Contemplating expensive house purchase during pandemic

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fyre4ce
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Contemplating expensive house purchase during pandemic

Post by fyre4ce » Mon May 18, 2020 11:44 am

Situation: Married, self and spouse are mid-30's, have one child (one year old), living in a nicer/more expensive area of SoCal. I'm an employee, about $150k salary, plus benefits. Spouse is an independent contractor (healthcare) who earns about a $100k salary for management work, plus per-hour for shift work, which probably ends up between $150-250k per year depending on work level (between 8-14 shifts per month). That puts our household income between $400-500k for realistic work schedules for my spouse.

Currently living in a small 2-bdr apartment that costs about $3k/month. It worked well before our child, but is now too small, and the lack of space causes us daily stress. The baby (plus paraphernalia), who's rapidly becoming more mobile, takes up a lot of space. Prior to the pandemic, we agreed that my wife's mom would stay with us 2-3 weeks per month to provide childcare, and we would supplement with a part-time nanny, and also my mom. Both my mom and MIL live out of state. Well, the MIL basically got stuck here when the pandemic hit and did a 2+ month stint. She just flew back home for a 10-day break. She's used to living in a large/nice house in a LCOL area, and the tight quarters (made worse by me working full-time from home without a room for an office, and all of us spending minimal time outside the home) have made it worse. MIL understandably complains about space, as do my wife and I. We want her to be comfortable while she's with us, also because she's our only practical option for childcare right now and we don't want to push her away. My mom has health issues that make flying during the pandemic very ill-advised, and it's too far for her to drive. We're considering options for housing, and the local prices are making that a depressing process. Since the pandemic hit, I've been wondering what the impact will be on residential real estate, and that's still unclear so far as I can tell. I'm expecting the pandemic to last well into next year, at least. Our current lease is up in August, and our landlord is pretty flexible, so I bet we have options to renew or go month-to-month.

It seems our options are:

1) Renew lease in current place. Upsides are relatively cheap rent, it's easy (no moves during pandemic), and gives the housing market time to drop if we buy in a year. Downsides are another year in a very undesirable and anxiety-inducing living situation, that also strains relationship with MIL who is our best and only childcare.

2) Rent a bigger place (3bdr apt or house) for a year. A reasonable place in this category would cost about $4500/mo. Upsides are a potentially vast improvement in living quality, and still giving housing prices time to drop. Downsides are one (and potentially two) moves during a pandemic, "wasting" money on rent for another year, and the possibility that house prices could continue to climb during this year (or interest rates).

3) Buy a house. This is the option I want to get opinions on most. A basic house in our area starts around $1.5M, and I'm not excited about any house we've seen in this price range. I don't feel like my house wish list is unreasonable (4 bedrooms, decent kitchen, 2-car garage with shop/storage space, good school district) but it's hard to find properties with all these things under $2M, and even then they often have other issues and/or idiosyncrasies. It was fun shopping for my last house, but this process is so discouraging I find myself not even wanting to look at listings. I'm tempted to push my spouse to work more so we can afford a nicer place, but she's not excited about working more shifts, it means more time away from our child, and the pandemic also adds a new (and possibly long-lived) element of risk. If we were to buy, I think our strategy should be to put money toward the things that are difficult to change (space/layout and school district) and less toward recent remodels, with the plan of remodeling it later if/when funds are available. This would also keep our property tax assessment lower. Buying in a less expensive neighborhood is another option, but not preferred because it would mean longer commute, worse schools, and further away from our friends. Waiting a year could bring a much-needed drop in prices. Then again, maybe prices will continue to climb.

4) Move to a LCOL area, such as the city where the MIL lives. Upsides are that we could nearly afford to pay cash for a house we'd be happy with, plus being closer to the MIL means she'd be happier watching him - we could drop our kid off at her house, which has advantages for all parties. Downsides are that we both have good jobs that we enjoy, and relocating would be a setback in both our careers. My wife also hates the cold, so I think she values SoCal more than she realizes, and also has bad allergies, which are worse in most other places, including where we'd consider moving. Job hunting during the pandemic is also an extra challenge, when most employers are trying to just not lay people off.

This would be a difficult personal decision during normal times, and the pandemic adds an extra twist. This board is full of wisdom and experience, and if anyone here would apply theirs toward our situation, I'd greatly appreciate it.
Last edited by fyre4ce on Mon May 18, 2020 11:59 am, edited 1 time in total.

Nate7out
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Re: Contemplating expensive house purchase during pandemic

Post by Nate7out » Mon May 18, 2020 11:58 am

Is another option to rent for MIL a 1br apt. in your same building? Then she would have a quiet place to go and more space to sleep, etc. No moving until after this pandemic, etc. Might cost a bit more.

OnTrack2020
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Re: Contemplating expensive house purchase during pandemic

Post by OnTrack2020 » Mon May 18, 2020 12:06 pm

Can you rent a 3-bedroom in your current complex? At least you wouldn't have to move very far.

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fyre4ce
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Mon May 18, 2020 12:43 pm

OnTrack2020 wrote:
Mon May 18, 2020 12:06 pm
Can you rent a 3-bedroom in your current complex? At least you wouldn't have to move very far.
We live in a condo complex with a relatively low number of units, and most are owned rather than rentals. But there are 3-bdr units, and there may be one or two that could possibly be rented in our time frame. I'll look into it. Overall we're not crazy about the complex and have had some minor tension with the HOA, but probably something we could live with for another year.
Nate7out wrote:
Mon May 18, 2020 11:58 am
Is another option to rent for MIL a 1br apt. in your same building? Then she would have a quiet place to go and more space to sleep, etc. No moving until after this pandemic, etc. Might cost a bit more.
That's worth discussing with MIL but I suspect it won't be as desirable an option as #2. $1500/mo doesn't get you much in our area, and it would need to be within walking distance because driving is out of the question. I have a feeling she'd rather we just put the money toward a bigger place for everyone. But I'll ask.

Do reliable predictions exist about housing prices over the next year?

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fyre4ce
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Tue May 19, 2020 5:27 pm

*bump*

I should also add that we were facing this dilemma before the pandemic - buy in a very expensive market or relocate? We tend to be frugal. We live off about $90k per year ($35k rent and $55k other expenses), which after taxes and 401k/IRA/HSA/529 savings has left a surplus of $100-200k per year. A $1.5M+ house purchase would cut that surplus substantially. I'd be interested to hear experiences from similarly frugal Bogleheads who either purchased pricey properties in VHCOL areas, or decided to do something else (buy a cheap place, keep renting, relocate) and either regretted it or not.

