Conflicting advice about when to buy a house

We've been getting so much conflicting advice about when to buy a house (we're first time home-buyers, and DH has been an attending for 3 months now). Some people say buy now, you're ready, but others say wait at least two years before buying.

Some have said wait until DH has been in his job at least 2 years, to see if he likes it.

Some have said wait until you pay off your private med school loans (we have about $15,000) and then think about buying.

Some have said don't buy in such an expensive market--move to a cheaper region so you don't have to buy a house way out in the suburbs and have a miserable commute

Others have said you're wasting too much on rent now (over $2000 per month) so buy soon.

Others have said that my career is up in the air so don't buy until it's settled

It's hard to know what to do. We've been going to a lot of open houses lately, and we've been seeing shacks in the 600-800,000 range. Keep in mind we live in an expensive area, but still, these are small, dumpy houses for exorbitant prices.

We're so tired of renting, and our rent is really expensive per month. We're so ready to buy this summer--but a decent home in this market would mean moving way out to the burbs and a horrible commute for DH. Or, alternatively, we could spend a huge amount on a shack but have a good commute for DH, but I don't think that's a very good option.

We could move to a whole new city, but we have no idea where we would move. We can move anywhere, but having so many choices is a little overwhelming!

Where do you start to figure all of this out? Have others gotten conflicting advice about when to buy a new home? Should we seek the advice of a financial advisor? I'm reading some books on buying a home, but it's a lot to take in all at once.

I don't think anyone is going to give you the right answer. You need to make decisions about personal preferences. Some people are willing to pay $600K for a shack in the city because they don't want to commute or live in the burbs or they love being in the city and the cost is worth it, etc. Some people figure the commute is a fair trade for more affordable housing and like living there.

Once you decide what kind of setting you want to live in, it will be easier to make some decisions. If you want to live in the city, then you are probably going to have to start with the expensive shack and work your way up. Or find something in-between the city and far out burbs.

And you should probably decide if this is a place you want to live for at least a few years. If you don't, probably not a good idea to buy a house.

I will make it easy for you veggiefriend!

Wait until your husband has been at his job 12-14 months to buy a house AND when you know you want to stay in this city and in that house for four years. Three months is not long enough to assess a job and a huge percentage of new doctors leave their first job within two years. In this 12-14 months, hopefully you can set a goal of determining what you want to do with your career - - that way you will have a deadline for yourself too. You can also use the 12-14 months to build up a hefty down payment - - if you are looking at 700k houses, then you ideally want 140k down payment, I certainly wouldn't go any lower than 70k.

Plus, why rush to buy into what is nationally a deflating real estate market. Two thousand a month for rent is a bit painful but add up mortgage plus real estate taxes plus home insurance plus repairs on the 600-800k houses you are talking about . . . . I bet 2k will start to look like a bargain.

[Vishenka69]

We're planning on waiting about a year after DH starts his job after residency. We've heard too many horror stories about people getting screwed over by the job and hating the area but being tied to the house. We want to make sure we like both before we put down our roots there.

Thank you sms92 for your helpful advice and yes, I agree with everyone--it is probably better to wait, but actually we're paying way more than $2000 for rent per month and that is PAINFUL! I guess I'm thinking--yikes--to have to pay this for rent for one to two additional years and have nothing to show for it! But I guess in the long run that is better than buying a house and then having problems selling it if we decide to move.

I guess my other question, then is: if DH decides to find a new job in a year or two, and we end up moving out of state, then do you wait another two years to see if this next job is the right one? When do you ever know for sure? That is such a hard question, I know.

[SuzySunshine]

We're not there yet but I think it depends on the housing market of your location. I know you've said you're looking at shacks for $500-600K but are they selling still, even after the collapse of the past few months?

I know you can never predict the market but if you feel comfortable that you'll get your money back in your market then why wait?

We may not make any money on the house we live in now when we sell it in four years but we'll at least get some of the money back that we've put in to it - that is more than you can say about renting.

Some of the shacks in the 400-600 range have been on the market for a year or more; others just a month or two. We've been going to a bunch of open houses and just seeing what's out there. What's really shocking is that this past Sunday we saw two absolute shacks priced at $800,000-1 million. And when I say shack, I mean shack. Small and poorly maintained.

I'm totally ok with waiting a year, but we wonder if we made a mistake moving here to such an expensive housing market.

Veggiefriend,

Do you feel comfortable telling us what city you are in? I completely understand if you would rather not. Its just that you might be able to get some city-specific advice from posters on the real estate market and whether your city is just too expensive period.

We are in a city with similar housing prices to what you describe. There are times I would prefer to move to a smaller, but still relatively cosmopolitan city, but my job is not geographically mobile. However, I am happier in my big city than I would be in a rural area so I am prepared to suck it up.

If you really like your city, then there are ways to deal with a super-expensive housing market. For example, most people in these markets start out with a condo or townhome for five years or more then gradually move up to their ideal house - - that is, a series of moves. Otherwise you end up with a huge mortgage that will keep your dh chained to his work and limit your educational flexibility. Another option is to save all of your income in a house fund for a couple of years (direct deposit your whole check) and live off of his income.

You can make it work but it will likely not be your ideal scenario of buying a relatively nice house with a relatively modest commute the first time around. If big city living isn't worth it to you, then count yourself lucky you have the flexibility to move!

[Vishenka69]

Are you deadset on a standalone house? Have you looked at townhouses, condo, co-ops? These tend to be cheaper and you wouldn't be throwing money away on rent.

Along the lines of the suggestion to wait a year. You don't have to tell us, but something to think about -- is your husband offered partnership at that point? Or something along those lines? Would a year or two years be some sort of milestone for him to choose to stay with his employer or vice versa? And if he didn't stay at that job, would you want to stay in the same city (and are other good jobs available)?

There is no partnership option for my DH--his specialty doesn't work that way. His job 2 years from now will likely look and be exactly the same as it is now.

DH could have worked anywhere. We chose this city together, based on the thought that I'd have the best career options here. DH could get a job easily in another place or even in this city, I would imagine. He had multiple job offers to choose from when we chose this city.

As for us, yes, we absolutely want a standalone house. We are definitely not interested in condos or townhouses.

So given that condos and townhouses are out, we're looking at very expensive single family homes. I'm from a small-ish city in the midwest, and 400,000 there will buy you a mansion. Here you get a small, crappy house with no yard out in the burbs.

We just moved here three months ago....and love it here, but homeownership is also one of our goals, and what we're trying to decide is maybe we should wait a year or two, see how things are here, but if housing is still this super expensive, we move somewhere else. But where is the big question?

We have no idea how to answer that question. We don't want to move back to our hometowns, but we don't have a strong draw to any other place. I have moved 3 times in 6 years (3 different states). I'm ready to settle down in a house and start nesting. We're ready for the responsibility of home ownership, but perhaps we were too hasty in moving here without doing a lot of research on the housing market first.

[Vishenka69]

As for us, yes, we absolutely want a standalone house. We are definitely not interested in condos or townhouses.

To me that doesn't go with living in a large city (unless you move to suburbs an hour or so away). City living doesn't usually come with or means living in a standalone private house. That's what suburbs are for. Being downtown puts you into the center of activity, where isolation comes with a very high price tag. I don't understand why house prices surprise you. They are the same way in all large cities.

The house prices surprise me because we're talking about 400-600 k shacks in suburbs--not in the city itself. But nearby suburbs. It surprises me because these houses are dumpy and totally not worth the price.

But I'm worried we made a mistake moving here too hastily and that we didn't take into account the fact that we'd get priced out of suburbs within a 30-minute commute of the city.