Author Topic: Frustrated w/home shopping. budget went from $350K-$500K. Need advice  (Read 2973 times)

mamabear18

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i Everyone - I need some advice from different perspectives.  First time homebuyer. I'm in my mid 40s, married with 2 kids. Spouse stays home. Currently make $100k plus a nice bonus every year.  We have no debt. We started out looking for houses in the $350k range (trying to live below our means), but quickly found that the city #1 (which  we like the most) has older homes (1950s -1980s) and need to be completely remodeled and are smaller (less than 1900 sq ft and funky layouts).  Not interested in remodeling b/c that will take 6 months and we have a 6 year old and a 3 year old with no help.

Then we moved up in budget. Started looking at $375-$400k homes. Not much additional square footage. Running into similar problems. older homes that need to be remodeled and the ones that are remodeled are involved in bidding wars which I don't think we should participate in.  I've also noticed most of these homes that are remodeled are not being done with permits which seems scary to me.  The market in city #1 is insane. As soon as good house comes along - its gone in 24 hours and usually over asking price.

So now we are debating moving father away from our first choice city (city #1) to city #2. You get a little more for your money, but it is farther away from the metro city downtown area (near airport), a tad more traffic, less exciting than our favorite city #1, not as diverse (which is important for us).  Homes are newer ( 1970s-1990s), but need some remodeling. Not as bad as city #1. I was hoping for something a little more modern.  Looking in this new city would be a compromise.

Now we are considering going up in budget - $475-$500k only b/c of super low interest rates. This is the absolute max in our budget. We can afford it, but I think its ridiculous that I'm even looking here. I can get a NEW HOUSE for about 2400 sq feet in city #2 for this price range. The bank said our max loan is $515K.  Just to give you some perspective I get paid twice a month and take home pay in 1 check is $3k. the mortgage, interest and insurance would be $2500.00 a month.  Is this insane or normal?

I don't know what to do. I feel like my options are:
1. buy under $400k in city #1 and have a smaller house thats old and not visually appealing and having to repair aging parts of the house.
2. buy between $400-$450 with similar issues and live with a dated interior in city #1.
3. Buy $400k in city #1 and engage in bidding wars up to $450k.
4. buy a new house for $485-$500k - in less desirable city, be on a budget, but not worry about things falling apart and house is modern and nice.

Does anyone else see any other options? I guess we could rent, but rents are high in desired city #1. about the same as a mortgage in $450K range ($2,200). We've been looking since January :/

Is it even a good time to buy with coronavirus? My job is fine now, but you never know.  My priority is alway to protect my hard earned and saved money.  I want to be smart about home purchase but I feel like I want is unattainable.
Thank you for your help!

secondcor521

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A good rule of thumb I learned recently is that if I don't like any of my options, I need to generate more options.

In my local real estate market it is very much a seller's market.  Normal inventory levels are 3-6 months, and we're down to about 5 weeks.  It sounds like your market may be in the same situation.  Sometimes waiting will see the trend turn back the other direction and make the market more neutral or even a buyer's market, and sometimes it takes a long time of waiting if ever.

Another option is to consider additional cities or even other states.  If you move away from the coastal areas and to anywhere in the middle of the country, then you will find much lower priced houses.  Of course a move that far away will also impact job, friends, kids' schools if you have any, etc.

Another option is to buy a smaller house.  My three college-age kids and I live in a 1750 square foot house and it feels perfectly fine size-wise.  If part of your intended house is for a hobby, consider not having that hobby be done in your house (perhaps you're thinking of a home gym; get a gym membership).

You could also look for houses before they hit the market.  This could save you both the realtor fees and the bidding wars.  Not sure how that's done, but I'd google for ideas in that vein.

You could get over your worry about house repairs and your concern about dated interiors.  Stuff in houses breaks down on a pretty predictable schedule, and you can figure out what you're in for in a well-maintained older home if you get an inspection.  Roofs, AC's, furnaces, and kitchen appliances are probably the big ticket items, but your inspector can say with greater certainty.  And you can learn to live with formica countertops instead of granite.