I'm also wondering about the range of options that involve remodeling or building - buying an undeveloped lot and building new, buying a cheap place and gutting it, or just doing some extensive remodeling, either up-front or gradually over time. California property taxes are based on the purchase price and never increase, so taxes at least favor some amount of remodeling. I'm not sure how the rest of the economics of these options play out, but if there were a pathway to get a property we liked at a lower overall price I'm happy to explore it. I don't mind managing a contractor.

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sergeant
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Re: Contemplating expensive house purchase during pandemic

Post by sergeant » Tue May 19, 2020 5:53 pm

Property taxes do go up in California but never by more than 2% a year absent new construction or an addition to the property. Property taxes are regulated by Prop. 13.

What area of So. Ca. are you looking? How much are you putting down?

Buying land and developing the property is to be avoided in most parts of California. There are lots of regulations.
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Re: Contemplating expensive house purchase during pandemic

Post by bloom2708 » Tue May 19, 2020 6:05 pm

I like #2 right now.

Even safe jobs are not very safe.

Renting through this is a safer bet.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead

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Re: Contemplating expensive house purchase during pandemic

Post by delamer » Tue May 19, 2020 6:09 pm

No one knows how this pandemic is going to continue to affect the economy in general or housing prices in particular, either in the short run or the long run. Therefore, I’d be very hesitant to take in a major new financial obligation — such as an expensive home — for the foreseeable future. Nor would I attempt a job change to a new area.

So I’d highly recommend that you find a larger rental that you’ll be comfortable in for a couple of years (if need be).

Good luck. It’s a tough situation.

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fyre4ce
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Tue May 19, 2020 6:12 pm

sergeant wrote:
Tue May 19, 2020 5:53 pm
Property taxes do go up in California but never by more than 2% a year absent new construction or an addition to the property. Property taxes are regulated by Prop. 13.

What area of So. Ca. are you looking? How much are you putting down?

Buying land and developing the property is to be avoided in most parts of California. There are lots of regulations.
Thanks for the clarification; I'll look at Prop 13. We're looking in the San Gabriel valley area (Pasadena, San Marino, La Canada, Glendale, etc.). Planning on putting 20% down.

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Re: Contemplating expensive house purchase during pandemic

Post by srt7 » Tue May 19, 2020 6:16 pm

#2 Rent a bigger apt/house would be my recommendation in general unless you both love SoCal and will go to great lengths (pay-cut, change careers etc.) to not move from that region. If so then I'd recommend staying put for a few more months until real estate prices fall and snatch yourself a great deal!
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warowits
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Re: Contemplating expensive house purchase during pandemic

Post by warowits » Tue May 19, 2020 6:53 pm

srt7 wrote:
Tue May 19, 2020 6:16 pm
I'd recommend staying put for a few more months until real estate prices fall and snatch yourself a great deal!
I live in a LCOL location, and all real estate markets are different, but prices are going up around me, not down. People who are losing jobs tend to be on the low end of the pay scale, and less likely to own a home. Combine that with lower interest rates and a general expectation among sellers that this will pass in a year or less and I am guessing there are not going to be great deals to be had in 1 years time.

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goingup
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Re: Contemplating expensive house purchase during pandemic

Post by goingup » Tue May 19, 2020 7:17 pm

I'd vote for renting the 3 bedroom. There's a pretty good chance the Covid situation will affect the housing market. Housing is always cyclical--boom turns to bust (or at least not-so-boom).

Seems like a prudent, even shrewd, move to rent for at least another year. Rent in the area you ultimately want to purchase in so you get to know the neighborhood. Then you'll be positioned to purchase when the opportunity is right. :beer

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sergeant
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Re: Contemplating expensive house purchase during pandemic

Post by sergeant » Tue May 19, 2020 8:24 pm

fyre4ce wrote:
Tue May 19, 2020 6:12 pm
sergeant wrote:
Tue May 19, 2020 5:53 pm
Property taxes do go up in California but never by more than 2% a year absent new construction or an addition to the property. Property taxes are regulated by Prop. 13.

What area of So. Ca. are you looking? How much are you putting down?

Buying land and developing the property is to be avoided in most parts of California. There are lots of regulations.
Thanks for the clarification; I'll look at Prop 13. We're looking in the San Gabriel valley area (Pasadena, San Marino, La Canada, Glendale, etc.). Planning on putting 20% down.
My DW grew up in Arcadia and MIL still lives there. Arcadia is just east of Pasadena and there are nice homes in your price range. Schools are excellent and the area is very safe. I don't think prices will drop much in the area you are looking. You are competing with the Asian market which continues to buy up just about anything that comes on the market. I would be looking now and if you find something that works make an offer a bit below comps.

If you buy a place for 1.5 million and put 300k down that will be a mortgage of 1.2 million. 30 year loan would put you at 5k monthly for P&I and another 1.5k for property tax and insurance. 78k a year still leaves you way below your extra 100-200k a year. I say buy now.
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Watty
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Re: Contemplating expensive house purchase during pandemic

Post by Watty » Tue May 19, 2020 9:07 pm

Something else to consider is what living in Southern California will be like for your kid when they grow up and may want to live near you. It was a long time ago but when I lived in the Bay Area, which has always been expensive, one thing I saw was that some of my older coworkers had adult kids that were still living with them well into their 20s and that was not always a good situation. The problem was that the kids did not have high paying jobs and they could not afford to rent an apartment even with a roommate.

In contrast I am now living in Atlanta which is still affordable and I have a 30 year old son. He and virtually all his high school and college classmates that stayed in the area have been able to afford to buy nice homes. This works out nice since my son was able to buy a nice house about ten minutes from us so we get to see him and our grand-kids frequently.

We also have friends who have a son who is severely dyslexic and barely graduated from high school. At one point he was working in a chain muffler shop which is a good honest job but I am sure that it did not pay a lot. Even with his income he was able to afford to buy a small older house in a marginal but not terrible area.

Moving to a lower cost of living area sounds like it would be real hard like now so to me it looks like renting a bigger place for now would make sense so you can decide what to do later on.

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fyre4ce
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Tue May 19, 2020 10:15 pm

sergeant wrote:
Tue May 19, 2020 8:24 pm
fyre4ce wrote:
Tue May 19, 2020 6:12 pm
sergeant wrote:
Tue May 19, 2020 5:53 pm
Property taxes do go up in California but never by more than 2% a year absent new construction or an addition to the property. Property taxes are regulated by Prop. 13.

What area of So. Ca. are you looking? How much are you putting down?

