[Vin100]

Hello everybody,
I am posing a very peculiar question to learned members of this forum.
We have been looking for a house to buy in North Haven County. We have looked at many houses. We are still very confused as to how much should we invest..or rather say spend for buying a house. I am asking because we came to this country about 31/2 yrs ago and plan to live in this area for at least 4-5 yrs. Not sure after that. We would like to buy a house because we feel that its not worth spending on rent since we have 2 kids and want a minimum 3-4 bedroom house. We are Asians so typically have that mentality that buying a house is an investment, which was countered by an american who told me that buying a house in US is more of liability.
The houses in the range of 380K-440K are perfectly the types we would love to have. And we can stretch ourselves to buy such a type of house. But the thought of recurring expenses esp bills etc makes us feel uncomfortable. Not that we cannot do, but we would end up not saving anything, and may have to compromise on family outings, parties, better cars etc. Houses in range of 280-350K are more comfortable in our range, but these houses need a lot of updating, some have old kitchens/ bathrooms or some are 1950s. We are afraid that we may end up spending a lot on renovations or repairs.
My question is should we spend all our savings to buy a house which is in quite a good renovated condition, and updated, and also spend all our monthly income in home related bills and essential expenses like food, gas, kids etc with nothing much to save monthly?
Or should we buy a house with a little lesser price tag.. and compromise on the older house, and stay with it (obviously I would not like to spend on renovations otherwise I would have bought a newer expensive home). This way we have some money to save for family outings, weekly restaurants, and some spared to save.
Our income is going to remain the same for next 2-3 yrs, though we expect it to increase after that.

My wife says that we should always buy our dream house which we would love to keep for number of years to come. She insists on a newer house, says she would like to give the best to her kids and is ready to compromise on other expenses and live on a tight budget for next 2-3 yrs. I feel that we should be able to enjoy small ways of pleasures by going out for dinners, trips, etc. and may feel more comfortable if have some money to spare in our bank accounts.

Looking for sound advice….
Thanks in advance

[Stylo]

There are a lot of factors. Is your combined income over $100,000? If not, I would consider that price range out of what you should be able to afford.

[Vin100]

Yes. Combined income above that, but we also factor in the cost of day care for our 3 yr old.

[NewJeffCT]

Never heard of Americans thinking of homes as a liability. Maybe with the 2007-2010 downturn, some people might be temporarily scared off of home buying. But, real estate has proven itself a good long-term investment over 80+ years now and I think most people would agree.

I would also say that it depends on how stable your jobs are as well. If you and your wife can count on that raise after 3 years, you'll really come out ahead in the long run by buying a more expensive home. You'll have built up 3 years of equity in your home, which you would not have done if you stayed in an apartment, and you'll also have more disposable income after those three years, too. (I think you're in the medical field, if I recall, so after your residency or internship is completed?)

Also, let's say that over those 3 years, your home increases in value by 10%. On a newer $400,000 home, you'll have gained $40,000 and probably not need any updates and still be easier to sell if you wanted to "upgrade" your home even further. On a $300,000 home, you'll have gained "only" $30,000. But, if the $300,000 home needs updating, like you say, some of that $30,000 would likely have gone towards updates. And, if you do want to "upgrade" your home in 3 years, if you save money and don't update the $300,000 home, it will make it harder to sell.

Off the top of my head, I'd say go with your wife's idea.

[Vin100]

Yes. You are right. Both of us are resident doctors and now going into fellowships. Do you think we can see home prices to rise upto 10% after 3 yrs !!. No doubt my wife loves taking challenges and feels that we can do it..I am a little pessimistic and always sees the negative side of the coin.

[NewJeffCT]

If you're still looking in Cheshire, the median sale price of homes increased by 14.4% just over the past year, according to Trulia.

[Vin100]

We are actively looking in Cheshire..and seem to be losing on some deals..probably because we r not sure how much we should spend on the house.

[NewJeffCT]

and, Zillow has the average value of homes in Cheshire as having increased by 3.6% over the past year.

[Vin100]

The problem is compounded by the fact that we are living in a relatively cost effective town house provided by the hospital. I feel that we might as well stay here and save more money, but my wife feels that since its a gated community of young doctors much younger to our age group, it doesn't provide the surroundings and the family neighborhood to our 12 yr daughter who doesn't get any chance to make friends in neighborhood. My wife has really good tastes in life..i admit that i am kind of miser and the money-saver types.

[AmyBergquist]

Buy less of a house now and when you finish your fellowships and move on, buy more of a house then. You'll have better incomes at that point. Do you want to be stressed out with finances for the next 4 or so years?