How to make a housing decision?
July 28, 2009 10:45 PM Subscribe
I feel like I am constantly swinging back and forth in how I feel about buying a house in different locations. How can I make a decision?
I am looking for advice about how you weighed up where to live (and how it worked out!). I will give the details of the options I think we have, in case you have specific advice.
We seem to keep swapping roles – first one thinks that one option is the best, then goes cool on it, while the other then takes it up as the solution!
A) In the area where we currently rent or nearby, which we like – but where it will be difficult and I think impossible to find a property of the right type at the right price. Choosing to live here could delay our property purchase for a few years, or involve taking on more debt than I think we should. Neither of those are particularly conducive to starting a family (I think rent + baby is ok, but partner disagrees), or choosing to work part time, or having as much money for other things (like international travel). There are some other areas that would require various trade-offs (which we don't agree on), but for only a small discount on price.
B) In a less well off area of the city which is a similar distance from the centre of the city to where we live now – we would save 20-25% on the property, we could keep our current jobs, we would be further away from friends. It is closer to my sister and my partner’s family, but further from my parents. I have concerns about schools, public facilities (eg I use the public library a lot where we are, the ones I have visited in this area have lesser facilities and collections), general amenities, living in a more industrial area, living in a lesser socioeconomic area. It would be a longer commute for me, no difference for my partner. I feel no particular connection to living here, but recognise that in terms of price and accessibility to the city, it is worth considering. It probably will gentrify over time.
C) In a smaller regional city – we could save 25-30% on an equivalent property (actually, we would get something better for less money). This is close to my partner’s family and where he grew up. My sister has also moved to that city and I am keen to see her more often now that I have a nephew. Further from friends and my parents, but a number of our close friends have family there and visit the city often. I would need to change jobs – it would be at least a 1.5 hour commute each way for my current job. My partner would have a lesser commute to his current job, though probably still an hour+; he could find similar work in the small city, maybe a bit lower paid. There are no jobs in my industry in that city, but I think I would be able to find something (however, the job market is naturally smaller). It would offer many of the advantages of where we live now.
Renting might be a good way to try before we buy and discover we made the wrong choice. I have three concerns about it. The first is having to move a couple of times within a year (just the hassle!). Another is that the house we are in really suits us, and we would find it difficult to get another so good if we decided to move back. The last is that without changing jobs, I am not sure whether I would be able to really assess the regional city option.
Do you have any insights to the decision making process, or did you make a choice between similar options that I can learn from? Is there a practical way to assess these options, or do we just take a best guess at some point?
I am looking for advice about how you weighed up where to live (and how it worked out!). I will give the details of the options I think we have, in case you have specific advice.
We seem to keep swapping roles – first one thinks that one option is the best, then goes cool on it, while the other then takes it up as the solution!
A) In the area where we currently rent or nearby, which we like – but where it will be difficult and I think impossible to find a property of the right type at the right price. Choosing to live here could delay our property purchase for a few years, or involve taking on more debt than I think we should. Neither of those are particularly conducive to starting a family (I think rent + baby is ok, but partner disagrees), or choosing to work part time, or having as much money for other things (like international travel). There are some other areas that would require various trade-offs (which we don't agree on), but for only a small discount on price.
B) In a less well off area of the city which is a similar distance from the centre of the city to where we live now – we would save 20-25% on the property, we could keep our current jobs, we would be further away from friends. It is closer to my sister and my partner’s family, but further from my parents. I have concerns about schools, public facilities (eg I use the public library a lot where we are, the ones I have visited in this area have lesser facilities and collections), general amenities, living in a more industrial area, living in a lesser socioeconomic area. It would be a longer commute for me, no difference for my partner. I feel no particular connection to living here, but recognise that in terms of price and accessibility to the city, it is worth considering. It probably will gentrify over time.