Buying land and developing the property is to be avoided in most parts of California. There are lots of regulations.
Thanks for the clarification; I'll look at Prop 13. We're looking in the San Gabriel valley area (Pasadena, San Marino, La Canada, Glendale, etc.). Planning on putting 20% down.
My DW grew up in Arcadia and MIL still lives there. Arcadia is just east of Pasadena and there are nice homes in your price range. Schools are excellent and the area is very safe. I don't think prices will drop much in the area you are looking. You are competing with the Asian market which continues to buy up just about anything that comes on the market. I would be looking now and if you find something that works make an offer a bit below comps.

If you buy a place for 1.5 million and put 300k down that will be a mortgage of 1.2 million. 30 year loan would put you at 5k monthly for P&I and another 1.5k for property tax and insurance. 78k a year still leaves you way below your extra 100-200k a year. I say buy now.
I've been estimating 1.2% of purchase price for property tax, 0.3% for insurance, 0.3% for utilities, and 0.5% for maintenance per year. With a 30 year fixed at 3.0% (which I understand is a good but achievable rate on a jumbo) that puts total annual cost of a $1.5M at $95k. At $2.0M that's $127k a year. Maybe my assumptions are conservative; if that's true I'd be happy to update my numbers.

Can you say more about the Asian market? Is it foreign nationals who are buying properties? If the pandemic gets worse this fall and there's more economic trouble, I don't suspect Asia will be well insulated.

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Re: Contemplating expensive house purchase during pandemic

Post by A-Commoner » Wed May 20, 2020 8:30 am

fyre4ce wrote:
Tue May 19, 2020 6:12 pm
sergeant wrote:
Tue May 19, 2020 5:53 pm
Property taxes do go up in California but never by more than 2% a year absent new construction or an addition to the property. Property taxes are regulated by Prop. 13.

What area of So. Ca. are you looking? How much are you putting down?

Buying land and developing the property is to be avoided in most parts of California. There are lots of regulations.
Thanks for the clarification; I'll look at Prop 13. We're looking in the San Gabriel valley area (Pasadena, San Marino, La Canada, Glendale, etc.). Planning on putting 20% down.
Glendale is the closest to downtown LA and has the greatest proximity to job centers, compared to your other choices. It’s more centrally located in the greater LA metro area, which gives you more flexibility with your commute. If your job happens to be in the Westside, then Glendale is the least painful starting point you can be in, compared to your other options.

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Re: Contemplating expensive house purchase during pandemic

Post by blues008 » Wed May 20, 2020 1:06 pm

Have you taken a look at the NY Times calculator Rent vs. Buy?

https://www.nytimes.com/interactive/201 ... lator.html

Ensure that you feel comfortable saving enough money even after you buy a home and budget for larger expenses. The most conservative Boglehead will tell you to budget for a home where only one spouse has a job and the most liberal Boglehead will be fine with taking out a 401k loan to fund the house. It's all a matter of what will let you sleep well at night. If you're planning to be in a home for more than five-seven years and you can still afford to put money away into savings then you'll probably be fine buying a home. Interest rates are very low and I'd shop around to ensure you're getting at least 2.5% for a 15 year loan or 3.125% for a 30 year loan.

I wouldn't expect significant discounts during a pandemic...most people are doing their best to work from home and lenders are offering more flexibility, forbearance for those harder hit with job loss. Even if this pandemic lasts several more months the longer term prospects of living in Southern California outweigh almost any other part in the country: weather, more than 1.0% of US GDP is from Southern California, diversity, restaurants, etc.

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Re: Contemplating expensive house purchase during pandemic

Post by LilyFleur » Wed May 20, 2020 5:41 pm

Part of your financial equation is out-of-state childcare. One of the mothers is not available now. If you upsize your housing, it would be good to make sure there is enough in your budget to pay for childcare if that becomes necessary, and if both out-of-state mothers are not available to you. Are you planning on having more children? For people without free family childcare, childcare is a significant budget item, especially with more than one child. In the meantime, you could get MIL a hotel room on the weekends/or every other weekend to give her a break and give you and your wife and child some privacy and time on your own. It is wonderful that your child gets to be with a grandparent on a consistent basis, but MIL is working for you under conditions that a high-quality nanny would not tolerate.

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Re: Contemplating expensive house purchase during pandemic

Post by Leemiller » Wed May 20, 2020 5:54 pm

I would rent a house - maybe rent with an option to buy if you want get it. You don’t say how much you have saved so far, that is a pretty critical piece of information. Also, I’d aim closer to 1.5m than 2m at your income.

Frankly it is a miracle your MIL put up with that living arrangement as long as she did.

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fyre4ce
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Wed May 20, 2020 6:16 pm

Leemiller wrote:
Wed May 20, 2020 5:54 pm
I would rent a house - maybe rent with an option to buy if you want get it. You don’t say how much you have saved so far, that is a pretty critical piece of information. Also, I’d aim closer to 1.5m than 2m at your income.

Frankly it is a miracle your MIL put up with that living arrangement as long as she did.
We had a little over $500k saved prior to the pandemic, not including tax-advantaged accounts, emergency funds, substantial float in checking accounts, and RSUs I plan on holding longer. With the market drop, that's now worth $450k. So we are still covered for 20% down on a property in our price range. I definitely understand the comment about aiming for the lower end of the price range. The difficulty I have is that quality rises very quickly above $1.5M. I think the land is worth something like $1.3M, so a $1.5M purchase gets you a $200k house, and a $2M house gets you a $700k house, more than 3x the value. That's what's made this such a gut wrenching decision.

MIL has been a trooper for sure. We do what we can to make her stay pleasant. She knew our living arrangement before coming, although obviously the pandemic has made it worse. She highly values the time with her grandchild, which helps, and she also realizes we don't have many other options right now, so is stepping up to help us in a time of need. We got her a nice mother's day present.

As was pointed out by another poster, childcare is very expensive. One risk here is if we upgrade our housing to accommodate a full-time grandma, then the grandma isn't available for some reason, we'll effectively be double-paying. Obviously, the stakes are higher with a purchase than a rental with a 1-year lease.

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Re: Contemplating expensive house purchase during pandemic

Post by 60B4E24B » Wed May 20, 2020 7:39 pm

warowits wrote:
Tue May 19, 2020 6:53 pm
srt7 wrote:
Tue May 19, 2020 6:16 pm
I'd recommend staying put for a few more months until real estate prices fall and snatch yourself a great deal!
I live in a LCOL location, and all real estate markets are different, but prices are going up around me, not down. People who are losing jobs tend to be on the low end of the pay scale, and less likely to own a home. Combine that with lower interest rates and a general expectation among sellers that this will pass in a year or less and I am guessing there are not going to be great deals to be had in 1 years time.
How can you know that? Anything closing now was in contract before the virus was on most people's radars.

