Author Topic: First time homebuyer in NYC suburbs  (Read 2136 times)

Sweetpotatofries

  • 5 O'Clock Shadow
  • *
  • Posts: 58
First time homebuyer in NYC suburbs
« on: December 22, 2016, 09:29:32 AM »
My husband and I are debating whether we should try to purchase a home in the NYC 'burbs this spring. Long story short, our original plan was to save as much $$ as we could before moving to a lower COL, more relaxed area of the country, but we're expecting our first child and when it came down to it we didn't think we could leave the area where most of our friends and family live and where he has the best career opportunities in his field. Maybe in the longer term down the road, but for now looks like we're staying put. We just don't want to stay put in our overpriced Manhattan rental, and we don't like the idea of moving further out to one of the boroughs either, we want a little more green space for ourselves and our family.

Current assets:
~$165,000 in savings/checking account
~$40,000 in combined 401ks (we've only been funding them since last summer when we graduated law school)
~$35,000 in Vanguard brokerage account, pretty much all in VTSMX

Current debt:
~$10,000 outstanding on one law school loan, will be paid off at 4.4% interest in just under 4 years. We were going to sink it completely months ago, but then talk turned to maybe buying a house and we wanted as much liquidity as possible/within reason when the time came.


We're planning on living off just his income when I leave work to care for our baby - right now we're both at law firms, he'll stay at his and I'll be a SAHM but hopefully be able to do some (MUCH smaller-scale) legal work when I have the time from home - basic estate planning and wills, who knows maybe even basic real estate contracts. But we'd consider that gravy. His current salary is $190K and that goes up about $20k/year for the next few years because NYC law firms pay all of their junior lawyers a fixed amount per year they've been working. After maxing his 401K, my IRA, and paying health insurance premiums pre-tax, we're left with $9500/month or so take home.


Our choices for buying in a nice suburb with a reasonable commute to NYC (walk or biking distance to commuter rail of 50 minutes or less) are a whole lot less than pretty much anywhere else in the country, but we know HCOL comes with the high salaries around here.

Condo/townhome: 2-3 bed, 1-1.5 bath, 1200 sq ft condos will run you about 500k in a town with good public schools and low property taxes/HOA fees (8k/year total) or cost you 100k less but force you to double or triple that tax amount, depending on the area.

"Starter" home: (for us, a house plenty big enough for the long haul, but apparently not for some) with 1800 sq feet, 3 bedrooms and 2-2.5 bathrooms that aren't in need of immediate massive renovation will run us 550-600k with high taxes or 750-800k with lower taxes. We're leaning towards the lower tax, higher house cost area (CT, vs NY/NJ) because of family in the area, a nicer town with excellent schools where we'd be buying, a decent commute, and various other reasons.

Our bank is happy to lend us massive amounts but we're not keen on the idea of stretching too far. We're just wondering whether it makes sense to go for a condo now with one child due in April and knowing we'd like to have two relatively close together - it's plenty large enough for a young family, and we could take out a 15-year mortgage with a 25% down payment, planning to pay it down even faster, therefore building equity and making the rent vs. buy calculus come out in favor of buying after just 2-3 years, though we'd plan to stay at least 5-6. We also have the option of stretching for the house that we see as a long haul home, on which we could pay 20% down, and perhaps do a 20-year mortgage (we really don't like the idea of a 30 year given the massive interest to principal ratio at the beginning, and the difference in payments would be about $700/month) - but know our budget would be tight for awhile if we want to continue saving aggressively. We could do it with our current savings and keep everything in the retirement/investment accounts untouched, and rebuild our emergency fund savings with my maternity leave pay in the first few months after buying.


Any thoughts on this? We know we're incredibly fortunate to have saved what we've got, and that there are a lot of options open to us.


sammybiker

  • Bristles
  • ***
  • Posts: 383
    • Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
Re: First time homebuyer in NYC suburbs
« Reply #1 on: December 23, 2016, 11:25:57 AM »
If you're committed to living in a high COL area, can you at least find a property, preferably single family, that needs updates and present the opportunity to build some sweat equity vs paying market price for a turnkey property?  Given that you live in the property for at least a couple of years, you'll pay no cap gains on any profit realized at sale.

lizzzi

  • Handlebar Stache
  • *****
  • Posts: 2143
Re: First time homebuyer in NYC suburbs
« Reply #2 on: December 23, 2016, 11:33:07 AM »
Having lived in the tri-state area in both houses and condos from 1984-2012, I'd say just skip the condo and buy a house, since that's what you really want for the long haul. In my experience, it's not the selling prices that get you, it's the taxes over the years. Just make sure you can carry the tax load, buy something you like, and you're good to go.

Poundwise

  • Handlebar Stache
  • *****
  • Posts: 1537
Re: First time homebuyer in NYC suburbs
« Reply #3 on: December 23, 2016, 12:29:44 PM »
Current suburban NY resident with 3 kids here.  When we had only 2 kids, we lived in an apartment in an outer borough. Some quick thoughts for now:

- If you go for multifamily housing, choose the first floor or go for a townhouse-type arrangement. Believe me, having kids in NYC is hell if you have cranky downstairs neighbors!  My kids are quiet and well-behaved (really) but our downstairs neighbors moved in from Iowa!  and had very unrealistic expectations.

- my husband found, to his annoyance, that the New Haven train line is not as reliable as the Hudson line.  They have delays because of snow. Delays because of rain. Delays because of heat.  And once, somebody mistakenly unplugged the computers that control the train signals, causing two hours of delays.

