House vs Happiness

[Just Joe]

If you have children, an important factor to consider is whether a fancier house means a fancier neighbourhood, where the people who will be your kids' friends and models will have a lifestyle you don't want to emulate. If all the kids except yours are getting bouncy houses for their 2nd birthday, cars for their 16th birthday, vacations to South Africa or Bali every year, that will be very hard on your kids.

That is a very good point.

[MoseyingAlong]

.....  We will end up selling in 2 years, which is when the 5 yr grace period for capital gains under Obamacare rules arrives....

Uh, what does this have to do with Obamacare?

Ha, that was my initial reaction too.
But Google sorta helped.

From  https://www.healthcare.gov/glossary/capital-gains/
"A capital gain is the amount you get from selling property, like stock, a house, or a mutual fund. For example, if you buy stock for $1,000 and sell it for $1,250, you have capital gain of $250. You don't need to include a capital gain if it's from the sale of your main home you owned for at least 5 years (and the profit is less than $250,000). Report any capital gains noted in Form 1099-DIV, which you should get from some companies, like mutual funds, before the tax filing deadline."

Haven't looked into details. But wondering if you're supposed to include them for ACA calculations if you've owned for less than 5 years even if they are excluded from income tax for owning more than 2 years.

For example, if you've owned for 3 years, do you exclude for income tax but include for ACA calculations?

[martyconlonontherun]

No homes in between 450k and 600k because I think I  can’t justify the price for what you get. I’d rather get a slight less nice home for 450k or a way nicer home for 600k.

This analysis breakdown is weird. That's like saying that you'll only marry someone who is between 5"1' and 5'4" or 5'9" and 6' because... the value of people who are 5'5"-5'8" isn't great for what you get?

This happens all the time for me in different scenarios. It isn't that 5'7" wouldn't work but that the cost/benefit isn't there. I'm looking at a car now for my wife and the ones we are looking at, there seems to be weird price levels. $20k is FWD, no leather seats. $24k is Leather Seats, but $25k is Sunroof, AWD, Leather, captain chairs, technology package or whatever you want. So my options are either A or C because C is worth it for the extra money. This happens a lot with cell, meal plans, etc. I saw that a ton in real estate where people just seem to have an ideal house payment and certain price levels and it really waters down the market at the price point. Rather go for the cheap house no one wants and live with what ever is causing the low price, or go above where everyone else's price point is and get the perfect house.

(don't judge me for the car choice :) )

[Sandi_k]

We can definitely “afford” the nice house by everyone else’s standards, but to me it makes us invest less a month than I would like. Anyone here buy probably too much house but not regret it in hindsight, or regret it lol?

I heard a quote on ChooseFI the other day and it is resonating with me a lot: Build the life you want, then retire into it! Having a nice home is definitely part of the life I want.

We bought our starter home in 1992, after the implosion of Savings & Loans banking. Got a great deal on an ugly probate house. We thought we'd rehab, and move in 5-7 years.

We stayed for 19, because the location, space, and amenities worked. Also because re-setting our property tax basis in CA would have cost ~ $300 more per month (in addition to an increased principal & interest payment). We decided that stuffing money in retirement accounts and buying DH a business was a better use of our money.

After nearly 20 years, DH was getting out of his physically punishing job (after he had spinal surgery). So we finally pulled the plug and moved to our "maybe forever" home. (It has stairs, the only downside).

Again, with our "new" place, we bought an ugly house, at near the bottom of the market (2011). The house is now worth nearly double what we paid for it.

Two things made moving to our "maybe forever" home possible:

1) We saved a lot for retirement in that first home phase, and the compounding will make semi-RE possible.

2) We never treated the former home as an ATM - we pulled cash out once but reinvested it right back into the house at very cheap rates. We still had a 40% DP on the "new" house, which means the PITI difference per month is noticeable, but not impossible. And yes, that PITI is higher, which initially meant less for investing. But our early investing has really paid off. And in the 10 years we've been in the "new" house, I have had two SUBSTANTIAL bumps in pay - so we are now saving more than ever.

We are DELIGHTED with the "new" house, even though it's still ugly and some areas need work (e.g., rusted-out master bathroom sink, and kitchen shelves that the rollers are failing on).

It has a huge shop area for DH, which means for the first time ever, all of his tools can be stored in one area. He has floor space for a table saw and a panel saw, so he can do real work. We have space for guests, and for them to have their own bathroom. We have a deck and outdoor kitchen, which means we are flooded with friends and family in the spring, summer and fall. With Covid, and being unable to travel, we have delighted in the space even more.