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Re: Contemplating expensive house purchase during pandemic

Post by geerhardusvos » Wed May 20, 2020 8:43 pm

fyre4ce wrote:
Mon May 18, 2020 11:44 am
Situation: Married, self and spouse are mid-30's, have one child (one year old), living in a nicer/more expensive area of SoCal. I'm an employee, about $150k salary, plus benefits. Spouse is an independent contractor (healthcare) who earns about a $100k salary for management work, plus per-hour for shift work, which probably ends up between $150-250k per year depending on work level (between 8-14 shifts per month). That puts our household income between $400-500k for realistic work schedules for my spouse.

Currently living in a small 2-bdr apartment that costs about $3k/month. It worked well before our child, but is now too small, and the lack of space causes us daily stress. The baby (plus paraphernalia), who's rapidly becoming more mobile, takes up a lot of space. Prior to the pandemic, we agreed that my wife's mom would stay with us 2-3 weeks per month to provide childcare, and we would supplement with a part-time nanny, and also my mom. Both my mom and MIL live out of state. Well, the MIL basically got stuck here when the pandemic hit and did a 2+ month stint. She just flew back home for a 10-day break. She's used to living in a large/nice house in a LCOL area, and the tight quarters (made worse by me working full-time from home without a room for an office, and all of us spending minimal time outside the home) have made it worse. MIL understandably complains about space, as do my wife and I. We want her to be comfortable while she's with us, also because she's our only practical option for childcare right now and we don't want to push her away. My mom has health issues that make flying during the pandemic very ill-advised, and it's too far for her to drive. We're considering options for housing, and the local prices are making that a depressing process. Since the pandemic hit, I've been wondering what the impact will be on residential real estate, and that's still unclear so far as I can tell. I'm expecting the pandemic to last well into next year, at least. Our current lease is up in August, and our landlord is pretty flexible, so I bet we have options to renew or go month-to-month.

It seems our options are:

1) Renew lease in current place. Upsides are relatively cheap rent, it's easy (no moves during pandemic), and gives the housing market time to drop if we buy in a year. Downsides are another year in a very undesirable and anxiety-inducing living situation, that also strains relationship with MIL who is our best and only childcare.

2) Rent a bigger place (3bdr apt or house) for a year. A reasonable place in this category would cost about $4500/mo. Upsides are a potentially vast improvement in living quality, and still giving housing prices time to drop. Downsides are one (and potentially two) moves during a pandemic, "wasting" money on rent for another year, and the possibility that house prices could continue to climb during this year (or interest rates).

3) Buy a house. This is the option I want to get opinions on most. A basic house in our area starts around $1.5M, and I'm not excited about any house we've seen in this price range. I don't feel like my house wish list is unreasonable (4 bedrooms, decent kitchen, 2-car garage with shop/storage space, good school district) but it's hard to find properties with all these things under $2M, and even then they often have other issues and/or idiosyncrasies. It was fun shopping for my last house, but this process is so discouraging I find myself not even wanting to look at listings. I'm tempted to push my spouse to work more so we can afford a nicer place, but she's not excited about working more shifts, it means more time away from our child, and the pandemic also adds a new (and possibly long-lived) element of risk. If we were to buy, I think our strategy should be to put money toward the things that are difficult to change (space/layout and school district) and less toward recent remodels, with the plan of remodeling it later if/when funds are available. This would also keep our property tax assessment lower. Buying in a less expensive neighborhood is another option, but not preferred because it would mean longer commute, worse schools, and further away from our friends. Waiting a year could bring a much-needed drop in prices. Then again, maybe prices will continue to climb.

4) Move to a LCOL area, such as the city where the MIL lives. Upsides are that we could nearly afford to pay cash for a house we'd be happy with, plus being closer to the MIL means she'd be happier watching him - we could drop our kid off at her house, which has advantages for all parties. Downsides are that we both have good jobs that we enjoy, and relocating would be a setback in both our careers. My wife also hates the cold, so I think she values SoCal more than she realizes, and also has bad allergies, which are worse in most other places, including where we'd consider moving. Job hunting during the pandemic is also an extra challenge, when most employers are trying to just not lay people off.

This would be a difficult personal decision during normal times, and the pandemic adds an extra twist. This board is full of wisdom and experience, and if anyone here would apply theirs toward our situation, I'd greatly appreciate it.
Keep renting. It’s all you can afford. I personally would never spend more than 3X my bare minimum income on a house. That puts you around 700-800K. Not even close to 1.5 million. Have MIL rent another place or rent a bigger place for everybody. Best wishes!
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Re: Contemplating expensive house purchase during pandemic

Post by telsa11 » Wed May 20, 2020 9:19 pm

There are plenty of very nice homes in that area under $1.5 mil. Your HHI is high, but you have to realize you're in a HCOL area and you're not going to get a super impressive home on your income level. You will get a very nice and comfortable home in a safe and beautiful neighborhood though.

For instance.. what is wrong with this house?
https://www.zillow.com/homedetails/1700 ... 1575_zpid/?

I would be looking around 1.1-1.3 personally in a HCOL city.

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fyre4ce
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Thu May 21, 2020 9:54 am

geerhardusvos wrote:
Wed May 20, 2020 8:43 pm
Keep renting. It’s all you can afford. I personally would never spend more than 3X my bare minimum income on a house. That puts you around 700-800K. Not even close to 1.5 million. Have MIL rent another place or rent a bigger place for everybody. Best wishes!
I think $400k is a more accurate "bare minimum income". My wife not working any clinical shifts is not a realistic work model, and I actually I don't think her employer would let her have management responsibility without spending time in the hospital - the two go together. She was able to earn $260k last year even while taking four months off for maternity leave, and reduced hours after returning. If we take $400k x your multiplier of 3, that's $1.2M, and if this limit is applied to the loan amount (which is the biggest determiner of payment size) rather than the purchase price then that's a $1.5M price. I know some here prefer being more conservative and only buying a house that can be paid for on one spouse's income, but I don't think that's realistic in our market. The condo we're renting is worth about $850k, so we would need to downsize to be in a place I could afford on just my salary. My wife and I have relatively secure jobs, but if one of us lost our job we'd probably relocate anyway, in which case we'd be selling. As long as that doesn't happen within ~5-7 years of purchase we should still come out ahead vs. renting. That's my thinking anyway.

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fyre4ce
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Thu May 21, 2020 10:02 am

telsa11 wrote:
Wed May 20, 2020 9:19 pm
There are plenty of very nice homes in that area under $1.5 mil. Your HHI is high, but you have to realize you're in a HCOL area and you're not going to get a super impressive home on your income level. You will get a very nice and comfortable home in a safe and beautiful neighborhood though.

