Afraid to commit (future earnings) to RE... should I buy or not?

[Green_Tea]

Hello everyone, I'm looking for advice, thank you in advance for taking the time to read and think about my case!

I  know I will probably eventually want to buy a house in this region but I have been afraid to buy. Additionally with the current crazy housing market, I'm unsure whether my hesitation is good for the time being.

So for some background.

Incident one... where I missed out big time:
I have passed on a RE purchase a couple of years ago and it was the worst financial decision of my life so far. Itt was a VERY good deal financially and for several personal reasons: objectively underpriced at the beginning, which I didn't realize at the time: 120 k + about 10k closing costs + about 10-20k of bare minimum renovations, mortgage at about 3 %, could probably have been refinanced to somewhat less. Worth about 350-450 k now. Very large lot, several units so very flexible to rent out / use partially for oneself). My parents would have bought the other half of the property but would not have lived there (numbers above would have been mine alone).
At the time I was at the end of my studies and unsure about the future (more on that further down).

Incident two... which is more recent and with more details about the purchase and situation I'm in at the moment:
A couple of months ago I nearly bought a semi-detached for 435k Euros, estimated renovation costs 100k (not fully updated but would now have considered to do the bare minimum of maybe 30k only), additional purchasing costs 40k. So total of 575 k (690 USD).

I got a mortgage with the following details:
168 k Euro down payment
407 k mortgage
1,14 % interest 20 year fixed, can be refinanced at 0 costs 5 and 10 years into the mortgage (IIRC about the timeline)
minimum pay back: 1 % per year, flexible

So I think I did an excellent job on the mortgage, it was the needle in the haystack and I did do my homework and was very diligent.
With my salary higher this year and some less renovation projects, I think I could get a lower down payment to mortgage ratio.

In the end the seller behaved very badly and the purchase was cancelled (I backed out, I think but cannot be sure that he would still have sold to me). Now even though I was somewhat unhappy, I was undeniably relieved, though I am pretty sure I would have bought it otherwise, I was committed to buying it.
I know the asking price when it went on the market was 475k, there were at least several viewings, and the house has sold, with additional realtor costs that I wouldn't have had, in the meantime. (I do not know the selling price).

For perspective some personal and more detailed information:
I'm mid 30s and single. My salary will probably be around 90k Euros (108k USD) this year, take home salary is a bit more than 4k (4.8k USD) a month at the moment (after taxes, obligatory retirement contributions, health ensurance).
The house had 1600 sqft and I would have gotten a housemate.
Ongoing costs (without repairs, otherwise everything included, not considering housemate) for the house were estimated at 420 Euros a month
Mortgage principle + interest 726 a month
For comparison: I live in 400 sqft now and pay 580 a month in rent (all included).

Some more background information:

I'm not sure I'll stay here for the next working years but will probably come back to help my parents out when they need it and it would be a nice town to retire to / have a homebase also.

Comparable houses to the one above were selling for about 350k about 5 years ago and are selling for  probably about 550-600k at the moment (actually looking at the offers it seems there are no houses under 700k but not too sure those are comparable). So if I buy on the open market now, I will probably have to pay more.

So as a matter of fact, I'm even more uncertain about buying now, seeing the prices being driven up.
However with mortgage rates being about half the normal inflation and ongoing costs not that much more than renting a small appartment - even without a housemate... is it stupid not to buy at just about any price? Or would this just be a reaction to my fear to commit and the opportunities I have missed?

Is a mortgage of say 500k (+ 150 down payment) a road to disaster at a salary of 90k / 48k take home?

I have been weary of my employability and earning potential, especially regarding salary developement before (hence the pass on the first opportunity in the last stages of my studies) and still am, even though I am in a very high in demand profession and my salary has progressed from 2.4k to about 4.2k take home within 5 to 6 years (no special promotions, just normal progression, might go down, slow down but might speed up, so again I am quite unsure at this point). And I think this may be a key part because even though the monthly payments seem ok compared to my salary, even manageable at a lower salary, the amount of dept is very high!

Views and Advice

So I would very much like some views and advice, really anything you think worthwile to point out or discuss!

Some of the questions I have are:
A) how do you see the situation? At the moment and possibly the future?
B) how to approach real estate and maybe to change my perspective
C) how to approach future earning potential
D) how not to beat myself up regarding the lost opportunity of a couple of years ago

I hope I have provided enough information..., happy to answer questions.

