy a house for a price that you cannot sell it for? By definition it would be an overpay - no?

Gufomel
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Re: Buying house - Very important decision

Post by Gufomel » Tue Jul 18, 2017 2:43 pm

wilked wrote:
Gufomel wrote:What are your concerns about re-sale value related to? The backyard, or something else?
I thought that was strange as well.

Why would you buy a house for a price that you cannot sell it for? By definition it would be an overpay - no?
Here's the answer: They think the $535k house is so spectacular and they're getting a fantastic deal on it. The $420k house really just can't compare to that $535k house so it'd probably be really hard to sell it if they need to down the road.

Hint: Not many middle class families can afford to buy a home in the $500k+ range, hence the lower price per square foot for the McMansion. That house is actually probably the one with re-sale value concerns.

prettybogle
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Re: Buying house - Very important decision

Post by prettybogle » Tue Jul 18, 2017 5:37 pm

Gufomel wrote:
wilked wrote:
Gufomel wrote:What are your concerns about re-sale value related to? The backyard, or something else?
I thought that was strange as well.

Why would you buy a house for a price that you cannot sell it for? By definition it would be an overpay - no?
Here's the answer: They think the $535k house is so spectacular and they're getting a fantastic deal on it. The $420k house really just can't compare to that $535k house so it'd probably be really hard to sell it if they need to down the road.

Hint: Not many middle class families can afford to buy a home in the $500k+ range, hence the lower price per square foot for the McMansion. That house is actually probably the one with re-sale value concerns.
Yes but folks here are saying this area will be the next Silicon Valley. the way markets are going up, it appears the new middle class can afford $500k.

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ray.james
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Re: Buying house - Very important decision

Post by ray.james » Tue Jul 18, 2017 6:19 pm

PettyBogle,
But so are Seattle, Denver, Austin, Raleigh, North NTC corridor, Portland, Salt Lake City, Phoenix which are actually far ahead. I do not think Nashville is even close as the tech jobs are concentrated in IT area rather than into product/start_ up/Cross-areas like biotech:manufacturing:robotics: software etc.,

I think you like the house and are surprised that people are advising against it while the banker/ realtor/your friends do the same purchases. That is because boglehead principles are quite different from actual world. Living below ones means also includes a strong safety cash flow stretch to be able to weather recessions etc., These are the people(atleast the experienced ones on the forums) who did not finch during 2009-2010 recession. In the real world a lot of people went emotional and sold a ton of stocks at lowest prices in modern history. And thereby forced to go back to work in their 60's. While it is possible that you end up being right about the future house prices, people are concerned about tight cash flows and future budgeting issues for rightful reasons. Do the math with these concerns plus any additional upcoming surprise budget issues like childcare, kid classes, parents, health etc., to make a decision.

Good luck and Best Wishes.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

Gufomel
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Re: Buying house - Very important decision

Post by Gufomel » Tue Jul 18, 2017 6:49 pm

prettybogle wrote:
Gufomel wrote:
wilked wrote:
Gufomel wrote:What are your concerns about re-sale value related to? The backyard, or something else?
I thought that was strange as well.

Why would you buy a house for a price that you cannot sell it for? By definition it would be an overpay - no?
Here's the answer: They think the $535k house is so spectacular and they're getting a fantastic deal on it. The $420k house really just can't compare to that $535k house so it'd probably be really hard to sell it if they need to down the road.

Hint: Not many middle class families can afford to buy a home in the $500k+ range, hence the lower price per square foot for the McMansion. That house is actually probably the one with re-sale value concerns.
Yes but folks here are saying this area will be the next Silicon Valley. the way markets are going up, it appears the new middle class can afford $500k.
Real estate market values going up do not increase the amount that the same salary can afford.

mcraepat9
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Re: Buying house - Very important decision

Post by mcraepat9 » Tue Jul 18, 2017 6:57 pm

Gufomel wrote:
prettybogle wrote:
Gufomel wrote:
wilked wrote:
Gufomel wrote:What are your concerns about re-sale value related to? The backyard, or something else?
I thought that was strange as well.

Why would you buy a house for a price that you cannot sell it for? By definition it would be an overpay - no?
Here's the answer: They think the $535k house is so spectacular and they're getting a fantastic deal on it. The $420k house really just can't compare to that $535k house so it'd probably be really hard to sell it if they need to down the road.