For instance.. what is wrong with this house?
https://www.zillow.com/homedetails/1700 ... 1575_zpid/?

I would be looking around 1.1-1.3 personally in a HCOL city.
Thanks. Two issues I see with that property are 3 bedrooms, when we're looking for 4 (master, kids room, guest room, and an office for my wife, who regularly works from home even without the pandemic) and the Pasadena schools (6/10, 3/10, 6/10). San Marino, La Canada Flintridge, and South Pasadena are cities in the area with the best schools. I realize I said Pasadena, because that's the largest city in the area, but we've been trying to avoid properties in Pasadena proper due to the schools.

This is more typical of what we find: https://www.zillow.com/homedetails/1621 ... 6417_zpid/

$2.0M, 4 bedrooms, but just under 2400 sqft is certainly not huge. I'm not crazy about that particular place, and I'd prefer no pool, but I only offer it as an example.

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geerhardusvos
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Re: Contemplating expensive house purchase during pandemic

Post by geerhardusvos » Thu May 21, 2020 10:13 am

fyre4ce wrote:
Thu May 21, 2020 9:54 am
geerhardusvos wrote:
Wed May 20, 2020 8:43 pm
Keep renting. It’s all you can afford. I personally would never spend more than 3X my bare minimum income on a house. That puts you around 700-800K. Not even close to 1.5 million. Have MIL rent another place or rent a bigger place for everybody. Best wishes!
I think $400k is a more accurate "bare minimum income". My wife not working any clinical shifts is not a realistic work model, and I actually I don't think her employer would let her have management responsibility without spending time in the hospital - the two go together. She was able to earn $260k last year even while taking four months off for maternity leave, and reduced hours after returning. If we take $400k x your multiplier of 3, that's $1.2M, and if this limit is applied to the loan amount (which is the biggest determiner of payment size) rather than the purchase price then that's a $1.5M price. I know some here prefer being more conservative and only buying a house that can be paid for on one spouse's income, but I don't think that's realistic in our market. The condo we're renting is worth about $850k, so we would need to downsize to be in a place I could afford on just my salary. My wife and I have relatively secure jobs, but if one of us lost our job we'd probably relocate anyway, in which case we'd be selling. As long as that doesn't happen within ~5-7 years of purchase we should still come out ahead vs. renting. That's my thinking anyway.
I don't think a 5-7 year horizon in an HCOL house purchase comes out ahead over renting. Almost assuredly not when considering all the costs of ownership and all the risk you take on. If the appetite is there to move away, then just take all the risk off the table and rent the next 2-10 years as you stay in the HCOL area, and you've lost nothing, and you'll likely even be ahead. The transaction costs alone for a $1M+ house should make you shiver for a 5 year time horizon. Do the math, and don't underestimate the costs of owning a home (especially since you don't own right now and may not understand the full scope of that).

I "made" 350k recently in a HCOL house sale after owning for 7 years. When looking at all the costs and opportunity costs, I would have been way better off renting and investing my money in index funds, reits, crown funding real estate, honestly anything else... so that's what we do now. Rent and put money in VTSAX.

Income wise you said 150 + 150 for bare min in the OP, so that's a $900k house. Not to mention if one of you got sick, injured, wanted to stay home with the baby, etc. I wouldn't touch a million dollar house with a 10 foot pole in your situation, let alone 1.5M...

This becomes personal preferences over anything, but I can show you how the math doesn't work, especially with an under 10 year horizon in HCOLA. Don't confuse personal preferences with "breaking even" or "coming out ahead" or "good investment" --- Best wishes!
VTSAX and chill

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fyre4ce
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Thu May 21, 2020 10:32 am

geerhardusvos wrote:
Thu May 21, 2020 10:13 am
I don't think a 5-7 year horizon in an HCOL house purchase comes out ahead over renting. Almost assuredly not when considering all the costs of ownership and all the risk you take on. If the appetite is there to move away, then just take all the risk off the table and rent the next 2-10 years as you stay in the HCOL area, and you've lost nothing, and you'll likely even be ahead. The transaction costs alone for a $1M+ house should make you shiver for a 5 year time horizon. Do the math, and don't underestimate the costs of owning a home (especially since you don't own right now and may not understand the full scope of that).

I "made" 350k recently in a HCOL house sale after owning for 7 years. When looking at all the costs and opportunity costs, I would have been way better off renting and investing my money in index funds, reits, crown funding real estate, honestly anything else... so that's what we do now. Rent and put money in VTSAX.

Income wise you said 150 + 150 for bare min in the OP, so that's a $900k house. Not to mention if one of you got sick, injured, wanted to stay home with the baby, etc. I wouldn't touch a million dollar house with a 10 foot pole in your situation, let alone 1.5M...

This becomes personal preferences over anything, but I can show you how the math doesn't work, especially with an under 10 year horizon in HCOLA. Don't confuse personal preferences with "breaking even" or "coming out ahead" or "good investment" --- Best wishes!
A few points of clarification:
-Minimum income in the OP was 150+100+150=400
-I owned a house in another state for almost a decade, so I'm somewhat familiar with the associated costs - having an air conditioner go out, etc. I've been budgeting 0.5% of the purchase price for maintenance each year ($1.5M x 0.5%=$7,500)
-I sold said house using a flat fee listing service rather than a full-service agent. We're looking at using a discount buyer's agent here and would probably sell with one as well.

But I still appreciate the perspective. If the performance of the stock market is high enough relative to house prices, it could never make sense to buy, mathematically.

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Re: Contemplating expensive house purchase during pandemic

Post by bloom2708 » Thu May 21, 2020 10:40 am

After a lot of grinding and back and forth, these threads usually come down to one thing....

If you (OP) wants to buy ta house (sounds like you do), then buy a house. No permission needed here. We just provide some thoughts/ideas.

These are strange times. But, some are still buying and selling. The house may be worth less in a year, the same or more. Nobody knows how this all plays out. I did see that home sales dropped to the lowest level in 10 years. That means 2010 which was near the previous crash bottom. The bottom may have been in late 2010 or spring 2011.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead

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geerhardusvos
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Re: Contemplating expensive house purchase during pandemic

Post by geerhardusvos » Thu May 21, 2020 10:48 am

fyre4ce wrote:
Thu May 21, 2020 10:32 am
geerhardusvos wrote:
Thu May 21, 2020 10:13 am
I don't think a 5-7 year horizon in an HCOL house purchase comes out ahead over renting. Almost assuredly not when considering all the costs of ownership and all the risk you take on. If the appetite is there to move away, then just take all the risk off the table and rent the next 2-10 years as you stay in the HCOL area, and you've lost nothing, and you'll likely even be ahead. The transaction costs alone for a $1M+ house should make you shiver for a 5 year time horizon. Do the math, and don't underestimate the costs of owning a home (especially since you don't own right now and may not understand the full scope of that).

