I might be inviting some coarse criticism here, but will do my best to stay within Mustachian bounds. At 8 months old, I'm still a very young mustachian you see.
My wife and I are looking into buying our first home. We're in our mid 20s and have a small 'stache mainly built up from some generous wedding gifts. We're in an extremely fast and competitive seller's market here in Austin, where "good" houses will be gone in 8 hours or two days. Luckily my mother-in-law is our realtor and she's available to help us pounce on any house as soon as it comes available to view.
I've shopped around for lenders and have nailed what seem to me to be pretty good offers on 30yr fixed loans at around 3.25 or 3.3%, for home purchase prices ranging from $150k up to about $225k.
As an additional note, housing costs within the city limits of Austin are climbing like mad. One of the main reasons we're considering a home in this market is that (A) certain parts of the city are gentrifying / appreciating quickly, and might actually yield a decent return, and (B) our rental costs are going to keep going up and up.
Final note: my wife currently works from home, so her commute is immaterial right now. That could be changing, but for now it is moot.
That's the background, now for our quandary:I've got a new job on the south-central side of town. At my old job I was expertly positioned to bike to it in 11 minutes, which was awesome. Now I have to drive 8.5 miles, and Austin rush hour traffic is bad. Average roundtrip time is about 1hr or 1.5 hrs. That's moderate by typical American standards, but of course we are not satisfied with "typical" around here.
Now -- my new job was a great find, and I could see myself staying there for 2-3 years easy, if not much longer. There's great room for growth, challenge, and income, so I think I'll be there for a while.
I'd like to move closer to work with our new home. Everyone here knows that a shorter commute is both cheaper and yields better quality of life. I'd *love* to be able to bike to work, aka a radius of say ~5-6 miles from our the job. Trouble is, the only parts of town that we can afford within that radius, we're either buying much less house, a much crappier house, or we have to get really lucky and beat the swarm of investors and other better-experienced buyers with which we are competing.
To demonstrate the difference we're looking at, here are some examples:
Within the bike-able parts of townBest case scenarioHere's an example of a house we wish we could have pounced on, but it was gone just hours after it came on the market:
http://www.trulia.com/property/3056397867-2535-Sol-Wilson-Ave-Austin-TX-78702The bike ride from that place to my new office would be about 40 minutes one-way. That's a fair time investment, but of course the ROI from biking is, as we know, quite good.
The home is in great condition, is plenty big enough, sold for within our price range, and has a great yard with space for our dreamy aspirations such as a garden, chicken coop, or simply enjoying some green space for a change.
More typical scenariohttp://www.trulia.com/property/1096311681-2953-Higgins-St-Austin-TX-78722A bit cheaper but basically representative of the middle of our price range for the area of town we're looking at. Location is basically equivalent to the previous example, but obviously the home is nothing to be particularly excited about. It's simply okay, and basically all the value we'd be paying for would be the land / location. Suffice it to say it's far-less move-in ready than the previous home. Even just a simple upgrading of the space available in the kitchen would likely be necessary just to accommodate moderate Mustachian food habits like buying in bulk, lots of freezer space, etc.
So, with both of these examples, my commute would be just fine. 1.25 hours a day on a bike through the great River District of Austin to get to my office sounds fantastic.
Now, on the other hand ...
The Not-Bikeable (north-central) part of townFurther north we have frequent housing choices come up like this one:
http://www.trulia.com/property/1091555834-1315-Neans-Dr-Austin-TX-78758To us, that house looks awesome. It has more than enough space for everything. So much space, perhaps, that we could even consider having some of our young-married-friends come share the space with us, and get significant rental cashflow out of it. We'd love to do that *anywhere* that we live, but within the aforementioned Bikeable Zone, I don't think we can afford a property large enough to yield rental cashflow.
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DiscussionAnyway -- personal or aesthetic taste aside, I think the disparity in value per location is pretty evident. The very first house (Best Case Scenario) in the bikeable zone is certainly
possible, but we are just not sure we'll ever be able to
win on a house like that. Such a house only comes along in the Austin market maybe 2-3 times a month, and it's gone almost as soon as it arrives. We're nervous and not optimistic about winning that battle, esp. since we're hoping to have a house under contract by early July, since our rental lease expires in August.
Transit from the north endIf I were to commute by car from the 1315 Neans house shown above, it would probably be 1hr minimum roundtrip everyday, likely closer to 1.5 or even 2hrs on the worst of days. Blech.
There is another option, though. Austin does have a (somewhat shitty) rail system in recent years, and from the north end I can bike to one of the rail stations and ride most-of-the-way south toward my office. In that case, my total time in transit would still be about 1.5 hrs, but none of it would be in a car. The total monetary costs associated with this transit option would be, sadly, about equivalent -- I drive a very gas-thrifty Honda Fit and Austin is not a huge city; on the other hand, taking the train would cost something like $3.50/day. So, the change between these two would purely be the quality of the commute, as opposed to the time or fiscal cost.
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ConclusionNeed some help sorting this out. As you can see there are several problems I'm considering here.
One of them might simply be: maybe we need to find a way to keep renting for a while, build the 'stache, and forget about the (possible) trap of homebuying in this current market.
Or, if anyone has any other brilliant ideas about *any* of this, I am down to listen. You may not answer the question that I intended to ask, but perhaps you'll provide answers to question(s) that I ought to be asking.
Have at it! Slaps are okay. Thank you, all, for reading this rather long post.