Author Topic: Should I build my new house during these times?  (Read 922 times)

cryptobynbot

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Should I build my new house during these times?
« on: April 05, 2020, 03:44:10 AM »
Heya,

I am very new to the forum and maybe I am asking an age-old question that has been asked umpteen times.
This is going to be my first home and we are excited about it.

Events and Timeline:
- Bought a small land lot in 2018 (at the peak), since then the prices have fallen down by 10% to rise briefly and now the Coronavirus is putting the downward pressure.
- In the midst, I lost my job, was job hunting for 3 months to join a company that got acquired by another.
- My wife was offered a job to be rescinded in this environment.

Financial Situation:
- Thanks to the fantastic advice all over the forum, we have been saving and spending less for the last 4 years.
- We do not have any credit card, car or other loans
- No land loan
- As we both were out of the job we kind of used our emergency and my focus has been to build that again. This time we are trying to get it to 6 months at least.

Our land is not big but good enough to build a small home. We were thinking of 2 storey but it will be costing us 40K more and we are thinking of dropping that idea to save money.

Our monthly income: 6K (After tax)
Monthly Expenses: 2K

Expected EMI (for 15 years) (double storey): 2K
Expected EMI (for 15 years) (single storey): 1.8K

Looking for the following advice?
- Given that home build prices do not change much, is it advisable to wait further, I am renting now. (Rent: 1K)
- Should I build a small home for now? (right now we have 1 child but we have been thinking to add 1)
- What was the experience for people who bought/build their first home during 2008/2009?
- I do not like debt so 15 years but I could increase the loan term to 30 years and go for a bigger home.
  Note: We do not plan to build another home for us, this is it.

Thank you all for the guidance!

Cranky

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Re: Should I build my new house during these times?
« Reply #1 on: April 05, 2020, 05:05:53 AM »
2009 was a good time to buy a house in that prices were low, but it was a tough time to get a mortgage because the banks had been burned. So there were tons of foreclosures and short sales, but you really needed cash for a lot of them.

I donít know what will happen to the housing market or the banks this year, and no one else does either. I would not personally make any big financial commitments in the immediate future. The thing about renting is that you can move easily if you need to.

Askel

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Re: Should I build my new house during these times?
« Reply #2 on: April 05, 2020, 06:36:24 AM »


Expected EMI (for 15 years) (double storey): 2K
Expected EMI (for 15 years) (single storey): 1.8K

That seems kind of expensive to me, but I have no idea what your expectations are in that regard. 

That said though, we're in a similar boat- bought a house just a few months ago that needs extensive renovations.  We're both lucky in that we have pretty stable jobs, but we're proceeding full steam ahead.  Hoping the various contractors we'll need to hire will be a little hungrier for work this summer.   

Sibley

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Re: Should I build my new house during these times?
« Reply #3 on: April 05, 2020, 09:43:58 AM »
I would hold off for now. Save up as much as possible, re-evaluate in the fall. My understanding is the prep work for design, permits, etc can take months. If you decide to go ahead, spend next winter doing prep the break ground in the spring 2021.

cryptobynbot

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Re: Should I build my new house during these times?
« Reply #4 on: April 18, 2020, 12:58:05 AM »
Thank you all for your comments, really appreciate it.

As you all have suggested it makes sense to hold off from bigger commitments.
We would be able to save more money and it would be less money to borrow from the banks in future if all goes well.

Given the job market, it's better to move some decisions to the future.

Dicey

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Re: Should I build my new house during these times?
« Reply #5 on: April 18, 2020, 01:55:49 AM »
Besides job stability, I would be concerned about the availability of materials and rapidly escalating prices. Does the lot have any Improvements?