I "made" 350k recently in a HCOL house sale after owning for 7 years. When looking at all the costs and opportunity costs, I would have been way better off renting and investing my money in index funds, reits, crown funding real estate, honestly anything else... so that's what we do now. Rent and put money in VTSAX.

Income wise you said 150 + 150 for bare min in the OP, so that's a $900k house. Not to mention if one of you got sick, injured, wanted to stay home with the baby, etc. I wouldn't touch a million dollar house with a 10 foot pole in your situation, let alone 1.5M...

This becomes personal preferences over anything, but I can show you how the math doesn't work, especially with an under 10 year horizon in HCOLA. Don't confuse personal preferences with "breaking even" or "coming out ahead" or "good investment" --- Best wishes!
A few points of clarification:
-Minimum income in the OP was 150+100+150=400
-I owned a house in another state for almost a decade, so I'm somewhat familiar with the associated costs - having an air conditioner go out, etc. I've been budgeting 0.5% of the purchase price for maintenance each year ($1.5M x 0.5%=$7,500)
-I sold said house using a flat fee listing service rather than a full-service agent. We're looking at using a discount buyer's agent here and would probably sell with one as well.

But I still appreciate the perspective. If the performance of the stock market is high enough relative to house prices, it could never make sense to buy, mathematically.
Annual costs over a 5-10 year period for maintenance could be well over $10k/year, and way higher if you do just one or two simple upgrades/remodels... Don't undercut the costs of owning with time, opportunity costs, and reality of higher contractor costs in your area. Buying a $30k roof would blow up the rentvsbuy formula for a 5 year period, and that's only one thing. Not to mention risk. Risk that you buy for 1.6M and its worth 1.2M just 5 years from now... That's huge exposure that all west coast HCOL markets are open to. It's not just stock performance vs property value growth... way more variables... you both work full time and raise a kid and now you also want to maintain a $1M house? During these economic times? To each his own! If you're going to buy the house, just do it. You don't need to justify it to us from a numbers standpoint... Just good to know the reality!
VTSAX and chill

supalong52
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Re: Contemplating expensive house purchase during pandemic

Post by supalong52 » Thu May 21, 2020 12:19 pm

We are also in So Cal and have a 10 month old. We bought our house a year ago and are very happy we did. We didn't feel affordability was an issue but our area is less expensive than yours (still close to the coast though ~3 miles away from nearest beach). We paid just over $900k last year but similar houses are now selling for $1.0m.

Going from a 2BR apartment in a central but crowded area to a 4BR in a family-friendly cul-de-sac has been a nice change. We have a backyard and nearby parks and playgrounds. I think you would probably also be happy making such a move and your finances seem to be able to support it especially if you don't need to pay for a nanny or daycare.

FoolStreet
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Re: Contemplating expensive house purchase during pandemic

Post by FoolStreet » Thu May 21, 2020 2:13 pm

Would you consider purchasing a duplex? It would stretch you more, but give MIL a place to stay and also give you long term upside to rent the other side out.

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Re: Contemplating expensive house purchase during pandemic

Post by HEDGEFUNDIE » Thu May 21, 2020 5:36 pm

geerhardusvos wrote:
Thu May 21, 2020 10:48 am
fyre4ce wrote:
Thu May 21, 2020 10:32 am
geerhardusvos wrote:
Thu May 21, 2020 10:13 am
I don't think a 5-7 year horizon in an HCOL house purchase comes out ahead over renting. Almost assuredly not when considering all the costs of ownership and all the risk you take on. If the appetite is there to move away, then just take all the risk off the table and rent the next 2-10 years as you stay in the HCOL area, and you've lost nothing, and you'll likely even be ahead. The transaction costs alone for a $1M+ house should make you shiver for a 5 year time horizon. Do the math, and don't underestimate the costs of owning a home (especially since you don't own right now and may not understand the full scope of that).

I "made" 350k recently in a HCOL house sale after owning for 7 years. When looking at all the costs and opportunity costs, I would have been way better off renting and investing my money in index funds, reits, crown funding real estate, honestly anything else... so that's what we do now. Rent and put money in VTSAX.

Income wise you said 150 + 150 for bare min in the OP, so that's a $900k house. Not to mention if one of you got sick, injured, wanted to stay home with the baby, etc. I wouldn't touch a million dollar house with a 10 foot pole in your situation, let alone 1.5M...

This becomes personal preferences over anything, but I can show you how the math doesn't work, especially with an under 10 year horizon in HCOLA. Don't confuse personal preferences with "breaking even" or "coming out ahead" or "good investment" --- Best wishes!
A few points of clarification:
-Minimum income in the OP was 150+100+150=400
-I owned a house in another state for almost a decade, so I'm somewhat familiar with the associated costs - having an air conditioner go out, etc. I've been budgeting 0.5% of the purchase price for maintenance each year ($1.5M x 0.5%=$7,500)
-I sold said house using a flat fee listing service rather than a full-service agent. We're looking at using a discount buyer's agent here and would probably sell with one as well.

But I still appreciate the perspective. If the performance of the stock market is high enough relative to house prices, it could never make sense to buy, mathematically.
Annual costs over a 5-10 year period for maintenance could be well over $10k/year, and way higher if you do just one or two simple upgrades/remodels... Don't undercut the costs of owning with time, opportunity costs, and reality of higher contractor costs in your area. Buying a $30k roof would blow up the rentvsbuy formula for a 5 year period, and that's only one thing. Not to mention risk. Risk that you buy for 1.6M and its worth 1.2M just 5 years from now... That's huge exposure that all west coast HCOL markets are open to.
A great reason to get an interest only mortgage and plow as little money into your house as you can. Give the keys back if you have to.

runner540
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Re: Contemplating expensive house purchase during pandemic

Post by runner540 » Thu May 21, 2020 6:23 pm

HEDGEFUNDIE wrote:
Thu May 21, 2020 5:36 pm
geerhardusvos wrote:
Thu May 21, 2020 10:48 am
fyre4ce wrote:
Thu May 21, 2020 10:32 am
geerhardusvos wrote:
Thu May 21, 2020 10:13 am
I don't think a 5-7 year horizon in an HCOL house purchase comes out ahead over renting. Almost assuredly not when considering all the costs of ownership and all the risk you take on. If the appetite is there to move away, then just take all the risk off the table and rent the next 2-10 years as you stay in the HCOL area, and you've lost nothing, and you'll likely even be ahead. The transaction costs alone for a $1M+ house should make you shiver for a 5 year time horizon. Do the math, and don't underestimate the costs of owning a home (especially since you don't own right now and may not understand the full scope of that).

