Life Situation: IRS filing status Joint, no dependents, live in College town in the northwest. Very "up and coming." Was a low cola but this is changing fast.
Gross Salary/Wages: Together we make a little over $115,000 year gross wages.
Pre-tax deductions: I didn't include this information as right now we are doing some extreme saving but this may change if we buy a house. We have your typical health insurance premiums, some flex accounts savings, and at least always do about 8% of our respective salaries. Currently we are both doing much more....like probably 20 to 30% of our income into retirement savings.
Other Ordinary Income: None
Qualified Dividends & Long Term Capital Gains: None
Current expenses: I would estimate we spend about $2000-3000 a month on regular monthly fixed expenses and pleasure expenses.
Assets: No assets other than a $5000 car
Liabilities: No loans. No debts.
Specific Question(s): Here is my situation:
My wife and I, recently married, have been wanting to buy a house. But we have seen prices here skyrocket in the last year. Me being a nervous nelly, I have hemmed and hawed and passed on a lot of houses. Some we did make bids on but were outbid by cash buyers. I had always thought I could buy something conservatively but in this town it just seems like if you buy something under 250k it's going to be a heap of crap and require a lot of work. As this is my first house, and I have an extremely intense job, I really have no interest in doing a lot of upkeep at first. I just don't feel ready for it. I also have a chronic pain issue which limits how much physical work I can do. Recently an opportunity to buy a brand new townhouse within biking distance has come up. It's expensive and more than I ever thought I would have to spend yet I am considering it as most of the stuff at 250k needs so much work anyways it was also just as scary. See details below for more specifics on the townhouse.
Currently we have about $90,000 saved up in cash. $10,000 we have earmarked for emergencies so that gives us about $80,000 to put down on the house/townhouse.
Our retirement accounts approximate about 80,000.(Mostly traditional accounts, some deferred compensation for wife). In the past we have mostly been piling into our down payment savings so we could really get a good down payment. So our retirement savings aren't as strong as they could be. Recently I have ratcheted that up. With a 10% retirement savings rate we still have been putting about $3000 a month of cash aside for our down payment. I think we are pretty good savers but maybe not as extreme as some on this board.
Current rent: 825 a month
Average rent for similar house as we are considering buying: $1500 to $1600
Price of new build townhouse: $290,000
Mortgage payment if I buy townhouse: $1100. Estimated PITI: 1400 to 1500
Townhouse details: 4 units. Good space in between. No shared walls. Detached two car garages. 3 bed, 3 bath. Excellent construction and excellent materials. Good views and great use of space. The neighborhood is good, not immaculate but a gentrifying area in general. Lots of nice amenities...heated tile bathrooms, central vacuum, central air, big windows, etc.
Incomes: Both are generally stable. I don't see huge jumps in income but steady steps. My job is stable but sensitive at times due to nature of my work.
Future: We don't have specific plans for kids but my wife definitely wants one or two. I'm kind of meh(lol) but it's mostly just because I am always scared about more responsibility or expenses(I know I'm lame).
I should also mention I work from home a lot and it's always been a desire to get a better office situation then we currently have. We want to have one bedroom for guests/potential baby(we are not trying yet) and also a dedicated office for me(should be able to lock it)
Question is...is this a good idea? I see this town as really booming. Everyone is talking about it being the next Portland and maybe that's exaggerated but we are getting a lot of out of town buyers who just seem to want to live here because it's a good place. We have a good rental situation right now so I hesitate. It's super cheap and my landlord doesn't believe in raising rent. We live below a mountain and I love it.
However, I really don't like the space. It's old and inefficient and half of our yard is asphalt(wtf). It feels like time to move on and sort of a necessary step for us to have a family. As much as I would love to stay in this neighborhood the only thing we could buy in our price range would require another $100k to make into a habitable place. A 1200 square foot house here would sell for $315,000 easily.
So....to me this $290k townhouse we are looking at feels like a big step. However the mortgage payment would be $1200 a month at the most, it's super efficient, excellent materials, and there actually is a little yard and no shared walls. It's within 1.5 miles of downtown and work for both of us. I should also mention that we have managed to survive with only one car and we could continue to do this if we stay within two miles.
I should also mention there is an emotional aspect. I have gone back and forth on this as I am really intrigued by the whole "Rent for life" arguments I have read from GCC, Jcollins and others. It's really opened my eyes that buying a house is not a must. However, sometimes I just feel like we want to try it. Maybe it is just a luxury that we want and we need to look at it like this. Something about just owning our own place feels like a good next step for us. We also want to be in a place that is new, good efficient use of space, and just feels better.
So once again I hope this didn't drag on for people and thanks for reading. I am open to any advice like...financially is this wise and also just people who have bought homes and what their perspective is on the emotional aspects of home ownership. I know a lot of people say it's not worth it but then I think those are also people who have gone through the experience and I wonder if we just need to try it.
I should also add we recently tried to offer a lower amount(270) and that got shut down. The builder has already sold one of the other units so I guess he feels pretty confident they will all sell at his asking price.