Author Topic: Determining the right house to buy  (Read 4232 times)

Jammer

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Determining the right house to buy
« on: January 25, 2015, 04:48:16 PM »
Hello!

My wife and I are in a situation where I would really like some Mustachian advice. We're looking to buy a home and currently live in a coastal town where home price per square foot can seriously differ based on location. What's $160/ft on one side of town could be $300/ft on the other.

Would it make more sense to buy a brand new home, roughly 20 minutes away from work (w/traffic) and another 10 minutes to downtown or the beach (where we love to spend most of our time) for $155/sqft or a home 10-20 years old for around $175-180 sqft much closer in to town that will require upgrading? We're in a very hot housing market town, where it's definitely a sellers market.

I understand it's definitely cheaper to live farther out,  but what about the things you love to do or the social aspect of living closer into the area you hang out in? How do you put a price on what you enjoy?
How do you judge what may be the best investment?

Thanks in advance for your wisdom!

humblefi

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Re: Determining the right house to buy
« Reply #1 on: January 27, 2015, 08:54:45 AM »
Some factors to consider:

+ Staying closer to work is cost effective and less stressful because most day-to-day activities like shopping, doctor visits, post-work activities, etc are all closeby.
+ M-F work days are packed days for us...so, an extra hour from not commuting is really great for us. An extra hour of commuting on weekends to the beach not much.
+ If you ever consider holding the house for many years and if you will have children during that time, staying closer to town will make many many things more efficient.
+ A home closer to town will hold its value *better* than a house away from it. I am *not* saying that it will not lose money okay...just holds its value better :-)

Hope it helps.

caliq

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Re: Determining the right house to buy
« Reply #2 on: January 27, 2015, 09:02:59 AM »
What about the 10-20 year old house will need upgrading?  If you can find one that has solid mechanicals but hasn't been done up on the inside, you could get a lower price and a house that new shouldn't absolutely require interior upgrades immediately -- you can live with an out of style interior for awhile and take your time to do the upgrades in a cost effective way. 

Also check out MMM's post on the true cost of commuting and see how the numbers work out for your particular situation:
http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/

Jammer

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Re: Determining the right house to buy
« Reply #3 on: January 28, 2015, 12:15:04 PM »
Thanks for your replies guys.

I actually do have a kid on the way, so Humblefi what you mentioned about commuting is important to me too. The new home we're considering would be 2.5 miles from the nearest grocery store, 12.3 miles from the beach, 15.8 miles from the downtown area we love to spend our time in, 8 miles from the main areas to shop, see a movie, etc.

@Caliq--in my town the homes in our price range closer in to town are all 15-20 years old and have roofs like will need to be replaced while we own the home and likewise with HVAC units (most of them anyway). I'm not really worried with anything interior to update (we can wait on that like you said), but the major things like a roof. The Houses we have looked at are all around 300k or more and priced more per square foot than the newer home that's 16 min farther out.

Wouldn't the cost of commuting be less than the cost of updating an older one (replacing a roof, updating an old kitchen, HVAC unit) that requires no real commute?

former player

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Re: Determining the right house to buy
« Reply #4 on: January 28, 2015, 03:07:26 PM »
The cost of commuting is not just money.  It is also time.  And time will be precious to you when you kid arrives.  The other thing is that it sounds to me as though the house further out would mean driving to everything.  With a baby or young child it is much nicer to be able to walk out of the door and go somewhere rather than always having to put the child in the car and drive.  In other words, the more expensive houses are more expensive for good reasons.

Can you go down in size to reduce costs?  My strategy has always been to buy a smaller house in the best location I can afford, which has had the side effect of reducing the amount of stuff I own.  Research suggests that, long-term, people tend to value experiences over stuff, which would also favour the house in town.  Provided always that you can afford it, of course.


eyePod

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Re: Determining the right house to buy
« Reply #5 on: January 29, 2015, 08:49:26 AM »
I actually do have a kid on the way, so Humblefi what you mentioned about commuting is important to me too. The new home we're considering would be 2.5 miles from the nearest grocery store, 12.3 miles from the beach, 15.8 miles from the downtown area we love to spend our time in, 8 miles from the main areas to shop, see a movie, etc.