An option I would rule out but you might consider is if you have parents or grandparents who would be willing to help with the down payment.

I wouldn't recommend becoming house poor.  If you're bringing home $3K a paycheck twice a month, I'd be looking at no more than $2K and preferably closer to $1500 for the mortgage, and that would be including taxes and insurance.

BikeFanatic

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Or consider a smaller house that has room to expand say in 5 years. I have friends that bought there dream house but they eventually needed more room for the kids. Good luck sucks paying that much for a house and bidding wars suck.

SwordGuy

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I'm going to be blunt.

Personally, I think you're crazy to be buying a house for $350k on a $100k income, so a $500k purchase is just super crazy.

Several generations lived in those older homes.   They lived happy, fulfilling lives.   Why can't you?

You seem to be acting under the illusion that one simply must update a house?  Why?   Why not just keep it in good repair?   Or embrace it's era and enjoy.  Our last three homes had a strong mid-century modern look so we just ran with it.  Gave us nice places to live and we didn't have to spend a fortune either.

Why not buy one that's less expensive and then add to it as the years go by?   Turn the carport into another room.   Add a room on the back.    Add a second story.   These are all things that my parent's generation did as a matter of course.   They didn't expect to buy "a perfect house".   

And frankly, a lot of the newer homes are just butt ugly, tasteless, overly expensive, poorly built, and remind me of budget hotel lobbies.   See https://mcmansionhell.com/101 for examples.

I'm curious.  What metro area are you in?

I routinely see people claim "One simply can't find a home for less than $X." and when I go on home sale sites, I find hundreds of homes (often looking quite nice) that have been sold for much less.

SailingOnASmallSailboat

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I'd also say to look hard at "requires renovation." Is this because a given house is not habitable, or because the finishes are not as awesome as you'd like? When we moved into our house 20 years ago, what we liked was that we didn't HAVE to do anything. We could live in it, cook in it, move our furniture into it. Over time, we've done a lot, much of which someone else would have considered "required" right off the bat. The only thing you can't change is the location of a house. Everything else? Over time, you can modify.

Freedomin5

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I would not go over 3x your gross income for your home purchase price. Otherwise you're stretching yourself too thin.

Another option is that now that both your kids are old enough for school/preschool, your spouse could work, which would increase your family income and allow you to afford a better house in the location you want.

Right now, you don't make enough to afford the house you want.

ixtap

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When you say rent is as high as a mortgage, is that just principal and interest or does that include taxes and insurance? If you end up getting a bigger loan than expected, will you be paying PMI?


How much are you saving now? Is savings + rent at least the new full payment (including taxes and insurance and something for maintenance)?

Have you actually run a rent/buy calculation?

Have you looked at townhomes/ condos?

seemsright

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My 90's house is fantastic. Everything works. I flat out do not care if my mini blinds are pink, or the tile is mauve. The brass in the bathroom adds more shine to the morning. Hubby and I are trying to fully FIRE by the time our 6th grader graduates from High School. Priorities.

Life is simpler with no bills. But the least house you can.

Owning a house is stupid expensive. It is not fun when the kitchen rains, or the furnace and roof both need to be replaced at the same time. The furnace due to age and the roof due to a wind storm. It is not fun when all of the glass fails at the same time and had to be replaced windows are not cheap. I can go on and on about how expensive a house is. Have a 'oh shit' fund for the good times that you will get to have. Like the late night runs to Walmart because something broke at 10pm and cannot wait till morning.

mamabear18

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secondcor521-I like your rule of thumb :) . You will be happy to hear that I did move to be able to afford/buy a home. I went from the West Coast HCOL area to the northern midwest a year ago. I left my family and friends for a better financial situation.  I like the idea of reconsidering a smaller house. I grew up in a house with 3 bedrooms and 1 bathroom and it was fine. I think that b/c I've lived in older homes all my life in the west coast, I was hoping to upgrade to a newer house for less. It is definitely less than the west, but still pricey here lol. I really appreciate your input and will definitely stop looking at remodeled homes. You are right. As long as it meets our needs, that is what is important and we can always add later. Definitely agree with keeping mortgage, taxes, insurance at $2,000 max.  Unfortunately, neither of our parents have money to help us. It is just us. I'm putting 10% down so we can have plenty of cash on hand and don't mind PMI as its only $80.