Hint: Not many middle class families can afford to buy a home in the $500k+ range, hence the lower price per square foot for the McMansion. That house is actually probably the one with re-sale value concerns.
Yes but folks here are saying this area will be the next Silicon Valley. the way markets are going up, it appears the new middle class can afford $500k.
Real estate market values going up do not increase the amount that the same salary can afford.
This is the hard truth. Those same folks aren't going to pay your mortgage if things down sideways, will they?
Amateur investors are not cool-headed logicians.

prettybogle
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Re: Buying house - Very important decision

Post by prettybogle » Tue Jul 18, 2017 9:01 pm

ray.james wrote:PettyBogle,
But so are Seattle, Denver, Austin, Raleigh, North NTC corridor, Portland, Salt Lake City, Phoenix which are actually far ahead. I do not think Nashville is even close as the tech jobs are concentrated in IT area rather than into product/start_ up/Cross-areas like biotech:manufacturing:robotics: software etc.,

I think you like the house and are surprised that people are advising against it while the banker/ realtor/your friends do the same purchases. That is because boglehead principles are quite different from actual world. Living below ones means also includes a strong safety cash flow stretch to be able to weather recessions etc., These are the people(atleast the experienced ones on the forums) who did not finch during 2009-2010 recession. In the real world a lot of people went emotional and sold a ton of stocks at lowest prices in modern history. And thereby forced to go back to work in their 60's. While it is possible that you end up being right about the future house prices, people are concerned about tight cash flows and future budgeting issues for rightful reasons. Do the math with these concerns plus any additional upcoming surprise budget issues like childcare, kid classes, parents, health etc., to make a decision.

Good luck and Best Wishes.
Thanks ray.james. your post clearly summarized our situation. Also we are very stressed out by this home buying experience thus far :(

KlangFool
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Re: Buying house - Very important decision

Post by KlangFool » Tue Jul 18, 2017 9:44 pm

prettybogle wrote:
ray.james wrote:PettyBogle,
But so are Seattle, Denver, Austin, Raleigh, North NTC corridor, Portland, Salt Lake City, Phoenix which are actually far ahead. I do not think Nashville is even close as the tech jobs are concentrated in IT area rather than into product/start_ up/Cross-areas like biotech:manufacturing:robotics: software etc.,

I think you like the house and are surprised that people are advising against it while the banker/ realtor/your friends do the same purchases. That is because boglehead principles are quite different from actual world. Living below ones means also includes a strong safety cash flow stretch to be able to weather recessions etc., These are the people(atleast the experienced ones on the forums) who did not finch during 2009-2010 recession. In the real world a lot of people went emotional and sold a ton of stocks at lowest prices in modern history. And thereby forced to go back to work in their 60's. While it is possible that you end up being right about the future house prices, people are concerned about tight cash flows and future budgeting issues for rightful reasons. Do the math with these concerns plus any additional upcoming surprise budget issues like childcare, kid classes, parents, health etc., to make a decision.

Good luck and Best Wishes.
Thanks ray.james. your post clearly summarized our situation. Also we are very stressed out by this home buying experience thus far :(
prettybogle,

What makes you think that the stress will go away after you buy the house?

It is very simple.

1) You will spend more buying the house. Your housing expense will go up at least $500 per month and maybe a lot more.

2) You probably will lose money on the house when you sell.

3) If you can no longer contribute to the max of your Trad. 401K, you are paying 25% or more tax for every dollar that you spend on housing.

4) You will have to spend less on something in order to make up for (1).

If you are okay with (1) to (4), go ahead and buy the house. But, please do not kid yourself that you will spend less money and you will not be stressed financially for a very long time.

Is the house worth it?

