I am seriously starting to debate buying a condo.
My financial situation
I am a 23 year old single female. I grossed about $100k in 2010 and $115k in 2011. My base salary alone is now over $100k and I'm expecting my total gross for 2012 to be around $132-138k including RSUs.
I've built up a pretty good nest egg at this point ($ = USD):
* 4k CAD in cash savings
* $4k in my checking account
* $24k in cash reserves
* $64k in cash savings for a down payment, plus 4k CAD intended for a down payment that I'll move south soon
* $4k in cash savings for a new car (I'm making a car payment to myself)
* 8k CAD in RRSPs (all in 5 year GICs, so no worries about non-resident trading restrictions)
* $5k in a money market account at Vanguard
* 28k in my 401(k)
* 10k in my Roth IRA
I'm pretty confident that my income for this year won't allow me to put very much into a Roth IRA directly, which is what the $5k in the money market account at Vanguard was meant for. I'm keeping that in cash right now instead of invested in case that will help me with a down payment. So in summary:
* 8k USD/CAD in checking accounts
* 24k USD in cash reserves (savings)
* 77k available for a down payment, closing and moving costs (64k USD + 4k CAD + 4k USD + 5k USD - I'm ignoring exchange rates since the dollars are so close)
* 46k USD/CAD in investments (RRSPs, 401(k), Roth IRA) that I will leave alone
I am maxing out my 401(k) and getting the maximum employer match. Those two add up to less than 20% of my gross income, which I decided was my magic retirement investing number, so I'm putting another $200 into my taxable Vanguard account each month. After that and expenses, about $1,600 is direct deposited to my down payment savings account. That means I'm saving about 45% of my net pay each month. I invest 20% of my gross RSU vests and save the rest.
Buy vs rent
Rent in my area is pretty expensive. I paid about $1,400 for two years and now I'm paying $1,800 (yes, that's how much rent for a comparable apartment went up year-over-year.) Normal rent increases seem to be around 5-30%, but considering that I'm in a one bedroom apartment, I see rent plateauing around $2,100 or so in a few years. It's also possible that rent could go down as the market cycles in a few years, but that seems somewhat unlikely to me.
You might say that paying $1,800 to rent a one bedroom apartment is anti-mustachian, but I really value my personal space and I walk pretty much everywhere since I live in the city, so I never fill up my gas tank more than once per month on average.
When I started thinking about buying, my first thought was houses, but I've realized that I really don't want to deal with yardwork, roof problems, etc. I also realized when I looked at townhouses that as a single woman, I wasn't comfortable buying a place that anyone can just walk up to the door pretty easily. I've decided that I want to buy a two bedroom/two bathroom condo, ideally with two bedrooms of comparable size so that I could rent out the other bedroom if I so chose and allowing for some flexibility in the case of marriage and/or children.
I would say that 2 bedroom condos in the areas I would be interested in run between $275k and $500k. I've used the NYT Buy or Rent calculator to death and really since I have no magic ball to know how rent and property values will change over the next decade, it could take anywhere from 3-12 years for buying to make sense, barring condo prices dropping significantly further than they already have.
Some days I wonder if it makes sense to buy a condo when there are so many variables at this point in my life - will I get married? will I want to have children? will I want to stay in my current city for awhile?
I don't see myself wanting to live in a house in the next five years. The catch on all of this planning is how long I will stay in the States for. Right now, I see myself staying here until I reach FI since moving back to Canada would mean a huge pay cut. I'm not opposed to staying here, but I could also quite happily move back to Canada in 10 years.
Given my situation, do you think that I'm crazy to buy a condo?