Bikefanatic - thank you and yes, based on everyone's advice, I'm going back to square one - smaller and less expensive house.

Swordguy - thank you for being blunt. I needed that. Yes I agree its crazy to consider going that high. I needed to hear it from someone else.
I will definitely be taking your advice and embrace the older homes. I think I just got swept away with all nicer homes we looked at and took my eye off the real prize. financial freedom. thanks for the McMansion link. will check it out. I live in Minneapolis area.

sailingonasmallboat - thank you for reminding me how important location is. I am willing to go smaller and older after reading all of these posts. sometimes I get distracted with the glitz and glamour of new homes.

freedomin5- agree with spouse going back to work in a couple of years. Due to interest rates being extremely low - a $400k house will provide me with a comfy $2,000 mortgage all in (taxes, interest, insurance).  I feel comfortable with a max payment of $2,000 a month. We have no debt. on track to hit my retirement goal in 10 years, kids college funds are being funded, emergency fund, etc...we are prepared financially. I also get a hefty bonus quarterly. So my gross income is higher than $100k and lower than $200k but I don't count bonus in my calculations, because you never know.

ixtap- for ex:i currently pay $1980 in rent for a 3 bedroom townhouse about 1500 sq feet. if you see my response to freedom5, you will see the details of what I pay for rent and how much payment I can afford on a house. I currently don't have a backyard and if I rented an actual house- that rent would be $2200 in city #1.  The monthly payment of $2,000 includes PMI. Yes, I have done a rent/buy calc and it tells me to buy.  If my monthly house payment is $2,000 - I already have an emergency fund for house repairs if needed and I was planning on saving $300 a month to continue to fund it. I have plenty of room in my budget to save for everything. I have looked at townhouses, but the only reason I prefer single family homes is b/c of my 2 little kids. They really need a backyard. Right now, I rent a town house and the backyard would be very helpful for us. right now we have to drive to the park almost everyday :/

seems right- totally agree. I am realizing that a house is more expensive than I thought and after hearing from all of you - definitely changing priorities. I just got a little sidetracked. I even considered renting, but what if the owners sell?  Thats a messed up situation. My parents went through that and it was heartbreaking.  I don't want someone to tell me I have to vacate a home b/c I'm a renter. If I decide to rent, its part of the game but I don't think I'm willing to play that game just b/c of experience.



AccidentialMustache

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If you can afford the time I would recommend having a read through the Not So Big House. https://susanka.com/not-so-big-house/ -- you should be able to pick up a copy from your library to peruse. Size and updates don't matter. Fit and quality do. Fixing a house might be cheaper than you'd expect, especially if you can DIY it. This isn't gut/redo but selective additions/subtractions to fix specific issues.

It honestly sounds like you've applied too many filters to your search. Are you working with a buyer's agent who is learning your tastes and showing you better houses for you each time you go out -- or just more expensive houses each time? Are you looking on zillow/redfin yourself, no agent? Try relaxing your search criteria some, or set only absolute minimums -- if you need a parents, boy, and girl bedroom, look for a 3 bed/1 bath as a minimum so you aren't excluding otherwise exceptional houses (or ones who listed poorly, like having 1.5 or 1.75 baths and "rounded down" to only 1 on the listing).

Are you seeing a lot of FSBO aka overpriced-by-owner? If you are, start looking outside those.