KlangFool

runner540
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Re: Buying house - Very important decision

Post by runner540 » Thu Jul 20, 2017 4:29 pm

prettybogle wrote:
ray.james wrote:PettyBogle,
But so are Seattle, Denver, Austin, Raleigh, North NTC corridor, Portland, Salt Lake City, Phoenix which are actually far ahead. I do not think Nashville is even close as the tech jobs are concentrated in IT area rather than into product/start_ up/Cross-areas like biotech:manufacturing:robotics: software etc.,

I think you like the house and are surprised that people are advising against it while the banker/ realtor/your friends do the same purchases. That is because boglehead principles are quite different from actual world. Living below ones means also includes a strong safety cash flow stretch to be able to weather recessions etc., These are the people(atleast the experienced ones on the forums) who did not finch during 2009-2010 recession. In the real world a lot of people went emotional and sold a ton of stocks at lowest prices in modern history. And thereby forced to go back to work in their 60's. While it is possible that you end up being right about the future house prices, people are concerned about tight cash flows and future budgeting issues for rightful reasons. Do the math with these concerns plus any additional upcoming surprise budget issues like childcare, kid classes, parents, health etc., to make a decision.

Good luck and Best Wishes.
Thanks ray.james. your post clearly summarized our situation. Also we are very stressed out by this home buying experience thus far :(
Prettybogle, I saw this article about Nashville rents dropping and wondered if you had shopped around/negotiated.

http://www.tennessean.com/story/money/2 ... 326620001/

wrongfunds
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Re: Buying house - Very important decision

Post by wrongfunds » Thu Jul 20, 2017 4:46 pm

She reported that her rent did NOT go up but she does not know what will happen in future.

prettybogle
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Re: Buying house - Very important decision

Post by prettybogle » Fri Jul 21, 2017 2:04 pm

runner540 wrote:
prettybogle wrote:
ray.james wrote:PettyBogle,
But so are Seattle, Denver, Austin, Raleigh, North NTC corridor, Portland, Salt Lake City, Phoenix which are actually far ahead. I do not think Nashville is even close as the tech jobs are concentrated in IT area rather than into product/start_ up/Cross-areas like biotech:manufacturing:robotics: software etc.,

I think you like the house and are surprised that people are advising against it while the banker/ realtor/your friends do the same purchases. That is because boglehead principles are quite different from actual world. Living below ones means also includes a strong safety cash flow stretch to be able to weather recessions etc., These are the people(atleast the experienced ones on the forums) who did not finch during 2009-2010 recession. In the real world a lot of people went emotional and sold a ton of stocks at lowest prices in modern history. And thereby forced to go back to work in their 60's. While it is possible that you end up being right about the future house prices, people are concerned about tight cash flows and future budgeting issues for rightful reasons. Do the math with these concerns plus any additional upcoming surprise budget issues like childcare, kid classes, parents, health etc., to make a decision.

Good luck and Best Wishes.
Thanks ray.james. your post clearly summarized our situation. Also we are very stressed out by this home buying experience thus far :(
Prettybogle, I saw this article about Nashville rents dropping and wondered if you had shopped around/negotiated.

http://www.tennessean.com/story/money/2 ... 326620001/
Rent went up by about $30 per month :-(

KlangFool
Posts: 6492
Joined: Sat Oct 11, 2008 12:35 pm

Re: Buying house - Very important decision

Post by KlangFool » Fri Jul 21, 2017 2:10 pm

prettybogle wrote:
runner540 wrote:
prettybogle wrote:
ray.james wrote:PettyBogle,
But so are Seattle, Denver, Austin, Raleigh, North NTC corridor, Portland, Salt Lake City, Phoenix which are actually far ahead. I do not think Nashville is even close as the tech jobs are concentrated in IT area rather than into product/start_ up/Cross-areas like biotech:manufacturing:robotics: software etc.,

I think you like the house and are surprised that people are advising against it while the banker/ realtor/your friends do the same purchases. That is because boglehead principles are quite different from actual world. Living below ones means also includes a strong safety cash flow stretch to be able to weather recessions etc., These are the people(atleast the experienced ones on the forums) who did not finch during 2009-2010 recession. In the real world a lot of people went emotional and sold a ton of stocks at lowest prices in modern history. And thereby forced to go back to work in their 60's. While it is possible that you end up being right about the future house prices, people are concerned about tight cash flows and future budgeting issues for rightful reasons. Do the math with these concerns plus any additional upcoming surprise budget issues like childcare, kid classes, parents, health etc., to make a decision.