Thank You a Lot for reading! Any comments, advice, experience will be very welcome!

Please do not cite large parts of this (like e.g. the whole text), I might want to delete some details in a couple of weeks, thank you!

[Sibley]

Do you want to buy a house? I don't see any of that in your post - just the financial pros and cons. You're in Europe, so not sure what the differences might be, but in the US owning a home is at least partially a lifestyle choice. If you're renting, you don't have to worry about repairs, maintenance, (often) yardwork, and so on. Owning a house though means it's all on you.

If you don't want to buy a house, then don't buy a house. It's not a matter of math. A house is simply too much money to buy when you don't actually want one. Frankly, your entire post just screams that you don't want to buy but that you think you should want to buy. It doesn't work like that.

[Green_Tea]

Thank you for your answer, Sibley!

Valid question. I will try to elaborate.

One of the main reasons for me to want to own is that I would like to have my own, large yard to grow things to eat, to provide spaces for wildlife and to enjoy observing what happens in the yard (so a lot somewhere else is not a proper solution though I have thought about it, and renting wouldn't provide the guarantee to be able to keep the yard).

As for the living space, I'm not very fussy about that. Ideally I'd have a house that would be flexible and accommodate me single in a small space, as a couple or as a family while renting the rest if not used by myself. I wouldn't mind renting the whole space out if I move for work, a partnership or sabattical travel reasons.

Repairs: I don't think I'd mind thinking about and organizing repairs/renovations. The associated irregularity of costs I don't think I would love, but I don't think I'd mind too much either. Of course I cannot know because I've never owned a house.
Maintenance: the way these houses are built (solid brick houses), they don't require a lot of regular maintenance as far as I can tell (the usual cleaning of the insides, regular visits from the chimney sweeper on a set schedule by them, occasional cleaning of the rain gutter, the occasional unplanned repair on the inside or outside).
Yard work: I enjoy yard work.

The first house I regret so much not buying had all this: a large lot perfect for plants (one of the largest lots in the neighborhood, so double regret) and great flexibility of the living spaces and some more pros, e.g. a helper for my parents could have moved into one of the spaces.

So I think what it comes down to is that I would like to (eventually) own a house with a big lot near my parents. If possible with flexible living spaces.

A reason in favor of buying earlier is that being single for the moment and not knowing what the future will hold, I see value in learning about renovations, repairs, renting while my parents are still there to consult vs. maybe having to learn and decide all on my own.

I guess, if I could buy a property now for 200 or 300k I wouldn't ask the question, I'd buy right away. So yes, my main concern is the financial side with prices being a lot higher.


Do you think the prices work out to be identical for renting vs. buying from the financial side and that it's really mainly a lifestyle decision? Because if so, I would be trying to buy.

[Sibley]

I have rented even in markets where it didn't make sense to rent - because I didn't want the responsibility of ownership.

Since it appears you actually do want to buy a house, then you need to get an handle on the problem: you. Specifically your emotions. Sounds like anxiety for the 1st house, though really you may not have been ready to buy. For the 2nd house, if the seller is behaving badly does that actually matter? As long as the numbers make sense and the property isn't impacted negatively by the seller's behavior, who cares if the seller is an asshole? That's why you have realtors and lawyers to handle things.

[Metalcat]

You want to own a house, but you don't think you'll actually live there in the future? And you would be willing to rent it out while you aren't there?

But do you want to be a landlord, especially if you aren't living in the same city? Do the numbers actually work to be able to rent it out enough to cover your costs? You say you would often go back to your current town if you were to move, but if you rent it out, you can't stay there unless you move back.

Would a 350K mortgage be a disaster at a 90K income? That depends on your expenses, but I would not be willing to carry a mortgage that size on an income that size just to own a house that I might not even live in.

It's all going to come down to just how important having your wildlife space and garden is to you, because it sounds like a massive financial trade off to get it.

You seem to be wanting us to tell you whether or not it's reasonable, and none of us can do that, we can only share what we would do in your situation and cite arbitrary rules of thumb like David Ramsey's.

However, at the end of the day, it's an entirely personal decision. Some people are willing to heavily financially extend themselves for their dream home and others aren't.