C) In a smaller regional city – we could save 25-30% on an equivalent property (actually, we would get something better for less money). This is close to my partner’s family and where he grew up. My sister has also moved to that city and I am keen to see her more often now that I have a nephew. Further from friends and my parents, but a number of our close friends have family there and visit the city often. I would need to change jobs – it would be at least a 1.5 hour commute each way for my current job. My partner would have a lesser commute to his current job, though probably still an hour+; he could find similar work in the small city, maybe a bit lower paid. There are no jobs in my industry in that city, but I think I would be able to find something (however, the job market is naturally smaller). It would offer many of the advantages of where we live now.
Renting might be a good way to try before we buy and discover we made the wrong choice. I have three concerns about it. The first is having to move a couple of times within a year (just the hassle!). Another is that the house we are in really suits us, and we would find it difficult to get another so good if we decided to move back. The last is that without changing jobs, I am not sure whether I would be able to really assess the regional city option.
Do you have any insights to the decision making process, or did you make a choice between similar options that I can learn from? Is there a practical way to assess these options, or do we just take a best guess at some point?
I would advise against C due to the commute. Adding 3 hours a day to your work schedule takes time away from home life, esp when you're moving to a new location and will want to spend time making new friends and getting to know your new community. Monday to Friday will be hectic, followed by weekends busy with doing all the things you could not fit in during the week. We did this for 7 years and moved back to the city we worked in when the commute grew to 2+ hours one way. We were missing out on too much.
How about a smaller property in A? If real estate keeps it's value there, could a smaller house or condo? be a possibility as it would give you equity in a few years which you could turn over into a larger property? I'd avoid B as you just don't have any enthusiasm for it. Sometimes the sensible thing to do is to hold out for what you really want.
posted by x46 at 12:23 AM on July 29, 2009
How about a smaller property in A? If real estate keeps it's value there, could a smaller house or condo? be a possibility as it would give you equity in a few years which you could turn over into a larger property? I'd avoid B as you just don't have any enthusiasm for it. Sometimes the sensible thing to do is to hold out for what you really want.
posted by x46 at 12:23 AM on July 29, 2009
Response by poster: I have put down as a condition to moving to C that I would need a job there. I commuted for school, university and work for years, and have no desire to do it anymore. I think my partner doesn't mind so much about the commute, at least for the short term, as it would be just on an hour for him. In the long term, I would like to think that if we took this option, we would both get jobs in C, giving us more time for things outside work.
We have discussed the smaller/cheaper property option in A endlessly. It would be one of my preferred options. It is just not going to happen. Also, transaction costs are very high in our state (even for smaller properties), so I would prefer to buy something that will last us for a good few years.
posted by AnnaRat at 12:44 AM on July 29, 2009
We have discussed the smaller/cheaper property option in A endlessly. It would be one of my preferred options. It is just not going to happen. Also, transaction costs are very high in our state (even for smaller properties), so I would prefer to buy something that will last us for a good few years.
posted by AnnaRat at 12:44 AM on July 29, 2009
You are balancing intangibles, as many people making residential real estate decisions do. So long as you let them remain intangibles, making a decision will always be a tough thing to do.
I couldn't care less about your intangibles, but on the face of the commute you describe for your SO in Option C (not to mention your own), I would take that completely off the table. Finding 2 new jobs, in this economy, just to get into a position where you could buy property, is not likely to be a short term successful proposition.
That leaves A and B.
Of the two, A is your best bet, in current US real estate market conditions (if you aren't in the US, forget this comment entirely). You'll never see a buyer's market like this, with the financing opportunities that exist for first time home buyers, in the next 20 years. You need to be pounding the pavements in Area A, and working to make some numbers work somewhere, if it isn't Detroit, Manhattan, or Los Angeles. And, if you have any better job prospects in Area A in the near future, you should be pursuing them like tigers. So many people now are discouraged unemployed who have ceased effectively looking for work, that you stand some chance of actually landing improved positions, if you try. This will change over time, as increasing consumer confidence, and a better economic climate overall return.
Option B is your fall back position, if you absolutely can put together a deal in Area A in the next 3 to 6 months.
posted by paulsc at 1:07 AM on July 29, 2009
I couldn't care less about your intangibles, but on the face of the commute you describe for your SO in Option C (not to mention your own), I would take that completely off the table. Finding 2 new jobs, in this economy, just to get into a position where you could buy property, is not likely to be a short term successful proposition.