Good luck and Best Wishes.
Thanks ray.james. your post clearly summarized our situation. Also we are very stressed out by this home buying experience thus far :(
Prettybogle, I saw this article about Nashville rents dropping and wondered if you had shopped around/negotiated.

http://www.tennessean.com/story/money/2 ... 326620001/
Rent went up by about $30 per month :-(
prettybogle,

It is below the official inflation rate. Keep renting. You are getting a great deal.

KlangFool

TareNeko
Posts: 523
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Re: Buying house - Very important decision

Post by TareNeko » Fri Jul 21, 2017 6:07 pm

Why the sad face? Is $30 a lot of money for you?
prettybogle wrote: Rent went up by about $30 per month :-(

KlangFool
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Joined: Sat Oct 11, 2008 12:35 pm

Re: Buying house - Very important decision

Post by KlangFool » Fri Jul 21, 2017 6:28 pm

TareNeko wrote:Why the sad face? Is $30 a lot of money for you?
prettybogle wrote: Rent went up by about $30 per month :-(
TareNeko,

OP has a sad face because OP cannot justify his/her's house purchase with such a small rent increase.

KlangFool

wrongfunds
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Re: Buying house - Very important decision

Post by wrongfunds » Sat Jul 22, 2017 8:16 am

Come on, $30 per month means she would be paying extra $10,800 for next 30 years even if the rent did NOT go up from next year on wards. Now doesn't it make sense to go for $535K house to save that $10,800 in extra rent?

prettybogle
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Re: Buying house - Very important decision

Post by prettybogle » Sat Jul 22, 2017 10:37 am

wrongfunds wrote:Come on, $30 per month means she would be paying extra $10,800 for next 30 years even if the rent did NOT go up from next year on wards. Now doesn't it make sense to go for $535K house to save that $10,800 in extra rent?
We are not pursuing the $535k McMansion. Also we are not spending any time to even look at any 500k + houses as I told DH that they are beyond our budget. Thanks to everyone in this wonderful forum for putting some sense into us, especially me :happy

prettybogle
Posts: 209
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Re: Buying house - Very important decision

Post by prettybogle » Sat Jul 22, 2017 10:40 am

TareNeko wrote:Why the sad face? Is $30 a lot of money for you?
prettybogle wrote: Rent went up by about $30 per month :-(
No, for DH, it is basically no increase. Myself, after some honest reflection, feel like I overreacted and this is a manageable increase.

wrongfunds
Posts: 660
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Re: Buying house - Very important decision

Post by wrongfunds » Sat Jul 22, 2017 10:44 am

And he is right. The insurance and taxes will go up *lot* more than $30 per month year over year when you do buy a house. Anybody who tells you otherwise will be lying to you.

prettybogle
Posts: 209
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Re: Buying house - Very important decision

Post by prettybogle » Sat Jul 22, 2017 10:45 am

KlangFool wrote:
prettybogle wrote:
runner540 wrote:
prettybogle wrote:
ray.james wrote:PettyBogle,
But so are Seattle, Denver, Austin, Raleigh, North NTC corridor, Portland, Salt Lake City, Phoenix which are actually far ahead. I do not think Nashville is even close as the tech jobs are concentrated in IT area rather than into product/start_ up/Cross-areas like biotech:manufacturing:robotics: software etc.,

I think you like the house and are surprised that people are advising against it while the banker/ realtor/your friends do the same purchases. That is because boglehead principles are quite different from actual world. Living below ones means also includes a strong safety cash flow stretch to be able to weather recessions etc., These are the people(atleast the experienced ones on the forums) who did not finch during 2009-2010 recession. In the real world a lot of people went emotional and sold a ton of stocks at lowest prices in modern history. And thereby forced to go back to work in their 60's. While it is possible that you end up being right about the future house prices, people are concerned about tight cash flows and future budgeting issues for rightful reasons. Do the math with these concerns plus any additional upcoming surprise budget issues like childcare, kid classes, parents, health etc., to make a decision.

Good luck and Best Wishes.
Thanks ray.james. your post clearly summarized our situation. Also we are very stressed out by this home buying experience thus far :(
Prettybogle, I saw this article about Nashville rents dropping and wondered if you had shopped around/negotiated.

http://www.tennessean.com/story/money/2 ... 326620001/
Rent went up by about $30 per month :-(
prettybogle,

It is below the official inflation rate. Keep renting. You are getting a great deal.

