Straight to the point: do you buy a house when there is a housing shortage? House prices are skyrocketing, houses sell over asking price 4 hours after they are listed, and there’s that “recession coming.”
More about my life below:
Okay, so I'm 27, have worked hard to pay off all student loans and medical loans even while on disability, currently earn only $60,000, and have cobbled together about $12,000 between "emergency fund" money, revolving-pay-the-rent money, a small Vanguard fund, and from cashing out some dumbass permanent insurance I was tricked into buying when my health was really poor and my wits compromised. I also have about 57K in my 401K. I was never maxing it out. I just started to max it, but then decided NOT to, to allow that $1400 per month to flow into my future down payment instead of the 401K.
I've cleaned up my spending, whittled everything down as low as it can go, except that big ol' rent payment each month. So, I buy a house right? Well. I don't know. I LOVE my 2 bedroom $900 townhome 20 minutes away from work. (I can't move much closer to work, I work in a manufacturing site, which is in an industrial area surrounded by places I wouldn't ever feel safe in.) And I don’t want to switch my work. Their benefits are crazy good (like cheap health insurance, a 6% full company match in a 401K and 4 weeks paid vacation). So I drive my 1999 110,000 miler Accura to work and feel good about that.
So back to that house: I live in Indianapolis, where the housing market is super tight. There are lots of cute little homes I'd be okay living in for $150,000, and complete junk crack house duplexes for $60,000. The trouble is, there are not enough "good" homes for all the people in city. Every day, more "luxurious" apartment buildings are build downtown, $2000 a month for a studio! They remain largely unfilled as the people who could afford them, (young professional yahoos) are looking for a home to start their family outside of downtown.
I’m a handy lady and fixer-uppers don’t scare me. But there aren’t any in the good neighborhoods! So do I buy a “brand-new,” “perfect” house valued at $150,000, pay $160,000 for it, and struggle to pay the $1400 a month in “rent” (my mortgage) with the help of a “roommate” (my girlfriend). Or do I buy a crack-house, live in it for a scary, stressful, year playing “Firework or Gun Shot?”, clinging to the hope that I can rent it out after the year is up and become a Slum Lord Millionaire? Or, do I stay in my wonderful, perfect apartment with the lake that I keep getting yelled at for swimming in, and wait until the housing shortage fixes itself? (It’s not going to fix itself for several years, there are too many young 27 year-old yahoos buying dreams of Flowery Pillowcases and Homes For Their Children who will pay stupid money to achieve that Dream, damn the expense.)
I just want a house, well below or within my means that I can later rent out so I can retire around the same time all the yahoos are getting divorced!