I "made" 350k recently in a HCOL house sale after owning for 7 years. When looking at all the costs and opportunity costs, I would have been way better off renting and investing my money in index funds, reits, crown funding real estate, honestly anything else... so that's what we do now. Rent and put money in VTSAX.

Income wise you said 150 + 150 for bare min in the OP, so that's a $900k house. Not to mention if one of you got sick, injured, wanted to stay home with the baby, etc. I wouldn't touch a million dollar house with a 10 foot pole in your situation, let alone 1.5M...

This becomes personal preferences over anything, but I can show you how the math doesn't work, especially with an under 10 year horizon in HCOLA. Don't confuse personal preferences with "breaking even" or "coming out ahead" or "good investment" --- Best wishes!
A few points of clarification:
-Minimum income in the OP was 150+100+150=400
-I owned a house in another state for almost a decade, so I'm somewhat familiar with the associated costs - having an air conditioner go out, etc. I've been budgeting 0.5% of the purchase price for maintenance each year ($1.5M x 0.5%=$7,500)
-I sold said house using a flat fee listing service rather than a full-service agent. We're looking at using a discount buyer's agent here and would probably sell with one as well.

But I still appreciate the perspective. If the performance of the stock market is high enough relative to house prices, it could never make sense to buy, mathematically.
Annual costs over a 5-10 year period for maintenance could be well over $10k/year, and way higher if you do just one or two simple upgrades/remodels... Don't undercut the costs of owning with time, opportunity costs, and reality of higher contractor costs in your area. Buying a $30k roof would blow up the rentvsbuy formula for a 5 year period, and that's only one thing. Not to mention risk. Risk that you buy for 1.6M and its worth 1.2M just 5 years from now... That's huge exposure that all west coast HCOL markets are open to.
A great reason to get an interest only mortgage and plow as little money into your house as you can. Give the keys back if you have to.
HEDGEFUNDIE, I've seen your posts about minimizing equity in a house to be able to walk away, but haven't seen you address this: many jobs require credit score checks and/or background checks where a foreclosure or bankruptcy would come up, and probably not be viewed favorably, especially for someone in a high paid position like OP and spouse.

To the OP, I suggest renting a 3 BR place - you have plenty of income to do this, and take your time on deciding on a longer term home.

HEDGEFUNDIE
Posts: 4772
Joined: Sun Oct 22, 2017 2:06 pm

Re: Contemplating expensive house purchase during pandemic

Post by HEDGEFUNDIE » Thu May 21, 2020 7:40 pm

runner540 wrote:
Thu May 21, 2020 6:23 pm
HEDGEFUNDIE wrote:
Thu May 21, 2020 5:36 pm
geerhardusvos wrote:
Thu May 21, 2020 10:48 am
fyre4ce wrote:
Thu May 21, 2020 10:32 am
geerhardusvos wrote:
Thu May 21, 2020 10:13 am
I don't think a 5-7 year horizon in an HCOL house purchase comes out ahead over renting. Almost assuredly not when considering all the costs of ownership and all the risk you take on. If the appetite is there to move away, then just take all the risk off the table and rent the next 2-10 years as you stay in the HCOL area, and you've lost nothing, and you'll likely even be ahead. The transaction costs alone for a $1M+ house should make you shiver for a 5 year time horizon. Do the math, and don't underestimate the costs of owning a home (especially since you don't own right now and may not understand the full scope of that).

I "made" 350k recently in a HCOL house sale after owning for 7 years. When looking at all the costs and opportunity costs, I would have been way better off renting and investing my money in index funds, reits, crown funding real estate, honestly anything else... so that's what we do now. Rent and put money in VTSAX.

Income wise you said 150 + 150 for bare min in the OP, so that's a $900k house. Not to mention if one of you got sick, injured, wanted to stay home with the baby, etc. I wouldn't touch a million dollar house with a 10 foot pole in your situation, let alone 1.5M...

This becomes personal preferences over anything, but I can show you how the math doesn't work, especially with an under 10 year horizon in HCOLA. Don't confuse personal preferences with "breaking even" or "coming out ahead" or "good investment" --- Best wishes!
A few points of clarification:
-Minimum income in the OP was 150+100+150=400
-I owned a house in another state for almost a decade, so I'm somewhat familiar with the associated costs - having an air conditioner go out, etc. I've been budgeting 0.5% of the purchase price for maintenance each year ($1.5M x 0.5%=$7,500)
-I sold said house using a flat fee listing service rather than a full-service agent. We're looking at using a discount buyer's agent here and would probably sell with one as well.

But I still appreciate the perspective. If the performance of the stock market is high enough relative to house prices, it could never make sense to buy, mathematically.
Annual costs over a 5-10 year period for maintenance could be well over $10k/year, and way higher if you do just one or two simple upgrades/remodels... Don't undercut the costs of owning with time, opportunity costs, and reality of higher contractor costs in your area. Buying a $30k roof would blow up the rentvsbuy formula for a 5 year period, and that's only one thing. Not to mention risk. Risk that you buy for 1.6M and its worth 1.2M just 5 years from now... That's huge exposure that all west coast HCOL markets are open to.
A great reason to get an interest only mortgage and plow as little money into your house as you can. Give the keys back if you have to.
HEDGEFUNDIE, I've seen your posts about minimizing equity in a house to be able to walk away, but haven't seen you address this: many jobs require credit score checks and/or background checks whera foreclosure or bankruptcy would come up, and probably not be viewed favorably, especially for someone in a high paid position like OP and spouse.

To the OP, I suggest renting a 3 BR place - you have plenty of income to do this, and take your time on deciding on a longer term home.
A hiring manager who cannot distinguish between financial irresponsibility and strategic default on a credit report is not a manager I would want to work for.

And I say that as a hiring manager who actually does review background checks on candidates for $200k+ roles. Have you ever done so?

WS1
Posts: 197
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Re: Contemplating expensive house purchase during pandemic

Post by WS1 » Thu May 21, 2020 7:55 pm

HEDGEFUNDIE wrote:
Thu May 21, 2020 7:40 pm
runner540 wrote:
Thu May 21, 2020 6:23 pm
HEDGEFUNDIE wrote:
Thu May 21, 2020 5:36 pm
geerhardusvos wrote:
Thu May 21, 2020 10:48 am
fyre4ce wrote:
Thu May 21, 2020 10:32 am


A few points of clarification:
-Minimum income in the OP was 150+100+150=400
-I owned a house in another state for almost a decade, so I'm somewhat familiar with the associated costs - having an air conditioner go out, etc. I've been budgeting 0.5% of the purchase price for maintenance each year ($1.5M x 0.5%=$7,500)
-I sold said house using a flat fee listing service rather than a full-service agent. We're looking at using a discount buyer's agent here and would probably sell with one as well.