KlangFool
Thanks KlangFool. I agree. I always enjoy reading your posts

prettybogle
Posts: 209
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Re: Buying house - Very important decision

Post by prettybogle » Sat Jul 22, 2017 10:49 am

wrongfunds wrote:And he is right. The insurance and taxes will go up *lot* more than $30 per month year over year when you do buy a house. Anybody who tells you otherwise will be lying to you.
Yup. After this decision, a lot of stress is taken off of us and we enjoyed dining at a very nice restaurant last night :happy

wrongfunds
Posts: 660
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Re: Buying house - Very important decision

Post by wrongfunds » Sat Jul 22, 2017 12:43 pm

We are all very glad for it! You will find the right house eventually but take your time and enjoy the house freedom that you still have :-)

KlangFool
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Re: Buying house - Very important decision

Post by KlangFool » Sat Jul 22, 2017 1:18 pm

prettybogle wrote:
wrongfunds wrote:And he is right. The insurance and taxes will go up *lot* more than $30 per month year over year when you do buy a house. Anybody who tells you otherwise will be lying to you.
Yup. After this decision, a lot of stress is taken off of us and we enjoyed dining at a very nice restaurant last night :happy
prettybogle,

Spend more money on yourself and your family instead of "caring and feeding" of an expensive house. You will enjoy your life a lot more.

KlangFool

Gufomel
Posts: 195
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Re: Buying house - Very important decision

Post by Gufomel » Mon Jul 24, 2017 9:09 am

I'm happy for you. In my opinion, the two best things seem to have happened: You made the best financial decision (IMHO) and you're content with your decision. $30 is a very modest rent increase. At the very least, this gives you another year to keep your eyes out for a smart buying decision rather than rushing into it. Best of luck!

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JDCarpenter
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Re: Buying house - Very important decision

Post by JDCarpenter » Mon Jul 24, 2017 10:26 am

Prettybogle, congrats on the decision. At least another year of living on a nice budget and saving cash for the time that you buy a house.

Also, with regard to anyone around here seeing Nashville as the next S.Valley, they are nuts. Look at just one factor--how easy is it to add housing units here versus NorCal? We aren't constrained by the ocean, mountains, and development bars of various types. There will not be a supply pinch in Nashville area anything like that which periodically drives prices through the roof in the Bay Area. So, even in the highly unlikely event that we end up equaling that area in high-paying technical (or other jobs), the housing market will not be the same.

(I wish it were otherwise, as it would really help the value of our 25-zoned-for-development acres, but it ain't so.)
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thangngo
Posts: 260
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Re: Buying house - Very important decision

Post by thangngo » Mon Jul 24, 2017 10:33 am

:sharebeer I'm happy for your decision, prettybogle! Good things will come when you have sound principles of personal finance. Keep saving and living below your mean, you'll get your McMansion before you know it!

prettybogle
Posts: 209
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Re: Buying house - Very important decision

Post by prettybogle » Mon Jul 24, 2017 9:56 pm

Thanks everyone. Hope it all works out eventually.

prettybogle
Posts: 209
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Re: Buying house - Very important decision

Post by prettybogle » Tue Jul 25, 2017 12:30 pm

Dont mean to restart the same topic, but a coworker was mentioning that he knows some folks who bought multiple SFH homes. Apparently they are able to rent couple of them for about the same as mortgage amount. He also says there is no way in hell prices are going to come down here. Wondering if this is a new normal or if something fundamental has changed in the real estate market. I know it is almost impossible to predict the future but this is quite a paradigm shift in just 10-12 years !!

KlangFool
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Re: Buying house - Very important decision

Post by KlangFool » Tue Jul 25, 2017 12:42 pm

prettybogle wrote:Dont mean to restart the same topic, but a coworker was mentioning that he knows some folks who bought multiple SFH homes. Apparently they are able to rent couple of them for about the same as mortgage amount. He also says there is no way in hell prices are going to come down here. Wondering if this is a new normal or if something fundamental has changed in the real estate market. I know it is almost impossible to predict the future but this is quite a paradigm shift in just 10-12 years !!
prettybogle,

It simply meant that those folks are losing money. In order for them to make money, the rent has to be substantially more than the mortgage payment.

KlangFool

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