- Living in a 2BR with one kid and no car in the city isn't so bad at all.  Public elementary schools in the city will be fine too. But I found having 2 kids a lot more trouble... Wrangling a preschooler, a baby, a folded stroller, your purse, and shopping bags on the bus is no fun.  Anyway, what I'm trying to say is that you have a little wiggle room if you don't make the whole move to the suburbs right away.

- There are no bargains in the NY metro housing market, as far as I can tell. I do recommend Redfin for saving on real estate fees though.

- I am very glad we made the move to the burbs.



« Last Edit: December 23, 2016, 01:48:11 PM by Poundwise »

Sweetpotatofries

  • 5 O'Clock Shadow
  • *
  • Posts: 58
Re: First time homebuyer in NYC suburbs
« Reply #4 on: January 04, 2017, 03:47:59 PM »
Current suburban NY resident with 3 kids here.  When we had only 2 kids, we lived in an apartment in an outer borough. Some quick thoughts for now:

- If you go for multifamily housing, choose the first floor or go for a townhouse-type arrangement. Believe me, having kids in NYC is hell if you have cranky downstairs neighbors!  My kids are quiet and well-behaved (really) but our downstairs neighbors moved in from Iowa!  and had very unrealistic expectations.

- my husband found, to his annoyance, that the New Haven train line is not as reliable as the Hudson line.  They have delays because of snow. Delays because of rain. Delays because of heat.  And once, somebody mistakenly unplugged the computers that control the train signals, causing two hours of delays.

- Living in a 2BR with one kid and no car in the city isn't so bad at all.  Public elementary schools in the city will be fine too. But I found having 2 kids a lot more trouble... Wrangling a preschooler, a baby, a folded stroller, your purse, and shopping bags on the bus is no fun.  Anyway, what I'm trying to say is that you have a little wiggle room if you don't make the whole move to the suburbs right away.

- There are no bargains in the NY metro housing market, as far as I can tell. I do recommend Redfin for saving on real estate fees though.

- I am very glad we made the move to the burbs.


Thanks...this is exactly the kind of response I was looking for. We ended up finding a townhouse-type condo that's a 5-minute walk to the Metro North station. Unfortunately on the New Haven line versus the other two, but still what we think will work for us. We're in a 1-BR in the city and probably wouldn't have been able to afford to move up to a 2-BR without moving to a borough that made his commute longer anyway, and also distance from family (northern Westchester and Fairfield County) a lot further. We sort of found out the hard way there are no bargains in the region though. This place, which we're hoping works out, is the sixth we liked and third we made a formal offer on. One of those ended up being *just* outside the flood zone but still, you know, apt to flood when it sprinkles. Another backed up to I-95 - literally, postage stamp yard and bam, there the highway was.

Indio

  • Bristles
  • ***
  • Posts: 363
Re: First time homebuyer in NYC suburbs
« Reply #5 on: January 04, 2017, 07:46:31 PM »
One of the good things about being in lower Fairfield, when the New Haven line goes down you can switch to Hudson line to White Plains and then Uber it home. If you are in coastal CT the towns have a lot of amenities - beach, ice skating rink, tennis courts, public golf courses, etc. It's like joining a country club without the dues and property taxes are low because of all the businesses located there. Some of the big law firms have branches in CT to handle all of the business from the financial firms based there. From what I've heard, total comp is similar to NYC.

Choosing a town with a great school system is key because it also helps property values go up. Check the US News and world report but also read the local news so you can understand if there are budget cuts, racial imbalance (very common in the affluent towns), investment in infrastructure, etc. This can help you decide if you want to put your kids into public magnet schools or stay in the closest/districted school.

Just as it is in NYC, it's very easy to get sucked into the "keeping up with the Jones" once kids start schools and you meet other parents but it's also possible to find like minded mustachian parents at the local library, museums and parks.

Sweetpotatofries

  • 5 O'Clock Shadow
  • *
  • Posts: 58
Re: First time homebuyer in NYC suburbs
« Reply #6 on: January 05, 2017, 08:18:56 AM »
Choosing a town with a great school system is key because it also helps property values go up. Check the US News and world report but also read the local news so you can understand if there are budget cuts, racial imbalance (very common in the affluent towns), investment in infrastructure, etc. This can help you decide if you want to put your kids into public magnet schools or stay in the closest/districted school.

Just as it is in NYC, it's very easy to get sucked into the "keeping up with the Jones" once kids start schools and you meet other parents but it's also possible to find like minded mustachian parents at the local library, museums and parks.

I grew up in FFC, though not a coastal town, so I'm well aware of the last part. My own parents were pretty frugal and it didn't affect us too much relative to other kids except they raised frugal kids! I'm hoping having all the amenities (and lower taxes - was a MAJOR reason we went for CT) like the beaches and parks, libraries, museums that are low cost relative to NYC or free means we'll find other like minded parents and families. The town we chose is not one of the smaller ones that's lily white, but also not one of the cities that has many urban issues, sort of a combination, and it seems like a lot of the homes and areas where you do get the vastly wealthy tend to send their kids to private school despite an excellent public system. It's also closest you can get to NYC while being in CT. Property values have held steady and didn't dip too much during the downturn.

And I think my husband is most excited about Costco - finally being able to shop at Costco which was not really reasonable for us to do in NYC (given distance to haul goods from train and lack of space to store them).