Author Topic: SHOULD I BUY A HOUSE?  (Read 912 times)

carlosdanger

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SHOULD I BUY A HOUSE?
« on: September 28, 2019, 08:00:19 PM »
Hi all,
Current stash:
Retirement accounts: $270k
Taxable accounts: $450k
Cash: $140k

I am currently in the military and have 5+ years left until retirement. I am considering buying a house now in the area that I want to retire to and renting it out. Houses in this area currently cost $550-700k and have been appreciating double digits each year for the last few years.
The current plan is to pay for a house in full using my taxable accounts once I retire in 5 years. My thought instead is to take advantage of the low mortgage rates and lock in a home price now, I would take my cash and buy with a mortgage with 20% down. Once I retire depending how the markets are, I would then pay off the mortgage using the taxable accounts and FIRE off my pension and retirement accounts which I contribute the maxes to each year. Do I buy now with the cash or put it into the market and buy later? Thanks for any thoughts.

FINate

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Re: SHOULD I BUY A HOUSE?
« Reply #1 on: September 28, 2019, 10:43:08 PM »
I think you should wait until you're ready for a primary residence.

In your post you mention buying a house to rent, yet you didn't provide any investment analysis suggesting you haven't run the numbers. If I'm right then your main motivation for buying now is FOMO on future appreciation. This is the stuff of bubbles.

Also, RE interest rates: At your price range people are paying not what they think a house is worth, but instead based on the payments they can afford. In other words, if interest rates increase it will put downward pressure on prices. This exact thing happened in the Bay Area last year.

Hold off and be patient. Your situation may change and/or you made decide you want to retire somewhere else.  Housing had a good run, and it may continue to increase (who knows, I don't have a crystal ball), but I think it's more likely to go flat or even slightly negative for a few years.

Sibley

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Re: SHOULD I BUY A HOUSE?
« Reply #2 on: October 02, 2019, 09:41:40 AM »
Wait. Continue stashing. You're 5 years out, your plans may change dramatically. And what you want in an ideal house may change as well. Plus, you're assuming that those housing prices will continue to increase. That's what lots of people thought in 2008 and look where that got them.

Dicey

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Re: SHOULD I BUY A HOUSE?
« Reply #3 on: October 02, 2019, 06:14:25 PM »
Another wait vote. I did this with my retirement home, figuring it was so nice, no way would I be able to afford it when I was finally able to retire. Surprise! The place has barely kept up with inflation. I still love it, but it's certainly not my best investment. #WaitWaitWait

AccidentialMustache

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Re: SHOULD I BUY A HOUSE?
« Reply #4 on: October 02, 2019, 09:44:16 PM »
Wait. Renting it out is a pain in the rear.

Also, at that sort of home value you're presumably coastal. Why risk the hurricane/earthquake/sea level rise before you need it?

Malkynn

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Re: SHOULD I BUY A HOUSE?
« Reply #5 on: October 03, 2019, 05:38:59 AM »
-You have no idea what your priorities will be in 5 years.
-You have no idea what housing prices will be in 5 years.
-You have no idea what government policies might exist in 5 years and what impact they may have on your housing market or your investments in general.
-You have no idea what affects changing weather patterns might have in your area.

You have a vague expectation that you will possibly miss out if you wait to buy, based entirely on speculation.

Wait.
Invest.
Decide in 5 years when you actually have the information to make an intelligent and informed decision where you can examine all of the very critical factors in detail.

Dicey

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Re: SHOULD I BUY A HOUSE?
« Reply #6 on: October 03, 2019, 11:18:05 AM »
Funny this just came up again. Zillow just informed me that the house in question has dropped in value. Not that I put a lot of faith in their zestimates, but I decided to run the new number through an inflation calculator. I bought in 2003 for 301k. Zestimate is 401k. Inflation calculator says 301k in 2003 now requires 419K to purchase today. So I haven't even kept up with inflation, boo.


carlosdanger

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Re: SHOULD I BUY A HOUSE?
« Reply #7 on: October 03, 2019, 08:24:45 PM »
Thanks for the replies. I know waiting is the right move but it's good to hear it from others.

Lmoot

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Re: SHOULD I BUY A HOUSE?
« Reply #8 on: October 09, 2019, 04:01:08 AM »
^ Good to hear. I was going to chime in with the others. We are at the crest of recovery, and there may be a dip in the next year or 2 (we are due for a dip). If it dips lower, and you are a little closer to retirement and your heart is still set, then go for it I say. But not right now.