One important question about kids and back yard -- would they use it? We moved to be able to bike to his school. The house happened to have a pretty nice play structure, but he just won't use it. Take him to a park and he's good for a hour plus. He wants other kids and there don't happen to be any his age in the neighborhood. Sometimes if friends are over we can get him out but mostly he wants to play inside with toys with friends.

You might be somewhere more expensive in the midwest than I am, but $400k is pretty stupid high end here. Our first house was under 200 for a 3 bed/2.25 bath ranch, 2100 sf + full basement. We moved to be able to bike the kiddo to school and that bumped us to under 300 for a slightly more finished sf, less total (basement partially finished; 2 story not 1 story). The new one was an architect-designed house built in the 80s. Lots of windows, lots of light.

Cyanne

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #10 on: July 13, 2020, 06:59:43 AM »
I live in the Minneapolis area and can confirm that it is usually better financially to buy rather than rent in this market.  The median home price in the Twin Cities is now over $300,000.

Mama bear, I’m not sure which two cities you are looking at but be aware of property tax differences too. Hennepin county is higher than the rest. I own two properties in the Twin Cities and I was surprised at difference between Hennepin and Washington counties.
« Last Edit: July 13, 2020, 07:07:14 AM by Cyanne »

SwordGuy

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #11 on: July 13, 2020, 08:17:08 AM »
I'm truly glad you found my comments helpful!     

I suggest you go onto zillow.com for the minneapolis area.  Change the parameters to:

Sold
Max price $200,000
3+ bedrooms
1.5+ bathrooms
Home type: house, condo, townhome.

There have been a whole lot of homes sold for less than $200,000 in the last few years.

Some of those are data entry errors (some goober marked it for sale and meant for rent, or it's a lot not a house).   But a lot of them are houses that people bought that meet those search criteria.   Take a look at the photos.   You'll see that quite a few of them are perfectly serviceable homes.

Don't make assumptions about the area.   Don't assume it's crime ridden just because "those people" (whichever group that is) live there.   Check the crime stats for the area that has the homes and then also check the crime stats for the areas you think are "safe".   You might be surprised.   Go next door and meet the neighbors before you buy and ask them about the neighborhood.

I lived in some apartments in downtown DC when I had some long term contract work up there.   To hear my suburban white coworkers talk, you would think I would be mugged, beaten, raped, then mugged and beaten again, all within 50 feet of the metro exit.     And yet the neighborhood had young ladies out jogging at 10pm at night -- and I saw the same ones over and over so clearly it was much safer than my coworkers thought it was.

Ditto for the schools.   Check them out.  (Well, that's kinda hard now, but normally that's good advice.)   You might be pleasantly surprised.

MMM has a post about TDES -- Tiny Details Exaggeration Syndrome.   I see it a lot when people talk about buying a home and how they can't find a decent one for less than some extravagant sum.

bloodaxe

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #12 on: July 13, 2020, 08:41:25 AM »
Why not something like this:

https://www.zillow.com/homedetails/5741-Logan-Ave-S-Minneapolis-MN-55419/1896438_zpid/

3 bedrooms, basement, large yard, good schools, < 300,000.

It's been on Zillow for 30 days, so I'm sure there are other available homes that are similar.

FINate

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #13 on: July 13, 2020, 09:03:21 AM »
Location, location, location. You can fix almost anything on a house, but you can't change the neighborhood. I'm not saying you should go for the swankiest location, as SwordGuy points out, there are many hidden gems if you look beyond certain superficial metrics.

IMO, you're better off buying a smaller less up-to-date home in a close-in location rather than a larger home further out or in a city that you don't really like.

Safe and habitable are the main things, everything else can be fixed/changed while you live in the house. You'd be surprise how much of a difference new paint, flooring, and fixtures make. These are cheap and easy to DIY. Even a roof isn't (usually) as expensive to replace as many people assume - get a quote from a reputable company before releasing contingencies. The only caveat I might add in your situation, since you have little ones, is the potential for lead paint mitigation/stabilization, especially for interior surfaces.

