Author Topic: Would it be a financial mistake for us to move to the city?  (Read 4602 times)

MrD

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Some stats to start off:

We are both 24 and soon to be married. We have a combined income of 130k which will increase to over 200k in the next 8 years. All student loans are now paid off and we have a net worth of about 62k (this does not include cars or any depreciating assets, only 401ks IRAs and our home). Since recently paying off all student loans we are moving close to a 55% savings rate.

We want to move to the city where we live so we can live a more fun and outgoing life style. We love to walk around the city, go to parks, cycle, go to sporting events, bars, etc. I realize moving to the city would be a huge lifestyle inflation but I am trying to decide if the added happiness would be worth the cost. Right now we live in a 201k home in the suburbs and we would be moving to a 350k-400k condo in the city. Commuting is not an issue as my SO works close to the city and I travel for work.

I realize there are huge differences between the two ways of living and I didn't want to spend the time listing them all out here, but they are part of the consideration.

The other option would be to live in the suburbs and then just buy a small place in the city for 150k-200k and set it up like a hotel room and potentially rent it.

Any advice would be appreciated as I really don't know what to think. I am leaning towards just letting it go as a pipe dream and to continue just putting away money, but there will always be a side of me that dreams of living in the city so everything is walkable.

olivia

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Re: Would it be a financial mistake for us to move to the city?
« Reply #1 on: July 14, 2013, 10:34:15 AM »
I'm a big fan of city living so I say go for it.  The housing costs a lot more, but that's really the only downside, IMO. But I look at it as you get what you pay for.  Cities just have so much to offer-sports, entertainment, parks, etc.  And a lot of events are free.  Plus you can walk/bike/use public transport so you use a lot less gas, and can even ditch a car entirely.  And you're so young!  At 24 I would have hated the suburbs!

One thing to consider is parking-do you have 1 or 2 cars?  And what about kids?  You may want to consider buying in an area with a good school district if there are any in your city. I live in the city and there are actually 2 very good school districts right in the city. I have no kids and am not sure I'll have them, but if I buy I'll buy in one of the 2 good districts. It's pricier up front but sales priced remain high and houses sell faster in those districts.

Matte

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Re: Would it be a financial mistake for us to move to the city?
« Reply #2 on: July 14, 2013, 11:07:02 AM »
Similar situation age and income wise.  In a boring suburb too, we're looking at moving to a more lively larger one.  Moving costs are a tough pill to swallow at this age, as it such a chunk of equity.  Is there any way you could afford a house that has a suite in it in the city? That could be the ticket for you, and even though your spending big bucks on a place you will keep it in equity and the renter will pay your mortgage income and then some.  In my city condo fees go from $300-$800 plus you lose autonomy of rePairs and maintenance.  Lots of people lost all their savings from condos that we're built lousy and leaked and had 100k per unit assessments. 

MrD

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Re: Would it be a financial mistake for us to move to the city?
« Reply #3 on: July 14, 2013, 11:23:53 AM »
I'm a big fan of city living so I say go for it.  The housing costs a lot more, but that's really the only downside, IMO. But I look at it as you get what you pay for.  Cities just have so much to offer-sports, entertainment, parks, etc.  And a lot of events are free.  Plus you can walk/bike/use public transport so you use a lot less gas, and can even ditch a car entirely.  And you're so young!  At 24 I would have hated the suburbs!

One thing to consider is parking-do you have 1 or 2 cars?  And what about kids?  You may want to consider buying in an area with a good school district if there are any in your city. I live in the city and there are actually 2 very good school districts right in the city. I have no kids and am not sure I'll have them, but if I buy I'll buy in one of the 2 good districts. It's pricier up front but sales priced remain high and houses sell faster in those districts.

I agree with everything you have said and that is why we really want to go for it. I am just trying to decide if it would make more sense to have the two places at 200k each or just the one condo for 350k-400k.

As far as parking a lot of the places in our city come with 2 spots but we would probably sell 1 car and I would ride my bike everywhere. If we decide to live in the city it would be because we decided to not have kids (this is a long story).

MrD

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Re: Would it be a financial mistake for us to move to the city?
« Reply #4 on: July 14, 2013, 11:25:50 AM »
Similar situation age and income wise.  In a boring suburb too, we're looking at moving to a more lively larger one.  Moving costs are a tough pill to swallow at this age, as it such a chunk of equity.  Is there any way you could afford a house that has a suite in it in the city? That could be the ticket for you, and even though your spending big bucks on a place you will keep it in equity and the renter will pay your mortgage income and then some.  In my city condo fees go from $300-$800 plus you lose autonomy of rePairs and maintenance.  Lots of people lost all their savings from condos that we're built lousy and leaked and had 100k per unit assessments.

I am not sure I understand quite what you mean. What is a house with with a suite in the city? Also I am not sure about condo fees so I would have to look into that unless you are referring to the HOA fees which I have looked into. Also as far as the damages I would assume that would be covered by insurance.