LMAO. The last thing you should be thinking about is being able to shop. The last movie my wife and I saw in theatres was Chef. We have two unused gift cards for movie theatres because we just don't go out anymore. Get ready for your life to change!

EricP

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Re: Determining the right house to buy
« Reply #6 on: January 29, 2015, 09:39:19 AM »
Does the older house put you in bike range of work?  Because if it's the difference between a 20 minute drive and a 10 minute drive I would opt for the newer house, but if it's a 20 minute drive or a 4 minute bike ride, I'd go for the 4 minute bike ride and the older house.

If a lot of your frequent commutes can turn into bike rides than I would opt for whatever house allows that to be possible. 

If you want to take a real mathy approach to it I would set up a "standard" commute profile that has X number of drives to work per month, Y number of drives to groceries, etc. and then just calculate out how much extra commuting time you are dealing with each month.  That will make it something easier to understand and then you can compare the costs of housing.

One last note, I personally am weary of fix it up houses as there is always more wrong than you first realize, but that's probably just my personal distaste for having to renovate stuff.

OutBy40

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Re: Determining the right house to buy
« Reply #7 on: January 30, 2015, 06:50:50 AM »
I understand it's definitely cheaper to live farther out,  but what about the things you love to do or the social aspect of living closer into the area you hang out in? How do you put a price on what you enjoy?
How do you judge what may be the best investment?

This is a question that almost all of us wrestle with at some point in our lives.  This will all come down to your priorities and what you value more in your life - not necessarily only money.  Unless the difference between these homes is significant, then any additional costs for a home in an area that you might value more will probably come out in the wash by the end. 

Picture yourself in both homes.  Does one home make you feel more satisfied than the other?  If I may read into your post a little, it certainly sounds like you'd rather live closer in to the city with more stuff available to do.  If so, does this desire to live closer to "stuff" mesh well with your soon-to-be kid?  Meaning, would you rather raise your child in the suburbs or the city? 

In my view, if living closer into town makes sense for your family, even if it means a more expensive house, I would probably spring for the more expensive house at your desired location (again, provided you aren't slapping down an additional $500k or something crazy).  Ultimately, you will be a happier person, which will translate into a happier marriage and home life in general, happier commute into work, reduced stress level, etc.  Any upgrades that you do to the house can come over time.  If you do the work yourself, you obviously save money on the labor, and by the time that you move away from that house, you might stand a good chance at making some serious cash with it. 

HawkeyeNFO

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Re: Determining the right house to buy
« Reply #8 on: January 30, 2015, 07:12:39 AM »
I had to stretch our budget to get a house within a 15-20 minute drive (45 minute bike ride) of my office at the Pentagon.  I could have saved $300k-$400k if I was willing to move way outside the beltway, but I would be spending upwards of 15 hours each week in a car/bus/train.  Money well spent, I'd do it again the same way.  The other thing to consider is that as property values go up, some areas will appreciate much faster than other in the same metro area. 

Noodle

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Re: Determining the right house to buy
« Reply #9 on: January 30, 2015, 07:21:23 AM »
Would there be any possibility of waiting until after the baby comes to move? I ask because people's lives and priorities often change in ways they hadn't predicted when they have children. I get that it's tempting to have everything done before the baby instead of dealing with a huge project when you have a little one, but it's possible that these questions may have obvious answers once you know more about your family dynamics. (Ie, you become homebodies and don't care about a closer location, or you realize you have zero desire to work on house projects when you'd rather spend the free time with baby).

2527

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Re: Determining the right house to buy
« Reply #10 on: January 30, 2015, 07:30:09 AM »
Is there a big difference in quality of schools?

The more distant commutes you describe really aren't so bad. 

Are both neighborhoods holding up for the long haul?

If everything else really is solid, a new roof and HVAC is not a big deal.  It's just money and a contractor.

Don't get fixated on one factor.