You'll adapt to a funky layout and figure out how to make it work. Creative use of furniture helps. Need a closet where you don't already have one? Get an armoire. Insufficient kitchen cabinet space? Add a hutch.

You may even find that you like that funky layout. For a long time we lived in a 90's era home with an open layout and vaulted ceilings. Most newer housing follows this design, it's what we're supposed to want, right? But we found that we disliked it. Too noisy and too much wasted space due to lack of separation. Especially with kids, we really like having space that's partitioned in such that the kids can play in one area of the house and we can read or talk on the phone in another area. Or I can be making lots of noise cooking in the kitchen while not disturbing those watching a movie.


MudPuppy

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #14 on: July 13, 2020, 09:29:29 AM »
I donít believe in perfect houses, as a preface.

We knew we wanted to move back to my childhood community after my spouse finished school, but during the time between when we married and when we were in a financial position to buy the community when from sleepy little county seat to the whole county being desirable. We were not willing to look outside of three particular zip codes. We ended up having to 1) increase our budget by about 25-30% 2) compromise on the lot size, and 3) delay buying until we had saved more down payment.  The buying process was frustrating and we offered list 7 times before we got an offer accepted. Some of the houses were move in ready and some werenít even inhabitable. They all ticked at least half our boxes, even if they werenít all the same boxes.

In your position I miiiight consider an increase in total housing budget, but I think adjusting your criteria is going to bring you the better overall lifestyle.

SunnyDays

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #15 on: July 13, 2020, 09:39:13 AM »
Absolutely prioritize location.  Everything else can be changed.  Small is also good - it costs less in every respect to maintain a smaller house.  Plus, you can keep a better eye on the kids!  As long as the structure is sound, other changes can be made over time.  Don't forget that anything that's the rage now, will be dated in 10 years anyway.  Think "vintage" instead of outdated.  I'd rather have a genuine 1930's house than a genuine 2000 house.

Housing costs all told should not exceed 35% of your income according to Gail Vaz-Oxlade, Canadian financial guru.  That will allow you a comfortable life.

Look at lots of homes that you can comfortably afford before you even make an offer, so you get a good idea about what is easily fixable and what is not.  You may find your priorities changing as you see more houses.

Also, if you live in a summer climate, the house doesn't need to be as big.  Ditto if it has a basement.  Room in the yard for a large shed turned craft area/gym/solo retreat?  Great - no extra taxes required.  Use your creativity to make a smaller home work.

Michael in ABQ

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #16 on: July 13, 2020, 10:34:19 AM »
If you wait 6-12 months prices will probably drop as a wave of foreclosures hit from job losses. The government can't/won't continue to pay people not to work nor will they prevent lenders from foreclosing forever. Millions of people have lost their jobs and won't be getting them back anytime soon. Some of them are either going to sell their houses to unlock some of that equity, or get foreclosed on if they don't have any equity. In either case it will place downward pressure on prices. It's still a seller's market as there are very few people looking to sell and limited supply. Most people are in a holding pattern waiting for things to return to normal - if that's even possible. But this won't last forever and if you continue to pile up cash you'll be in a better position to act when that deal comes along that checks most of your boxes.

Sibley

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #17 on: July 13, 2020, 12:01:42 PM »
If you wait 6-12 months prices will probably drop as a wave of foreclosures hit from job losses. The government can't/won't continue to pay people not to work nor will they prevent lenders from foreclosing forever. Millions of people have lost their jobs and won't be getting them back anytime soon. Some of them are either going to sell their houses to unlock some of that equity, or get foreclosed on if they don't have any equity. In either case it will place downward pressure on prices. It's still a seller's market as there are very few people looking to sell and limited supply. Most people are in a holding pattern waiting for things to return to normal - if that's even possible. But this won't last forever and if you continue to pile up cash you'll be in a better position to act when that deal comes along that checks most of your boxes.

That's a very good point. And it is giving me nightmares with my parent's situation right now (will need to sell a house, then buy a house, in different locations).