Did it set our FIRE date back a bit? Yes, absolutely. Perhaps by 3-5 years. But for the 10-13 years that we still HAD to work before FIRE, it has engendered a deep satisfaction in our home life.

[kite]

Thirty plus years ago, that was me.  Sub 900 sq foot starter home with a laughably small mortgage payment.
I hadn't even finished college yet when buying.  We targeted homes in 1/2 the price range that all the tables and formulas indicated we could afford.  Our rationale was that if we had kids, one of us could leave the workforce and the house would be affordable on one income. It's tiny, but still 3br & 2 baths.  Easy commute to NYC or Philly by rail.
After graduating, my career really took off.  We thought about moving up.  We had a significant deal on a dream piece of property fall through.  Gorgeous large farmhouse on 17 acres with a stocked pond, adjacent to parkland and preserved farmland. Would have added only about 5 minutes to my commute. An absolute dream home, it really stung the way the deal collapsed.
But that left us able to get in on an investment property purchase and we became landlords.  A few years later, the 2008 financial implosion bankrupted my employer and I was laid off.  Suddenly having really low mortgage payments and a tenant who paid enough in rent to cover both of the homes' mortgages & taxes allowed us to ride out a 13 month period of unemployment with no trouble.
Now I'm in my fifties and grateful that things unfolded the way that they did.  My 'starter home' is the prefect size for down-sizing. It was cheap and easy to pay off. Fully accessible, it will be great for aging in place. All the things that made the location ideal in the early 90's are still true.  Walkable to shops, church, trails & parks, to my mothers and my MIL's.  I know my neighbors and we have a decades long history of socializing and helping each other.  The taxes on my tiny little, easy-to-clean home are lower than anything else I'm going to find in my state.   And while I could comfortably afford to buy something bigger or nicer or fancier, I don't want to commit myself to a bigger property tax bill.  Reduced expenses have meant I could turbocharge my savings and we could have some incredible travel & life experiences.  And we could provide significant charitable assistance to causes that are very important to us.
Somewhere along the way, I realize that my dream changed.  The big farmhouse was lovely, but it would have meant getting into a vehicle to go anywhere and the loss of all the things we'd loved about where we were.  It would also have been an extra job in and of itself just to maintain. 
You do you.  If you want my opinion, stick with the least expensive place that makes you happy. What happened in my life and what I've observed in everyone else's life is that there are hardships that were never anticipated.  Having low expenses and plenty of savings make those hardships much easier to endure.

[ohio4life]

I don't love my house. I bought one of the cheaper and more outdated/messed up houses in my neighborhood. I've done a lot to it, but it is still kind of rough around the edges. I also would like a bigger home with more storage and room for entertaining. The reality for me is that no one is coming over and I have too many things already. At least, this is what I constantly tell myself. If I want to live close to the city center or in a close burb I am going to pay a lot for added space or for that "finished" look. If I moved to the outer belt or farther I would have it all for a similar cost to my current home, but I don't think I want to give up my walkable neighborhood and quick commute. I say all this because I probably would be in similar situation to OP. A slightly more expensive house wouldn't be worth it to me. If I could buy one of the nicer houses in my neighborhood it would be nearly double the value of my current home. That's not happening so I feel a bit stuck despite being in a good financial space at the moment.

[bmjohnson35]

.....  We will end up selling in 2 years, which is when the 5 yr grace period for capital gains under Obamacare rules arrives....

Uh, what does this have to do with Obamacare?

Ha, that was my initial reaction too.
But Google sorta helped.

From  https://www.healthcare.gov/glossary/capital-gains/
"A capital gain is the amount you get from selling property, like stock, a house, or a mutual fund. For example, if you buy stock for $1,000 and sell it for $1,250, you have capital gain of $250. You don't need to include a capital gain if it's from the sale of your main home you owned for at least 5 years (and the profit is less than $250,000). Report any capital gains noted in Form 1099-DIV, which you should get from some companies, like mutual funds, before the tax filing deadline."

Haven't looked into details. But wondering if you're supposed to include them for ACA calculations if you've owned for less than 5 years even if they are excluded from income tax for owning more than 2 years.

For example, if you've owned for 3 years, do you exclude for income tax but include for ACA calculations?

The 5 yr ownership clause appears to be specific to Obamacare.  If we sold our house today, we wouldn't pay any capital gains taxes, but I would have to include the gains in my MAGI for Obamacare.  That's how I interpret the language.