Buy apt now or wait to buy house?

amother

Pumpkin

Tue, Jan 17 2017, 12:53 pm

We can afford to buy a condo in our area. Not only that, even taking taxes and maintenence fees into account, we will be paying over 1k less a month in mortgage than we're currently paying in rent. The downside is that the condo would likely be a bit smaller than our current home, but still with enough space for our needs. Dh wants to wait until we can buy a house. The thing is, houses just get more and more expensive (so do condos for that matters). We can afford now what houses cost 2 years ago, and 2 years from now we'll probably afford what houses cost now plus rent goes up every year too... I think we should buy an apt, at least we'll own plus be able to save the difference. And then we can sell it in a few years for more than we paid and use that plus extra savings to buy a house. Are there any downsides I'm not thinking of?

amother

Sapphire

Tue, Jan 17 2017, 1:05 pm

House prices do fall, even in New York/ New Jersey- but its hard to predict. Purchasing a property with the expectation of selling in the near future because you will outgrow it has a component of risk. You might find in 2-5 years you can't sell for what you need to sell for to get the bigger house. Nothing wrong with risk, just know that when you purchase property be aware of it.

Also there is an emotional, non-rational component to buying a home. Some people just want the feeling of ownership, even if on paper its the wrong thing to do. That can be OK - we can't be rational all the time!

amother

Papaya

Wed, Jan 18 2017, 3:29 am

If prices in your area are going up and you'd be paying 1K less a month, I don't see the downside. You can just sell at a profit in 2 years, having saved an additional 24K you'd have spent on rent.

JoyInTheMorning

Wed, Jan 18 2017, 7:16 am

The downsides are:
1. The real estate agent's fee (6% of purchase pricewhere I live, paid by the seller)
2. Taxes due on selling

The possible downsides are prices going down or unforeseen expensive repairs.

amother

Slategray

Wed, Jan 18 2017, 7:45 am

JoyInTheMorning wrote:

When you sell a house and buy another one , taxes don't need to be paid.

amother

Dodgerblue

Wed, Jan 18 2017, 7:59 am

Its a gamble. We bought a house soon after being married when the market was really hot - the market then fell and we held on to the house - now the market went back up - but not our house - the housing market changed a lot and no one is now interested in a small house our size. we will be lucky if we make back what we paid for it at the time (and then it was an amazing price).
Most of the time you get really lucky, but not always (and we are in a much desired location now).
\You are also pouring whatever savings you have into the down payment and then you have to save again for a house. In the beginning most payments go toward the interest so if you sell in a few years you won't have that much paid off.

amother

Pumpkin

Wed, Jan 18 2017, 8:52 am

The downpayment on a condo would still leave us with about a quarter of our current house fund, so we would not be starting from scratch plus we would have all this extra to save. I am a little concerned about ability to sell, but I do think we could rent it out if selling ends up proving difficult.

amother

Pearl

Wed, Jan 18 2017, 9:39 am

amother wrote:

Make sure you know the rules, if there are any, about renting there. Some places have restrictions.

shacn

Wed, Jan 18 2017, 9:42 am

I am in this dilemma too.

I probably could afford my downpayment now, I just am not sure where I want to settle yet and also I am not sure if I will be able to afford all the costs that come with owning a house aka taxes con ed bill (my bill now is $55, my parents is over $350), water bill, keeping up the lawn etc. there's a lot more costs to think about. I'm paying now about $1600 in rent and just about 55 for con ed.everything else included.

I do though still feel like since the market is going up especially in the places I prefer to live in (NY) that I SHOULD buy now, but it's hard as we only have 1 income now.

I don't think it's worth buying a condo though. Think condo fees, broker fees, title work etc. closing costs are another few thousand if not more.

But then again- interest rates are now rising! On the higher of 4% when a few months ago it was in the 3's.

Best of luck!