It’s no secret that our next big goal is to purchase a house.
I find that the decision to purchase a home has become entirely emotional and not so much fiscally practical.
Because financially, I’m not so sure that buying is a better option as opposed to renting—at least where we live.
The reason against buying a house? It is extremely expensive.
The reason for buying a house? To have a place we can call our own, that we can make it the way we want, and be a home for our family.
When it comes to Head vs. Heart—how do you decide which one wins?
The Right Time to Buy a House?
Over a month ago, Eric and I saw a listing for a three-bedroom townhome that was way under our budget. It was pretty tiny and needed a lot of work (definitely a downgrade from where we’re currently living), but it was in a desirable neighborhood and we knew we could make it our own.
Within 24 hours we got super excited and were prepared to make an offer, but ultimately my financial sense kicked in.
Essentially, I had a major freak-out because I felt that we were in no way prepared to make an offer on a home and we hadn’t even done any research. And I didn’t even like our realtor. Or the bank with which we were getting pre-approved.
The whole situation didn’t sit well with me, and we decided to back off. I was really glad we did.
But that hasn’t stopped us from still scouring listings to see if anything comes up in our price range that we may be interested in.
The Argument to Buy a House Next Year
The rational side of me says we should just keep saving. That has been our whole plan all along, is to just save, save, save this year.
Next year, we can save some more and Eric will finally be done with his first year of probation as a firefighter—meaning he will have much more free time since he won’t have to devote his off days to studying for tests and preparing presentations.
The Argument to Buy a House Now
We already feel that we’re getting priced out of the market. Three-bedroom single-family homes have inched from the low to mid $500,000s a year ago to now reaching the low $600,000s. At what point will they be next year?
And interest rates will continue to rise as well.
There’s this part of me—the logical part of me—that feels we shouldn’t buy until we are comfortable with our finances, no matter what the market is doing.
There’s the other part of me—the emotional side of me—that feels that I will never be comfortable with investing so much into a property and that if I don’t just leap and take the jump…it may be too late when we finally decide to move forward.
19 comments
So many people look at home buying from strictly a financial perspective but I’m glad someone shared their emotional perspective too. Emotions can play a huge role in such a big decision. Thanks for sharing!
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[…] And even though we’ve been living the DINK lifestyle (Cabo, anyone?), and our spending has increased, we’ve still been heavily focused on saving for our ultimate goal of buying our own house. […]
I feel your pain! We’re in the exact same (Los Angeles) boat. We’ll be more financially ready late next year. However prices have increased so much in the past 12 months, I’m a little afraid of what will happen next fall/winter. I’m sort of hoping that as interest rates rise a little bit, prices will come down just a tad. If I could score a “starter” home in a decent neighborhood for $380K (instead of $420K!), I’d be stoked! (to use a 90’s term).
[…] On Monday, I was ready to buy a house. […]
Great article! This is such a huge help especially for people like me who are considering buying a house within the next year. Thanks for sharing this!
This is a huge decision. I don’t think that any of us can try tell you what to do, but when you’re both ready, you’ll know it. That’s not to say that the hesitation will go away. I think that until you move in the house, there’s always apprehension. Good luck!
I was in your shoes last year and completely understand your concerns. My husband and I are about the same age as you and your husband. We bought a townhouse in LA. It was a total fixer upper but had the square footage we wanted and we knew we could grow into if we decide to have a child. We wanted to buy something we would be happy in for at least 10 years.
My advice to you is:
1. Have a go-getter agent. Interview multiple people before committing and get references. Make sure you like the agent because you will be in constant contact with him/her. Escrow is stressful and you need a strong advocate on your side.
2. Have a loan officer that will fully inform you of the “worst case scenarios” that come with townhouses and condos. Ours didn’t inform us that if more than one person owns 20% or more of the units in a complex, a buyers application is be subject to a “full” review by the lender – unless the buyer is putting 20% down. We got stuck putting 20% down.
3.
3. Look at as many properties as possible. Go outside your desired area. Drive around and check out different neighborhoods.
4.
You guys seem committed to staying in the area, and unless you want to be lifelong renters, I think you can’t go wrong buying a home that’s financially manageable (maybe even a little stretch, given your stable job situations). If you wait til next year or the year after, I think interest rates will rise and hopefully housing prices will fall (or at least stop growing by leaps and bounds), and you can buy a home at a less-“inflated” price and then refinance when interest rates get lower later on.
Well I have nothing useful to add other than I feel your pain. I’m not even in the right planet to be buying in LA…at least you are somewhere on the planet, if not the right part. 🙂 I always think you should listen to your gut in situations like this. It never lies.
I’m pretty much in the exact same boat. We’re about halfway to where we need our savings to be to buy, and I know we need to hold off so we’re 100% financially ready to make a downpayment and do closing, but at the same time, I WANT to get out of apartment living now, and meanwhile interest rates are rising. It’s tough. Let me know what you figure out, k, haha?!
Ugh!! It’s a really tough place to be. I hate our housing market! It was probably really hard to walk away from the possibility of finally getting your home but if it didn’t feel right then you did the right thing. If the housing prices go up it just means you might have to save more which I’m sure won’t be a problem for you two. It’s really hard to think of the what if scenarios. I’m inclined to tell you to go for it before the prices skyrocket more but only because what I know of you tells me that you would make a smart decision on whatever property you choose to get and would be financially savvy enough to handle it even if it’s not the “ideal” time that you had planned.
I feel the same way we live in NYC and want to purchase a house in Queens. I feel like no matter how much you think you prepare you will never be FULLY prepared. I don’t think we will make the magic 20% either but hey I want my family to have a home and I’m tired of renting.
have you seen this?
http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=1
I thought it was interesting. In my area, it says buying it definitely the right decision, financially. Not sure what your results will be, but it might make peace between your head and heart. 🙂
It’s kind of like the argument going on in my head to have a baby. I feel like there will never be a right time and I’ll never have enough money or be prepared.
You need to do what’s best for you and listen to your gut. I say if you find something, that feels right, then do it! 🙂
My husband and I just bit the bullet and bought a house last year in a high cost of living area as well (suburb of Boston). I am really glad that we did. The house next door to us, which has similar square footage, land, and updates, just sold last week for at least $40K more than what we paid for our house last year. I am saying at least $40K based on its asking price, but the realtor told us he expected it to go over asking – and it was sold in less than a week. I personally would go for it as long as you have a sizable down payment to make your monthly mortgage costs manageable.
Do you guys actually have the funds to buy now? (Unclear to me.) We’re in a really similar type of market to you and I can tell you if we could swing it right now (even with less than 20pc down) I would, because I don’t see prices slowing.
We searched for a house for about a year and a half. The process was exhausting both mentally and physically. Now after being in our house for 2 years, I find it to be one of the best decisions we’ve ever made. There is always something that needs to be fixed or some hidden expense that pops up that you weren’t expecting which tends to get frustrating and overwhelming at times but I wouldn’t change it for anything. We have gotten creative with our budget and have made it work. Do whats best for you and what feels right in your heart.
We bought a house last year. We had saved up the down payment for a house within our price range we could afford. We did buy a fixer upper. There’s things about my house that I like, and others which in retrospect I probably would have axed when we looked at it. Our master bathroom is teeny tiny. I thought I wouldn’t care but now, I wonder about it. Buying a house is more expensive. I’m still trying to control our budget. It’s been 6 months and I feel like I can’t control the money going out. So just be prepared for that in your budget.