K_in_the_kitchen

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #18 on: July 13, 2020, 12:53:45 PM »
Absolutely prioritize location.  Everything else can be changed.  Small is also good - it costs less in every respect to maintain a smaller house.  Plus, you can keep a better eye on the kids!  As long as the structure is sound, other changes can be made over time.  Don't forget that anything that's the rage now, will be dated in 10 years anyway.  Think "vintage" instead of outdated.  I'd rather have a genuine 1930's house than a genuine 2000 house.

This!  We prioritized proximately to DH's workplace over anything else.  We bought a 1700 square foot vintage 1920s house with 3 bedrooms but no separate family room.  It had been "remodeled" 11 years prior, and it was so dated!  The kitchen had blue formica counters.  The front bathroom had an 1980s makeover including a shower/bathtub insert with brass shower doors, as well as a pony wall and an apartment quality sink cabinet, and it had been sponge painted with pink and burgundy.  The intended master bedroom, done in 1991, had floral wallpaper I'm pretty sure wasn't even current when it was hung, and light blue carpeting.

Over the years we put in sweat equity and also had some refreshing done -- the most expensive in house remodel was skinning the kitchen counters, replacing the cabinet doors, and putting in new countertops, and that was about $5K.  DH and BIL gutted and redid the front bathroom, and now it will never look out of place in our vintage house.  But one thing we've learned is you either have to accept that things get used and will eventually look like it, or you throw money at it over and over again.  One nice thing about a nice house is it would never make sense to try to remodel it to look like a newer house, so we don't feel the pressure to make it look like a new or flip house.  The era of the accent wall never touched our house.  We get away with having less than perfect wood floors, because they're almost 100 years old.

Over the years we've switched up room functions, and we always make it work, even if it's unconventional -- that master bedroom is a work-from-home office by day, TV/movie watching area in the evening, and bedroom for a young adult by night.  On weekend days it's mostly a craft room and music room.  It's not perfect, but it's ours.  For 25+ years DH has been able to commute by foot or bike (previous condo was in same neighborhood), saving so much money, but also giving us all more time together.  Yes, we feel a little squeezed at times with four adults in one not-so-big single story house, but within the decade it will seem much bigger when it's only DH and I.  I'm certain we'll be glad not to have 2500 - 3500 square feet of house to clean and maintain.

We live in a HCOL area and chose a house not quite double our gross annual income.  People had opinions about us choosing a smaller house in a less "family friendly" neighborhood (which I guess means in a planned community or on a cul de sac).  But we weathered every economic downturn without fear of losing our house.  As friends moved "up the hill", we stayed put near our city's downtown, within walking distance of many amenities.  Buying within/below our means has never been a mistake.

mm1970

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #19 on: July 13, 2020, 02:01:19 PM »
+1 on SwordGuy.

My comments, in no particular order
Location: matters, but not as much as you think.  People in my town will spend 20% to 30% more to get their kids into a better elementary school, but they all go to the same high school.  What they want is a WHITE elementary school.  The school district is 60-65% Latino.  Get used to it.  Also, many neighborhoods go through gentrification, so the idea that you can't fix location is false.  It's just a slow process.

Renovation/ nice houses.  YMMV but I am SHOCKED at what houses are going for here.  1300-1400 sf, FULLY RENOVATED, $1.3M.  House next door, 2000 sf, dated.  $950k.  It's really ridiculous, but people are willing to pay a lot extra in some locations for something pretty.  Meaning, you can get a deal if you don't want something pretty.  I find myself looking at old homes online and thinking about how dated they are.  But honestly, they are functional.  Just give me enough counter space and a dishwasher.  We had neither in this home, so husband built new cabinets so we could get a dishwasher.

Space.  We have 1150 sf, 2BR, 1BA with 4 people.  Not gonna lie, I'd like an extra bathroom.  We are doing fine without it though.  I also really like "The Not So Big House" (we own the book).