TrulyStashin

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Re: Would it be a financial mistake for us to move to the city?
« Reply #5 on: July 14, 2013, 11:48:38 AM »
Is 350 - 400k really the only price range option?

In the city where I live, I could find reasonable housing options anywhere from 180k to $1m and way beyond depending on location.   The only places that are in the pricier end of the spectrum are the ones that are trendier and already gentrified.  Areas that are nice but not trendy or still in the process of gentrifying are far less expensive.

Condo fees can be very high too.  I suggest you broaden your search to parts of your city that you may have overlooked.


MrD

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Re: Would it be a financial mistake for us to move to the city?
« Reply #6 on: July 14, 2013, 01:39:43 PM »
Is 350 - 400k really the only price range option?

In the city where I live, I could find reasonable housing options anywhere from 180k to $1m and way beyond depending on location.   The only places that are in the pricier end of the spectrum are the ones that are trendier and already gentrified.  Areas that are nice but not trendy or still in the process of gentrifying are far less expensive.

Condo fees can be very high too.  I suggest you broaden your search to parts of your city that you may have overlooked.

Honestly there is such a dividing line between what a 200k condo is versus a 350k that going for anything between would seem odd. 200k gets you all the great amenities/location with a single 1bed/1bath. 350k gets you the same with 2bed/2bath. In between you'll end up in a rougher area or lose lots of amenities.

olivia

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Re: Would it be a financial mistake for us to move to the city?
« Reply #7 on: July 14, 2013, 04:24:06 PM »
I'm a big fan of city living so I say go for it.  The housing costs a lot more, but that's really the only downside, IMO. But I look at it as you get what you pay for.  Cities just have so much to offer-sports, entertainment, parks, etc.  And a lot of events are free.  Plus you can walk/bike/use public transport so you use a lot less gas, and can even ditch a car entirely.  And you're so young!  At 24 I would have hated the suburbs!

One thing to consider is parking-do you have 1 or 2 cars?  And what about kids?  You may want to consider buying in an area with a good school district if there are any in your city. I live in the city and there are actually 2 very good school districts right in the city. I have no kids and am not sure I'll have them, but if I buy I'll buy in one of the 2 good districts. It's pricier up front but sales priced remain high and houses sell faster in those districts.

I agree with everything you have said and that is why we really want to go for it. I am just trying to decide if it would make more sense to have the two places at 200k each or just the one condo for 350k-400k.

As far as parking a lot of the places in our city come with 2 spots but we would probably sell 1 car and I would ride my bike everywhere. If we decide to live in the city it would be because we decided to not have kids (this is a long story).

Oh, gotcha!  Hmm well could you rent out your house in the suburbs?  And actually make money on it?  Or would it make more sense to sell it?  I don't think just staying in a condo occasionally is going to make you happy if you have your heart set on living in the city. 

Have you considered renting in the city first?  Renting would be a good way to make sure you like a particular neighborhood or even just city living before you take the plunge and buy a condo. 

As for the 2 bed vs 1 bed condo-do you actually need 2 bedrooms (i.e. office space)?  Or could you get away with just one?  Not sure what your plans are for kids, but for just you two and the occasional guest, I've found that people don't visit enough for me to justify the cost of 2 full bedrooms vs. 1 bedroom.  When I moved to my current city I only looked at 2 bedrooms because I figured I'd have a lot of guests, but that just didn't happen!  People get excited and a talk a big game about coming to visit, but life just gets in the way.

MrD

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Re: Would it be a financial mistake for us to move to the city?
« Reply #8 on: July 14, 2013, 04:32:48 PM »
I'm a big fan of city living so I say go for it.  The housing costs a lot more, but that's really the only downside, IMO. But I look at it as you get what you pay for.  Cities just have so much to offer-sports, entertainment, parks, etc.  And a lot of events are free.  Plus you can walk/bike/use public transport so you use a lot less gas, and can even ditch a car entirely.  And you're so young!  At 24 I would have hated the suburbs!

One thing to consider is parking-do you have 1 or 2 cars?  And what about kids?  You may want to consider buying in an area with a good school district if there are any in your city. I live in the city and there are actually 2 very good school districts right in the city. I have no kids and am not sure I'll have them, but if I buy I'll buy in one of the 2 good districts. It's pricier up front but sales priced remain high and houses sell faster in those districts.

I agree with everything you have said and that is why we really want to go for it. I am just trying to decide if it would make more sense to have the two places at 200k each or just the one condo for 350k-400k.

As far as parking a lot of the places in our city come with 2 spots but we would probably sell 1 car and I would ride my bike everywhere. If we decide to live in the city it would be because we decided to not have kids (this is a long story).