But I still appreciate the perspective. If the performance of the stock market is high enough relative to house prices, it could never make sense to buy, mathematically.
Annual costs over a 5-10 year period for maintenance could be well over $10k/year, and way higher if you do just one or two simple upgrades/remodels... Don't undercut the costs of owning with time, opportunity costs, and reality of higher contractor costs in your area. Buying a $30k roof would blow up the rentvsbuy formula for a 5 year period, and that's only one thing. Not to mention risk. Risk that you buy for 1.6M and its worth 1.2M just 5 years from now... That's huge exposure that all west coast HCOL markets are open to.
A great reason to get an interest only mortgage and plow as little money into your house as you can. Give the keys back if you have to.
HEDGEFUNDIE, I've seen your posts about minimizing equity in a house to be able to walk away, but haven't seen you address this: many jobs require credit score checks and/or background checks whera foreclosure or bankruptcy would come up, and probably not be viewed favorably, especially for someone in a high paid position like OP and spouse.

To the OP, I suggest renting a 3 BR place - you have plenty of income to do this, and take your time on deciding on a longer term home.
A hiring manager who cannot distinguish between financial irresponsibility and strategic default on a credit report is not a manager I would want to work for.

And I say that as a hiring manager who actually does review background checks on candidates for $200k+ roles. Have you ever done so?
Mayhaps they can tell the difference and like many on this internet site they are repulsed by strategic default.

P.S. I intend to maintain minimal equity just in case I have to walk away after a catastrophic hurricane.

Topic Author
fyre4ce
Posts: 633
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Thu May 21, 2020 10:58 pm

For reasons I won't go into, I don't want to plan on a strategic default.

HEDGEFUNDIE
Posts: 4772
Joined: Sun Oct 22, 2017 2:06 pm

Re: Contemplating expensive house purchase during pandemic

Post by HEDGEFUNDIE » Thu May 21, 2020 11:00 pm

fyre4ce wrote:
Thu May 21, 2020 10:58 pm
For reasons I won't go into, I don't want to plan on a strategic default.
No one plans on a strategic default. But if the worst were to happen, it’s nice to know it’s an option.

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cchrissyy
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Re: Contemplating expensive house purchase during pandemic

Post by cchrissyy » Thu May 21, 2020 11:14 pm

i think you should rent a bigger place. it's the quickest way to get something that meets your current needs, you can easily afford it, and, very importantly, renting won't rush you to commit to an expensive and longterm plan.

dellfanboy
Posts: 60
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Re: Contemplating expensive house purchase during pandemic

Post by dellfanboy » Fri May 22, 2020 2:59 am

Option 2 is my vote.

I’m in a similar income bracket, VHCOL city, and have the same family size as you. No nanny during SIP, and MIL setup as well. We are in a 2/1 condo we own.

Let me be clear, this situation and setup is less than ideal. However, buying a 4/3 home for a temporary issue is crazy!

If you want some breathing room and space then rent a home (Airbnb) for a month or longer. It’ll solve for the current issue and gives you options. Either rent MIL the 1 bedroom the weeks she’s visiting or get a 3/2 for those weeks.

We rather wait this storm out, see where our jobs and the housing market settles and then buy a new place and sell the condo.

Best of luck!

delamer
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Re: Contemplating expensive house purchase during pandemic

Post by delamer » Fri May 22, 2020 9:44 am

60B4E24B wrote:
Wed May 20, 2020 7:39 pm
warowits wrote:
Tue May 19, 2020 6:53 pm
srt7 wrote:
Tue May 19, 2020 6:16 pm
I'd recommend staying put for a few more months until real estate prices fall and snatch yourself a great deal!
I live in a LCOL location, and all real estate markets are different, but prices are going up around me, not down. People who are losing jobs tend to be on the low end of the pay scale, and less likely to own a home. Combine that with lower interest rates and a general expectation among sellers that this will pass in a year or less and I am guessing there are not going to be great deals to be had in 1 years time.
How can you know that? Anything closing now was in contract before the virus was on most people's radars.
Not in my area. Houses that are well priced are getting contracts. A house up the street went on the market after our state was shut down* and it is settling at the end of the month. Although the volume of listings is down, according to my realtor friend.

*Real estate is considered an essential business, although open houses are illegal. And vacant houses are very popular. :happy

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cchrissyy
Posts: 89
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Re: Contemplating expensive house purchase during pandemic

Post by cchrissyy » Fri May 22, 2020 11:21 am

in my HCOL area, houses are being listed at their normal high pricing and going pending within a week as normal.

i expect there will be some impact like the OP said, where people won't want to move during a pandemic due to exposure risks, and cases where job security gives people pause.

but there are also people who suddenly realize they need more space. like the OP! lots of us care more than ever about a yard or home office or a room for grandma. or we care less than before about commute time.

Topic Author
fyre4ce
Posts: 633
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Re: Contemplating expensive house purchase during pandemic

Post by fyre4ce » Sat May 23, 2020 1:10 am

dellfanboy wrote:
Fri May 22, 2020 2:59 am
Option 2 is my vote.

I’m in a similar income bracket, VHCOL city, and have the same family size as you. No nanny during SIP, and MIL setup as well. We are in a 2/1 condo we own.

Let me be clear, this situation and setup is less than ideal. However, buying a 4/3 home for a temporary issue is crazy!

If you want some breathing room and space then rent a home (Airbnb) for a month or longer. It’ll solve for the current issue and gives you options. Either rent MIL the 1 bedroom the weeks she’s visiting or get a 3/2 for those weeks.

We rather wait this storm out, see where our jobs and the housing market settles and then buy a new place and sell the condo.

Best of luck!
Thanks. As you and many others have said, renting a bigger place is probably our best bet. We have been looking, and rental and purchase prices are cheaper by ~30% in the local less-desirable school districts. But, our child is only a year old and school isn't an issue, so we can save substantial money renting for a year or two there. If housing prices drop or remain flat, we'll come out ahead. We only lose if they continue to go up while we rent. (Local house prices have roughly doubled in the last 10 years.)

To be clear, we wouldn't consider buying a house just for a temporary MIL issue, or a bigger one than we need. We would want 4 bedrooms in our "forever" home, and MIL would take one of those. It's just a question of making more sense to pull the trigger now, or continue to rent and let this pandemic blow over. We are leaning toward renting.

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