Just think of how wasteful it is to replace a kitchen because it's dated.

FINate

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #20 on: July 13, 2020, 02:27:43 PM »
Neighborhoods change, but there's little an individual homeowner can do to change a neighborhood. Buying in a location that you believe is ripe for gentrification is a strategy the may pay off in the long run. But things can also go in the direction of blight. Not much you can do except attempt to organize neighbors, advocate for good governance and investment, and hold leaders accountable.

Things that matter more like walkability and bikeability, and proximity to jobs and amenities, are nearly impossible to change. Buying a house in the exurbs with big lots and lots of cul-de-sacs? Get used to a long commute and driving for every single trip.

Fishindude

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #21 on: July 13, 2020, 02:46:31 PM »
I'm going to be blunt.

Personally, I think you're crazy to be buying a house for $350k on a $100k income, so a $500k purchase is just super crazy.

Several generations lived in those older homes.   They lived happy, fulfilling lives.   Why can't you?

You seem to be acting under the illusion that one simply must update a house?  Why?   Why not just keep it in good repair?   Or embrace it's era and enjoy.  Our last three homes had a strong mid-century modern look so we just ran with it.  Gave us nice places to live and we didn't have to spend a fortune either.

Why not buy one that's less expensive and then add to it as the years go by?   Turn the carport into another room.   Add a room on the back.    Add a second story.   These are all things that my parent's generation did as a matter of course.   They didn't expect to buy "a perfect house".   

And frankly, a lot of the newer homes are just butt ugly, tasteless, overly expensive, poorly built, and remind me of budget hotel lobbies.   See https://mcmansionhell.com/101 for examples.

I'm curious.  What metro area are you in?

I routinely see people claim "One simply can't find a home for less than $X." and when I go on home sale sites, I find hundreds of homes (often looking quite nice) that have been sold for much less.


These are my thoughts almost to the letter.
Don't bury yourself in debt for a stupid house.   Buy an affordable beater and fix it up room by room, pay as you go.
Anything you can do in a $500k home can also be done in a $100k home.

My first home was $25k.   We added an addition on to it, and a deck, and made a nice place out of it, sold for $45k.
Second home was $75k.   We're still in that home and I've remodeled almost everything over time so it's a pretty nice place, but we never took on any extra debt to do upgrades, did a lot of it ourselves and it's been paid for for a long time.   Having a relatively inexpensive paid for home allowed us to accumulate wealth and invest rather than giving it all to the bank, and was part of what allowed me to retire early.

GrahamCracker

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #22 on: July 13, 2020, 03:33:57 PM »
I agree with Michael in ABQís advice. As a seasoned RE owner/investor, there is no way Iíd buy right now. The market is in for a roller coaster ride and you donít want to get on at the top. Being patient now should pay off handsomely in the relatively near future.

Malcat

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #23 on: July 13, 2020, 04:17:09 PM »
To me, location is everything, but be careful what you prioritize when it comes to location. If the location will significantly affect your day to day lifestyle, then yeah, it really matters. If it's some imagined concern that doesn't really hold up to scrutiny, like if the "crappy" public school is actually quite good when you look into it, then challenge those presumptions.

Our household income has dropped substantially down to not a lot higher than yours, and there's no effing way I would ever spend 500K on a house, even though that's the median cost of a detached home here.

Go back to the drawing board and rejig some of your priorities.

Cassie

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #24 on: July 13, 2020, 05:00:24 PM »
The rule of thumb when I was younger was to never pay more than double your yearly income. Our first was 60 years old and so ugly inside. We gradually fixed it up ourselves. It took us 14 years to finish. We did the main living areas first because thatís where you spend the most time.

MayDay

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #25 on: July 13, 2020, 07:34:30 PM »
For me no question, 1950's house that is small and in good repair but not updated in city #1.

