Author Topic: Buying a House Now VS Several Years from Now - WWYD?  (Read 1346 times)

jeff2017

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Buying a House Now VS Several Years from Now - WWYD?
« on: March 27, 2018, 09:01:25 PM »
Looking for some opinions from the forum. Here are the details and the question at hand.

Personal: My SO and I have been together 4+ years and currently live together (since the beginning of the year). We're a great match and I'll be proposing this year, it's just a matter of when. Luckily, we also agree on just about all matters and are both frugal. Our ages are 30 and 31.

Finances: Our combined income is around $140K with the ability to continue to increase. We have no debt. We currently live in a "starter house" that has $40K of equity and has a current value of about $140K, the house was bought 6 years ago. Other liquid assets (combined for simplicity of this post) include: Savings and checking accounts = $60K and Bonds that can be redeemed at any time = $10K. Our combined 401Ks are about $110K (weren't the best at the beginning of work years, but contributing near the max now).

We live in the Midwest, and do not want to live in the exact part of town we live in for the long term. When we leave this house, we already know the area we would like to live in (not too far away but in a better area, school district, closer to friends & family, etc.), and plan to buy once more and not move again as it will meet all of our needs.

The next/final house we will end up buying will be between $275K-$350K. The real estate market here has been going up every year for what seems like since 2010. This paired with interest rates continuing to rise has me wondering if buying now, although a bit premature, is something to consider. We've been casually looking for over a year, nothing serious like making offers, but keeping an eye on listings in the area that meet our price range and desired specs.

On one hand, I fear that if we wait and interest rates continue to rise from today's rate of 4.5% to say 6% or 7%, or even higher, and the housing market continues to increase each year, that the house we "could" buy today will cost quite a bit more. For example, just looking at the mortgage payment and interest alone a $325K house bought today at 4.5% interest rate with 20% down would have a monthly payment (again, ONLY the mortgage and interest) of $1,317 and that same loan at say 6% (assuming rates rise) would be $1,559.

Worst case, if we wait 3 years, the price of the house could continue to increase several percent each year as well.

My Mustachian mind says that the current house will suit our needs now and this is premature thinking. We could be fine staying here several more years and likely up until having a child and wanting them to be in a better school district, at the latest.

Cranky

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Re: Buying a House Now VS Several Years from Now - WWYD?
« Reply #1 on: March 28, 2018, 03:43:17 AM »
Kids donít go to public school until theyíre 4 or 5 years old, so youíve got plenty of time to worry about your hypothetical childís future school district.

So personally, I think you are better off just saving more money until this is an actual problem.

Aunt Petunia

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Re: Buying a House Now VS Several Years from Now - WWYD?
« Reply #2 on: March 28, 2018, 04:53:40 AM »
You are thinking of making a speculative buy, bad idea. On average, the stock market goes up faster than housing. Take the extra money you would spend on the house itself, plus increased utilities, taxes, etc., and put it in a taxable account at Vanguard. You will have a larger down payment in the event that interest rates are high when you are ready to purchase the house. If there is a recession, then the stocks will typically recover faster than housing.

Also, neighborhoods, schools, etc could change in the next five years. I remember being "redistricted" as a kid, my dad was really pissed off because he had bought in one school district and then they redrew the lines after a year.

frugaliknowit

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Re: Buying a House Now VS Several Years from Now - WWYD?
« Reply #3 on: March 28, 2018, 11:44:18 AM »
A home purchase is not a bet, like a casino.

The bigger the home (bought or rented), the higher the overhead (maintenance, taxes, insurance, updating, furniture, etc.).  If interest rates DO go significantly higher, everything else being equal, prices go down.

There is "no such thing" as a forever home (yes, it's possible, but at your ages, highly unlikely...needs change...).

My advise:  Cool your jets!

Sibley

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Re: Buying a House Now VS Several Years from Now - WWYD?
« Reply #4 on: March 28, 2018, 02:45:03 PM »
Stay where you are. Even if you got pregnant today, you'd have 4-5 years minimum before you'd want a different school system. A lot can change in that time. School systems can crash and burn, or get really great. Also, small kids don't need a lot of space.

Keep saving/investing, etc. And keep the wedding costs reasonable.

jeff2017

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Re: Buying a House Now VS Several Years from Now - WWYD?
« Reply #5 on: March 29, 2018, 06:51:34 AM »
Thanks for all of the responses. Sometimes you just need to hear it from others to confirm your gut instinct and think through the situation.

Discussed further last night with SO and we're going to stay put.

Thegoblinchief

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Re: Buying a House Now VS Several Years from Now - WWYD?
« Reply #6 on: March 29, 2018, 06:59:41 AM »
Worth noting you may never end up having kids, may decide to send them to private school, may decide to homeschool.

Iím raising 3 kids in a 2/1 house thatís only 740sqft (not including basement) in one of the countryís worst school districts but weíre making it work.