Oh, gotcha!  Hmm well could you rent out your house in the suburbs?  And actually make money on it?  Or would it make more sense to sell it?  I don't think just staying in a condo occasionally is going to make you happy if you have your heart set on living in the city. 

Have you considered renting in the city first?  Renting would be a good way to make sure you like a particular neighborhood or even just city living before you take the plunge and buy a condo. 

As for the 2 bed vs 1 bed condo-do you actually need 2 bedrooms (i.e. office space)?  Or could you get away with just one?  Not sure what your plans are for kids, but for just you two and the occasional guest, I've found that people don't visit enough for me to justify the cost of 2 full bedrooms vs. 1 bedroom.  When I moved to my current city I only looked at 2 bedrooms because I figured I'd have a lot of guests, but that just didn't happen!  People get excited and a talk a big game about coming to visit, but life just gets in the way.

Again, thanks for your input. I must have a 2  bed room space because I must have a home office for work. I am really getting closer and closer to just going for it and buying downtown. My SO and I would love the life and it would make life so much more fulfilling. My guess is we will not have kids so financially we will be ahead of most (the reason for this is a very long story as I have a condition that is passed 50% of the time).

olivia

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Re: Would it be a financial mistake for us to move to the city?
« Reply #9 on: July 14, 2013, 04:40:59 PM »
I'm a big fan of city living so I say go for it.  The housing costs a lot more, but that's really the only downside, IMO. But I look at it as you get what you pay for.  Cities just have so much to offer-sports, entertainment, parks, etc.  And a lot of events are free.  Plus you can walk/bike/use public transport so you use a lot less gas, and can even ditch a car entirely.  And you're so young!  At 24 I would have hated the suburbs!

One thing to consider is parking-do you have 1 or 2 cars?  And what about kids?  You may want to consider buying in an area with a good school district if there are any in your city. I live in the city and there are actually 2 very good school districts right in the city. I have no kids and am not sure I'll have them, but if I buy I'll buy in one of the 2 good districts. It's pricier up front but sales priced remain high and houses sell faster in those districts.

I agree with everything you have said and that is why we really want to go for it. I am just trying to decide if it would make more sense to have the two places at 200k each or just the one condo for 350k-400k.

As far as parking a lot of the places in our city come with 2 spots but we would probably sell 1 car and I would ride my bike everywhere. If we decide to live in the city it would be because we decided to not have kids (this is a long story).

Oh, gotcha!  Hmm well could you rent out your house in the suburbs?  And actually make money on it?  Or would it make more sense to sell it?  I don't think just staying in a condo occasionally is going to make you happy if you have your heart set on living in the city. 

Have you considered renting in the city first?  Renting would be a good way to make sure you like a particular neighborhood or even just city living before you take the plunge and buy a condo. 

As for the 2 bed vs 1 bed condo-do you actually need 2 bedrooms (i.e. office space)?  Or could you get away with just one?  Not sure what your plans are for kids, but for just you two and the occasional guest, I've found that people don't visit enough for me to justify the cost of 2 full bedrooms vs. 1 bedroom.  When I moved to my current city I only looked at 2 bedrooms because I figured I'd have a lot of guests, but that just didn't happen!  People get excited and a talk a big game about coming to visit, but life just gets in the way.

Again, thanks for your input. I must have a 2  bed room space because I must have a home office for work. I am really getting closer and closer to just going for it and buying downtown. My SO and I would love the life and it would make life so much more fulfilling. My guess is we will not have kids so financially we will be ahead of most (the reason for this is a very long story as I have a condition that is passed 50% of the time).

Well good luck!  I hope you go for it, and keep us posted!

Rebecca Stapler

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Re: Would it be a financial mistake for us to move to the city?
« Reply #10 on: July 15, 2013, 01:14:13 PM »
I am going to be the lone dissenter, but if you're not sure that you won't have children, I would rent in the city before buying anything -- unless you are buying a condo with the idea that you could rent it out if you do have children (check the HOA agreement that this is allowed). Buying is a big commitment, with big transaction costs. I wouldn't want to do it if there was a big X factor looming in the future. (I know that things can come up unexpectedly, but this is something that's foreseeable)

Matte

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Re: Would it be a financial mistake for us to move to the city?
« Reply #11 on: July 15, 2013, 08:00:28 PM »
Things might be different In the USA but here in Canada all condos have fees for strata probably like your hoa fees.  They cover the basics, but large items such as leaks, building hvac, any building dammage or wear from age can come up and each owner gets a One time bill.  Example my coworkers condo complex needed a new roof, It's not covered from monthly fees so each owner gets a one timd bill for 20k.  No insurance covers it and you gotta pay, whether you agree or not.  Thats why I say a house in the city might be better, add a basement suite to offset the cost of probably doubling your mortgage. What I Ment by suite is a house that you could seperate into two dwellings and rent the other out.  In the long run this would build your wealth greatly and offset high city real estate costs.