Is buying a house 1 year in advance crazy?

[KisLivingAbroad]

After 10 years living in Europe we are planning to return to Southern California mid 2025 when our oldest will begin kindergarten.  While Southern California isn't the most FIRE friendly location we have family there and loved living there pre children.  One of our favorite pastimes is browsing Zillow while waiting for the youngest child to fall asleep and occasionally we come across something that looks perfect - at least online :).  This will be the first home we ever purchased, is it crazy to already seriously start looking for something on our upcoming visit to the grandparents house?

While paying for a house we aren't living in for 6-12 months isn't ideal it is feasible.  We currently save ~50% of our net income, the monthly payments would bring that closer to 0 (excluding retirement savings) until we moved into it.  Financially, we are advanced in our journey, the stache could support a 4% withdraw rate without trimming any of our bloated budget.  But given we are in our early 40's with a 2 and 4 year old we are targeting 3%.  With annual bonuses paid 3/31 we currently have 75% of the down payment + closing costs in Savings/CDs and can free up the remainder selling <10% of our brokerage account with minimal tax implications.  There is zero wage income risk over the next 12 months as I have a permanent contract with my employer, getting rid of me would require 18-24 months of severance.     

The biggest benefit to us is making the transition more gradual for the kids.  We come back to visit family 3 times a year, and could potentially celebrate Christmas in the new house and start building good memories for the future.  This would also give us additional certainty regarding our future housing expense situation and slightly reduce equity exposure in our portfolio replacing it with real assets.   

What else should we be considering in our decision making process?

How far in advance do people normally purchase a home before moving into it?
 

[Freedomin5]

We will be repatriating to Canada next year, and last summer, we bought a house in Canada while visiting grandma. So, no, I don't think it's crazy to buy a house over the summer while on home leave (though to be fair, other people thought we were a bit nuts). We basically purchased a home two years before moving into it.

We had been browsing real estate listings for two years and following the real estate trends in that city, and there were indications that prices were going up and that the city was poised for rapid growth over the next 10 years, which would potentially drive prices up even further.

We feel we made the right decision, for many of the reasons you outlined in your post. We like the stability of having a landing spot when we return, rather than having to live with grandma in her basement temporarily while finding a place to rent/buy. It was easier for us to qualify with a mortgage as our expat incomes are much higher than our Canadian incomes.

Most importantly, we found something we liked, at a price we could afford, in a location we liked. Houses rarely come up for sale in that neighborhood, so we jumped when one came on the market.

One other consideration we had was whether we had family members nearby who could keep an eye on the house / help take care of the house. My sister lives in the same city, so she moved into our house while we are abroad. She contributes to the expenses of maintaining the house, which is a win-win situation because her contributions are less than what she would be paying in rent for a much smaller place, and we have someone looking after our house.

[GilesMM]

There is nearly infinite real estate available in Socal so while a house may look perfect, there will be plenty more perfect ones available later.  I would not buy early, especially with interest rates potentially poised to fall.  Plus, life happens and you may find you don't need a house in a year.

[Kwill]

I would wait. If you haven't lived in the US for 10 years, you might be better off renting a place for a year when you return, just to make sure you and your family are comfortable and happy before committing to a purchase. Last summer, I returned to the US after over 7 years in the UK, and it just didn't work out. My new job wasn't a good fit, and I had to deal with a lot more reverse culture shock than I expected. I'm writing now from Japan where I'm taking a bit of a sabbatical while trying to figure out what to do next, whether that's a different job in the US or a new job back in the UK or maybe in East Asia. I feel really lucky that I sold my place in the UK but planned to rent for a year in the US before buying. I'm not FIREd yet, but this gives me the freedom to choose my next step without worrying about a mortgage.

[By the River]

I sold a house 3 months before moving out without issue.  We put the house on the market late January as we planned to move when school was out.  Someone with kids was looking to move to where we were after the school year as well.  We closed the sale at the beginning of March and signed a 3 month lease where the rent was basically the mortgage and insurance.  (I did replace a pool item that broke during the leased phase but it was relatively inexpensive.)

[mspym]

We did buy a house a year before moving and I’m very glad we did. It gave us a place to stay on trips and somewhere to move to when our life plans were upended 9 months before we thought we were moving countries. It also gave us time to get the roof sorted and the fencing completed before we and our dog and our stuff all arrived.

But similar to @Freedomin5 we had been looking in the area for a couple of years, and were very clear on what we were looking for and where we were landing.

[Freedomin5]

Yes. It’s easier to make the decision to buy before repatriating if 1) you’ve lived in the area before and know you want to live there again, 2) you have ties there (eg, family), and 3) your job/income is not tied to a specific location. In our case, we are FI, and the new part-time job I’ll be doing for fun is all online.

There are many houses for sale in our city, but very few for sale in the specific neighborhood we wanted, which was in a good school district walking distance to major bus lines and other amenities. So while there may be infinite houses for sale in So Cal, the question is: are there infinite houses for sale in the specific neighborhood(s) you’re interested in?

In addition, we also considered the fact that our situation may change in a year, so we bought a house that is very attractive to a particular rental population that we want to target.

There are usually ways to mitigate most risks.

[deborah]

One other advantage of buying early is that it’s easier to get a mortgage when you have employment and an employment history with the employer. A lot of people on the forum who have already retired have difficulty getting a mortgage.

[Log]

If your stash is already at 25x spending and you're planning to continue working regardless, what is financially optimal no longer needs to be a deciding factor in your decision making (congrats, you won!) That's an awesome freedom to have.

Buying ahead of time so you can settle right into your long-term home upon return, without needing to bridge the gap with a short-term rental, sounds pretty nice. Moving internationally with kids already sounds stressful. Needing to move again a couple months later sounds extra stressful. Why not make it easier on yourself? 🤷🏼‍♂️

[Laura33]

This would also . . . slightly reduce equity exposure in our portfolio replacing it with real assets.   

You're FI based on your current expense levels.  You can do it if you want to.  Just make sure to assess whether you'd still be FI with the new mortgage and housing costs, and if not, whether the extra years of work are worth it.

But don't look at it as shifting assets from equity to real estate.  Look at it as shifting assets from investments to consumption.  Sure, you can sell the house if you need.  But that's not the plan -- the plan is to buy a place to live in for however many years, so that you can create a lovely home for your family with lots of wonderful memories.  Telling yourself you're just shifting assets from one category to another is a great rationalization for buying more house than you need.

OTOH, there's no issue whatsoever with starting to look now.  You've been gone a long time, and many, many things will have changed (not the least of which is you -- your wants/needs/goals/priorities).  It makes a lot of sense to fit some house-shopping into your next several visits, so you can re-learn the neighborhoods and the schools and really home in on what you can and can't afford and what kinds of tradeoffs are worth it.  Just be very, very careful about getting sucked into wanting a particular home before you've finished the boots-on-the-ground research.

[Dicey]

As soon as you feel like you have to find something, stop. Don't let yourself be pressured into something you may regret later. Whatever you decide to do, you'll be fine.