That leaves A and B.
Of the two, A is your best bet, in current US real estate market conditions (if you aren't in the US, forget this comment entirely). You'll never see a buyer's market like this, with the financing opportunities that exist for first time home buyers, in the next 20 years. You need to be pounding the pavements in Area A, and working to make some numbers work somewhere, if it isn't Detroit, Manhattan, or Los Angeles. And, if you have any better job prospects in Area A in the near future, you should be pursuing them like tigers. So many people now are discouraged unemployed who have ceased effectively looking for work, that you stand some chance of actually landing improved positions, if you try. This will change over time, as increasing consumer confidence, and a better economic climate overall return.
Option B is your fall back position, if you absolutely can put together a deal in Area A in the next 3 to 6 months.
posted by paulsc at 1:07 AM on July 29, 2009
Er... "... if you absolutely can't put together a deal..."
posted by paulsc at 1:31 AM on July 29, 2009
posted by paulsc at 1:31 AM on July 29, 2009
Think about this purchase and living in this place as a chapter in your lives. If it were me, and there were a baby and/or potential baby involved, I would go with option B with the goal of trading up to option A roundabout the time when baby reaches school age.
My first home was option A and although making the actual payments wasn't a concern, the cost cut into the other things that make life sweet, and it meant putting a lot less into savings/401(k) etc. My sister's first home was a small townhouse that she sold after ~5 years for a much nicer house in the area she'd always wanted to live in, and she had a lot of instant equity in the new house.
posted by headnsouth at 5:02 AM on July 29, 2009
My first home was option A and although making the actual payments wasn't a concern, the cost cut into the other things that make life sweet, and it meant putting a lot less into savings/401(k) etc. My sister's first home was a small townhouse that she sold after ~5 years for a much nicer house in the area she'd always wanted to live in, and she had a lot of instant equity in the new house.
posted by headnsouth at 5:02 AM on July 29, 2009
IF you're thinking about having a baby, live somewhere close to work, where you don' t need a car for everything.
Which of these options sounds like a better routine to you?
A) Coworker's morning: makes up at 6:00 every morning, makes breakfast for two kids, gets them and a spouse in the car where they sit for an hour in traffic, drops kids at daycare, drops spouse at work, goes to work, leaves work, gets kids, drives another hour and gets home at 7pm. Obviously at that point they eat whatever the hell can be slapped together in 10 minutes and zone out in front of the TV until it's time to zone out in bed.
B) My morning: wake up at 7:30, help get kid ready, get dressed and walk to work. Meanwhile, wife drives 15 minutes to work, dropping kiddo at daycare on the way. In 25 minutes of walking I pass two awesome bakeries, so I grab something to eat. After work, I walk to kid's daycare, pick him up, stop in one of the three parks we pass on the way home for some time on the swings, and still get home by 5:45...plenty of time to cook. One of us cooks while the other one walks around the neighborhood with the kid.
So it costs you 20%-30% more to live where you want, and you can't own the house you're living in. BIG DEAL. Structuring your life so that it all flows nicely is like having a vacation every day compared to people with long commutes. Owning a house is awesome, but if I had to choose between my home and my lifestyle, I'd torch the house and all its non-living contents in a heartbeat. 3 hours in a car every day is hell (been there, done that).
posted by paanta at 6:02 AM on July 29, 2009 [1 favorite]
Which of these options sounds like a better routine to you?
A) Coworker's morning: makes up at 6:00 every morning, makes breakfast for two kids, gets them and a spouse in the car where they sit for an hour in traffic, drops kids at daycare, drops spouse at work, goes to work, leaves work, gets kids, drives another hour and gets home at 7pm. Obviously at that point they eat whatever the hell can be slapped together in 10 minutes and zone out in front of the TV until it's time to zone out in bed.
B) My morning: wake up at 7:30, help get kid ready, get dressed and walk to work. Meanwhile, wife drives 15 minutes to work, dropping kiddo at daycare on the way. In 25 minutes of walking I pass two awesome bakeries, so I grab something to eat. After work, I walk to kid's daycare, pick him up, stop in one of the three parks we pass on the way home for some time on the swings, and still get home by 5:45...plenty of time to cook. One of us cooks while the other one walks around the neighborhood with the kid.
