Would it improve your quality of life to move? If you discounted the economics would you choose to move?
If you have a compelling reason to move, I wonder whether trying to time the housing market is akin to timing the stock market - just ignore it?
I’ve always treated our home as just that - not an asset, rather somewhere to actually live. Regardless of whether its value goes up or down. Others think differently. Neither is right nor wrong.
I have to agree with this post, we are in the process of buying a bungalow and hopefully will complete by the end of August. We are borrowing an additional £173000 at 4.34% (we got this rate locked in a while ago) which will probably increase our housing costs from 13% of take home to about 33% of our take home.
It has weighed on us heavily, we debated a whole year before deciding we wished to move as our current mortgage is fixed at 2.2% with 9 years left (thankfully porting) which means we could probably FIRE in 7 years or so. But for us, this house was never the forever home, its too small and the location isnt ideal either so we came up with some basic rules of what we were willing to compromise on and what our goals are.
We came up with 2 simple rules:
- Be able to retire by 50 (if we wanted to)
- The house had to justify extending our FI date (i.e. has to be in the right location, long term 'forever' home, more space)
It was a bit of a challenge finding a property which met our needs within budget, we viewed a lot of houses probably 15-20 over 3 months to get a real idea of what we liked. Boy do you realise pictures are not reliable! We were originally looking at 4 bed houses as we also wanted space but on the off chance we saw a lovely bungalow pop up in the perfect location for us (school & family), I wasnt even interested at first but my wife said lets take a look anyway. It was obviously smaller than the 4 bed houses and it was also only a 3 bed but the location was just out of this world and the property flowed really well in terms of space despite its smaller floorspace, 2 large south facing gardens (corner plot) a big drive, lots of privacy no houses opposite etc.. We could really see ourselves spending the rest of our lives there.
Over the last 6 months interest rates have just been going up and up, house sales slowed significantly, some prices dropped although not all, we had our offer accepted about 3 and half months ago and I would say that now we are probably slighltly overpaying for the bungalow considering the market conditions, maybe by 10k. Its been a tough ride and the financials have played on my mind but at the end of the day I dont view it as an investment, I'm not buying to sell it and if the seller isnt budging on the price am I going to walk away from something that ticks so many boxes just because the market says X. No, this is why we set the goals and budgets out at the start, its within budget and meets all of our needs, we havent seen anything even close for us within our budget so whilst id maybe get a better deal elsewhere I wont be anywhere near as happy!
I would say sit down and come up with some simple rules that you are both happy with to make sure you would still be on course for any life goals and the property delivers what you are looking for. It doesnt have to be a long list (this can make it prohibitive) then if/when you find something you like you know you are making the right decision (or wrong one). It might be useful for you both to write a list of things you would like (low maintenance, price, location etc..) Then seperately each of you put a number from 1-5 against each point as to whats most important, then reveal your scores and combine them and it should give an idea of what your highest priorities are.
Property is definitely one of those things everyone has an opinion on, mostly I think because it is usually the largest asset people own, there is an unhealthy obsession with houses being an investment and people treat it as such. The amount of times my boss has mentioned, 'house prices are dropping you know' like im going to put my life on hold to time a market or snag a 'deal' on a house I dont want just because its a 'good deal' financially to make money, this is completely wrong approach.
Sorry didnt realise how long a post this was!!!
