Author Topic: Is it smart to buy a house in this situation.  (Read 574 times)

leebuckeye

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Is it smart to buy a house in this situation.
« on: June 26, 2018, 08:59:19 PM »
I have posted in the past, essentially I had a stable job and got lucky in the stock market. Was burned out and let go from my job after 12 years. Spent a few months off and then found a good job that pays well (95k) but may have some stability issues. Live in Columbus OH suburb in midwest. Haven't quite sold the stock gains yet but am sitting on 1.8 million in retirement/cash accounts or roughly 1.5 million after taxes etc.  Housing market here is booming and home prices are up 40 to 50% over 5 years, I currently rent for around$1500 but have a 4 mile commute in a nice part of town. i found a house that was listed at 400k and can probably get for 350k after negotiating. The neighborhood is great but a few years ago houses a few houses down were selling around $260 to 300k (2015/2016) Now they are going for 450-500k and new construction a few blocks away is 800k plus. I am tempted to keep renting and retire in a few years but part of me thinks that I should borrow now while the rates are low and buy this house. Worst case the market tanks and the house gets sold for 300k (I lose 50k). Property taxes are around 8k a year but the school system is excellent. I figure mortgage+ taxes+utilities would be around $2500 a month. I would get equity though and get at least double if not quadruple the SQ footage (current place is 1100 sq feet no basement, house is 2200 sq feet with a 2200 sq ft basement --not finished). The house needs some minimal work but is in great condition. Would any of you buy a house in this situation? I am single...I am in my late 30s and would probably work for another 5 years or so maybe longer. I kinda want this job to be my last one. It should be stable at least another 2 years. I keep worrying that I have saved and done a lot right and now am buying a big house at the wrong end of a bubble that could derail a possible retirement. Thoughts?

SeattleCPA

  • Handlebar Stache
  • *****
  • Posts: 1234
  • Age: 58
  • Location: Redmond, WA
    • Evergreen Small Business
Re: Is it smart to buy a house in this situation.
« Reply #1 on: June 26, 2018, 09:11:53 PM »
I would for reasons basically outlined here and in the federal reserve paper it references:

https://evergreensmallbusiness.com/rate-of-return-on-everything-paper/

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4562
Re: Is it smart to buy a house in this situation.
« Reply #2 on: June 26, 2018, 09:17:54 PM »
No.  Your employment is not stable enough.  Rent until you are sure you will stay in the same location for a minimum of five years.  The costs of buying and selling are too high otherwise.

waltworks

  • Magnum Stache
  • ******
  • Posts: 2811
Re: Is it smart to buy a house in this situation.
« Reply #3 on: June 26, 2018, 09:32:38 PM »
Um, you're FI, right? Do whatever the hell makes you happy. If you decide to move and lose $100k on the house, so f'ing what?

I mean, I probably would just quit working and forget about the commute entirely, in your shoes, and spend some time deciding where I want to live. But if you want to keep working your job, and you want the house, buy the house.

-W

cchrissyy

  • Pencil Stache
  • ****
  • Posts: 652
  • Location: SF Bay Area
Re: Is it smart to buy a house in this situation.
« Reply #4 on: June 26, 2018, 10:18:43 PM »
I don't see the point of buying. your default option is 1500 rent for a nice place and the flexibility to work as long as you want and leave when you're done is a fine price. it sounds like you're tempted to pay extra to buy an anchor on your life. More cost, more space to maintain, more risk of repairs, more transaction costs... why? don't you value the freedom to leave this town after you FIRE?   you don't need double the square feet and you don't need a school system. those are pure distractions that other people value but aren't relevant for your specific life.

Michael in ABQ

  • Bristles
  • ***
  • Posts: 468
    • Military Saints
Re: Is it smart to buy a house in this situation.
« Reply #5 on: June 26, 2018, 10:28:16 PM »
I would pass simply because I don't see much need for 4,400 SF for a single person. That's a lot of time maintaining all that space. Obviously you can afford it but is this where you want to settle considering you could stop working today if you choose.

Dicey

  • Walrus Stache
  • *******
  • Posts: 8553
  • Age: 60
  • Location: NorCal
Re: Is it smart to buy a house in this situation.
« Reply #6 on: June 29, 2018, 08:08:56 AM »
Um, you're FI, right? Do whatever the hell makes you happy. If you decide to move and lose $100k on the house, so f'ing what?

I mean, I probably would just quit working and forget about the commute entirely, in your shoes, and spend some time deciding where I want to live. But if you want to keep working your job, and you want the house, buy the house.

-W
Assuming you want to stay in the area, I'm with Walt.