We bought that for 330k in Mpls :) I love my mint green bathroom.  Why does a family of 4 need more than a 3 bed house at 1200 SQ ft with a basement rec room?


tthree

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #26 on: July 13, 2020, 07:54:05 PM »
For me no question, 1950's house that is small and in good repair but not updated in city #1.

We bought that for 330k in Mpls :) I love my mint green bathroom.  Why does a family of 4 need more than a 3 bed house at 1200 SQ ft with a basement rec room?
This.  Family of four, bought a 1200 square foot house (with no rec room) built in 1963.  Ten years later, it finally has a basement rec room (and a new kitchen).

MayDay

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #27 on: July 13, 2020, 08:12:26 PM »
For me no question, 1950's house that is small and in good repair but not updated in city #1.

We bought that for 330k in Mpls :) I love my mint green bathroom.  Why does a family of 4 need more than a 3 bed house at 1200 SQ ft with a basement rec room?
This.  Family of four, bought a 1200 square foot house (with no rec room) built in 1963.  Ten years later, it finally has a basement rec room (and a new kitchen).

I use basement rec room loosely, lol. "Mostly dry basement" is good enough! As preschoolers my kids adored the unfinished basement as they spent the winter riding bikes and scooters around the basement!

GoCubsGo

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #28 on: July 14, 2020, 01:19:35 PM »
I'd vote for a smaller home in a better neighborhood.  That way if you want to move up or sell in a few years you might get some appreciation.  I'd say that $350K on your salary with 2 kids is the absolute max I'd spend.  Make sure there aren't big ticket items to fix and plan on doing some updating over time (which will add to the value if done correctly).  Move-in ready is generally the most sought after and will have the most bids.  I've been through some awful "flips" and I would much prefer a solid but dated house rather than pay top dollar for  poorly done flip that will cost money in the long run.

Pigeon

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #29 on: July 14, 2020, 01:37:54 PM »
One of the things I found helpful was to have a hard price cut-off with our realtor.  No, don't show me the house that's $25K more than the top of my budget.  Yes, it will be nicer than the house I can afford.  It will also make the house I can afford look undesirable to me in comparison.

I would make a list of the features that are an absolute must.  For me, that was  at least 3 bedrooms and two baths, in any of XYZ school districts, with $XXX being the max I am willing to consider.  Also make a list of desirable features, but not deal breakers.  Then look at the houses and see your best fits.

I agree that you should stop focusing on finishes and updates.  Look at the layout and the bones of the house.

mamabear18

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #30 on: July 15, 2020, 07:18:34 AM »
Thank you everyone for all the amazing advice!!! I needed to hear all that....so happy to have a community with a lot of wisdom.

Will definitely check out the Not so Big House. Aware of the property taxes and I am in Hennepin which is higher - but in terms of location for my job, it is the ideal area for us. Will look into TDES as I had not heard of that but definitely sounds like my problem lol.

Love the shed idea. Good advice on the market being high right now. Definitely seeing that location is important. I will be adjusting filters and lowering my expectations - I need to keep my eye on the prize.

THANK YOU!!!!

jabell

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Re: Frustrated w/home shopping. budget went from $350K-$500K. Need advice
« Reply #31 on: July 25, 2020, 01:41:44 AM »
I hear you, I am frustrated too.  We just bid 285K for a 275K listing offering a 5 day inspection the first day the property was listed in Bloomington MN and were beat out with a better offer of a 1 day inspection and more $. 

The first home we looked at not that long ago was 245K in Bloomington and we were not interested after seeing it in person.  I was curious and asked our realtor what they thought it would go for and we were told it would probably go 20-30K over asking price because sadly that is the market we are in.  I was dumbfounded hearing that. 

I am debating on pulling out and sitting back continuing to rent to let things maybe not crash but cool off a little bit.

This reminds me so much of 06-07 where people were throwing money over each other to get into houses because everyone else was, with many echoing its only going up from here.

I know its not the same as the pre-housing market bubble pop of 2000s because they are not giving loans to everybody, but the vibe sure feels eerily similar.