So it costs you 20%-30% more to live where you want, and you can't own the house you're living in. BIG DEAL. Structuring your life so that it all flows nicely is like having a vacation every day compared to people with long commutes. Owning a house is awesome, but if I had to choose between my home and my lifestyle, I'd torch the house and all its non-living contents in a heartbeat. 3 hours in a car every day is hell (been there, done that).
posted by paanta at 6:02 AM on July 29, 2009 [1 favorite]
I agree with paanta. Live where the commute to work, your friends, your family, and your favorite activities would be the shortest and most convenient. Otherwise, you will find yourself seeing your friends, family, and doing your favorite activities less. To me, that is worth a higher house price or not owning for awhile.
posted by gt2 at 8:15 PM on July 29, 2009
posted by gt2 at 8:15 PM on July 29, 2009
Some of the real estate blogs I read offer compelling evidence that prices will continue to drop. (I'm in San Francisco, one of the "special" real estate markets that "never goes down", which has seen significant price drops at all price levels in all neighborhoods.) There are still a lot of weird adjustable rate mortgages out there that will reset in the next couple of years (and even though interest rates are at historic lows now, some of those mortgages had insane teaser rates or "pay whatever you want" options for the first few years, so the resets will be nasty even at 5%). There are also a ton of foreclosures and foreclosures-in-the-works that the banks haven't put on the market yet. There are even new condo projects still being completed and adding to the total housing supply (again, in San Francisco, but I know there are condo projects in other cities that were started during the boom and are being finished now).
Sit down with a spreadsheet and run a whole lot of numbers. What if prices in areas A and B drop by 5% next year? 10%? 20%? (or even more?) If you wait a year or two and aren't able to use the first-time homebuyer credit, how does that affect your numbers? (Depending on the purchase price and total interest payments, that credit isn't really a lot of money in the grand scheme of things.) (If you don't know about seasonality in real estate, read up on it a bit - basically, summer is selling time, and the fact that sales are higher than they were in, say, January, has more to do with the fact that people tend to buy houses in the summer than with a recovery of the housing market. Here's a chart showing similar bounces every year in San Francisco.)
Are you saving money by renting right now? How much? Would continuing to rent for 2-4 years make a big difference in what you can afford to buy?
Finally, regarding B and the local libraries - here in San Francisco, it's easy to request materials from one library and pick them up at another branch. For a while, I was working near the Main library, and I would pick stuff up there. Then I started working in a different location, and I just started having my requested materials shipped over to that branch to pick up. Of course it's nice to have all the resources of your local library, but look into what your library system offers in terms of making things available at the branches in area B.
Good luck!
Also,
posted by kristi at 10:18 AM on August 4, 2009
Sit down with a spreadsheet and run a whole lot of numbers. What if prices in areas A and B drop by 5% next year? 10%? 20%? (or even more?) If you wait a year or two and aren't able to use the first-time homebuyer credit, how does that affect your numbers? (Depending on the purchase price and total interest payments, that credit isn't really a lot of money in the grand scheme of things.) (If you don't know about seasonality in real estate, read up on it a bit - basically, summer is selling time, and the fact that sales are higher than they were in, say, January, has more to do with the fact that people tend to buy houses in the summer than with a recovery of the housing market. Here's a chart showing similar bounces every year in San Francisco.)
Are you saving money by renting right now? How much? Would continuing to rent for 2-4 years make a big difference in what you can afford to buy?
Finally, regarding B and the local libraries - here in San Francisco, it's easy to request materials from one library and pick them up at another branch. For a while, I was working near the Main library, and I would pick stuff up there. Then I started working in a different location, and I just started having my requested materials shipped over to that branch to pick up. Of course it's nice to have all the resources of your local library, but look into what your library system offers in terms of making things available at the branches in area B.
Good luck!
Also,
posted by kristi at 10:18 AM on August 4, 2009
This thread is closed to new comments.
posted by bonobothegreat at 11:20 PM on July 28, 2009