Hello all,
This is my first post, but I have been following this community (and the blog) for a while now, and have learned and implemented much from what I have read. I am hoping you can give me some perspective, and perhaps a punch in the face if needed. Here is my situation:
Location: Spokane, Valley, WA
Income: $65k (new engineer, graduated <2 years ago)
Retirement accounts: $34k, currently maxing out my Roth IRA, and putting another $100 from each paycheck into my 401(k) to get the company match. I am currently putting such a small amount into my retirement accounts so that I can fund my house down-payment fund.
House down-payment fund: $14k, putting $900 from every paycheck into this account since I payed off my student loans.
Credit Score: 797
I am also putting $250 from every paycheck into a fund to eventually buy a car, as I currently drive a 1998 Honda Civic with 230k miles (so far I only have $2000 saved).
Here is the rest of my situation: I am currently living with my parents, in order to pay off my student loans (done, no other debt), and save up to buy a house. The arrangement is working pretty well, but friction is slowly building, and they would definitely like to see me move on to the next phase in my life before long. I’m getting a lot of pressure from them to buy a house, new(er) car, etc…
I realize that my down payment fund is currently very small. To make matters worse, the price range of houses I am looking at in Spokane Valley ($170k) are generally pretty low quality. One I looked at yesterday was about 3br/1ba, 800 sq ft, had very cheap updates, and there were already multiple offers in excess of the $165k asking price. It just didn’t feel solid at all, and a lot of the other local listings in that range look very similar. Just for kicks, I went to look at a 4br/1ba (with potential to easily add a second bathroom) house listed for $225k, and it was not only much higher quality, but over twice the size. I am also frustrated at the apparent fact that there is very little discount for buying a smaller house (say 1100-1400 sq ft), as those are generally in the $200k range. It seems there is a huge premium on small homes, or they are lacking in quality.
I’m having trouble deciphering the market here in the Spokane Valley area. Like a lot of other places, house prices have gone up significantly in the last 1-2 years. My gut instinct was that the market was due to come back down, but there seems to be a large influx of people moving here from HCOL areas such as California, and I wonder if this will continue, and drive prices up. Additionally, it appears that Amazon is building a new location in nearby Airway Heights, which I worry will continue to push housing prices upward.
So all that being said, I’m wondering if you can give me some advice for how to proceed. Obviously I’m in the very early stages financially, but I want to make sure I make a good decision here. The way I see it, I can either 1) continue living at home, saving aggressively until I have a larger down payment, 2) move out and rent an apartment (looking at the rental market, this would likely cost $1000/month, slowing my down payment savings way down), 3) buy in the near future, either spending more than I’m comfortable with, buying a place of low quality, or buying a fixer-upper and learning to remodel as I go.
Hopefully that was enough detail, but please let me know if I am missing anything. I really appreciate any insight that you all could give on any aspect of my situation. Thank you in advance!