Aug 18, 2012
House Hunting Part III: Why We're Not Buying A House (Yet)
It's been a while since I've given a house hunting update and with good reason; it's been put on hold, much to my great disappointment.
Let's start from the beginning and let me remind you that this little story doesn't come out so poorly, so bear with me.
We were starting to get really gung-ho about buying a house. After all, we have a downpayment that Brandon has been adding to for years now, we need more space, and neighbors on all sides of us is just not our cup of tea. Primed and ready, I tell ya.
So we first decided to scoped out some places and choose where we wanted to buy (not far from where we live now actually). In general, we agreed upon a lot of the characteristics in a home that we wanted and after our weekend of open houses, we had an even better idea of our wants and needs.
So the next step was the money. Brandon has a work connection with a mortgage lender, had heard great things about him and we figured we'd just go with him. Check. But first, we wanted to do some research about the real estate in the Bay Area and what exactly constitutes a good deal when it came to buying a home here. So we researched and we researched. The same information kept staring us in the face: they Bay Area was a renter's market, not a buyer's market. There's a phrase in real estate called "breakeven horizon", where obviously, you break even on the house you own and start making money on it. It's a prediction; obviously, but its not something we are going to ignore.
In fact, just yesterday, Yahoo Finance released an article (though much debated) listing the seven cities where you should rent and not buy. We live smack-dab in between number 6 and number 7.
So yes, even with all the great deals on mortgage interest rates at the moment, our research says not to buy...well, unless we want to stay here for the next 5-10 years. It boils down to this: if we bought a house right now in the location that we want to buy a house, we'd have to live in it for at least five years (some research said 12!) in order to make a profit. That would be all fine and dandy, but our plans do not include us settling down here and staying for the next 10 years. We are not about to take a huge gamble and risk our freedom of moving whenever the heck we want.
And we are well aware that those statistics may not be true and no one can truly predict the market outcome, but this does include a huge financial risk on our part, so we aren't about to play any games. Sure, you can rent out a house (that you own) here for lots of money, but that's not something we are interested in either. So basically, we looked at this purchase in all aspects and scenarios and decided it wasn't for us. A few episodes of Holmes on Holmes solidified our decision (ha - kidding. Sort of.)
So what next? Well, our lease is up next June and we are going to try our darndest to find a house to rent out. It's not an easy task, but we are up for the challenge. Hopefully we can find a good deal and still be able to continue to add to our downpayment fund. When we do move out of the Bay Area, we'll be about to afford a lot more house for our buck, which sounds worth the wait to me.
Also, things can change between now and June with real estate. We are going to keep our eyes open and continue researching in case predictions change or we simply have a change of heart and decide to stay here for the long haul after all.
Am I sad? Yup. I really wanted to be able to buy a house at this time of our lives, but that little free spirit inside of me loves the fact that while renting, we can easily pick up, pack up, and move to where ever life takes us next. That's pretty comforting and not to mention, very exciting.
In case you're interested...
House Hunting Part I: Open Houses and Wish Lists
House Hunting Part II: Well, That's A Perk
Tell me your story. Are you ready to plant roots where you live now or do you want to move around a bit first before settling down?
at 9:59:00 AM