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We have a decent downpayment saved up and in a position to buy a house in Seattle area.
We are in our early 30s with no kids. Will probably have kids in next few years.
We are looking for 3 bedrooms + and a good school district.
Problem is most of the good properties are around 20 miles from downtown.
Our options:
1. Buy 3 bed house in good school district, 20 miles from downtown.
2. Continue to rent 1-2 bed in Downtown or somewhere with direct commute to downtown.
3. Buy 2/3 bed townhouse/condo in an area with maybe not so good school district. I dont like this option. This would have been a good option if we were in our 20s, but I think its too late to do this now. Don't want to buy something that I know i'll have to move out of in a few years.
4. Buy townhouse or condo (but in a good school district) with a better commute. This is the kind of houses we will keep looking for even if we rent, but it seems unlikely we will find something in our price range.
I'm not able to convince myself to buy a house - Pay more for mortgage than rent, spend more time in commuting just to end up in a nice big house with empty rooms (as we don't have need for the rooms now).
Am I missing something?
On the other hand, considering the prices going up so much, I'm worried about being priced out and that in next few years, I might not even be able to afford what I can today.
From what I understand about the increasing prices in the Seattle area (similar to Southern California), someone in your situation, who is seriously hoping to buy a home in the next few years (schools, children, etc), might be better off buying what they can afford now. Otherwise, they will likely be priced out of the market and 20-miles will quickly become 30-40 miles (20-miles really isn't that far.)
The question in your situation might be, can you increase your income and save money at a rapid enough pace to keep-up with rising housing prices? In contrast, the old axiom: "a rising tide raises all boats" is applicable to housing appreciation.
I’d usually counsel to continue renting but I agree that if you’re not careful you may be priced out of the closer suburb to buy in. It depends on your personal finances and what you can save for a down payment, but generally speaking closer is always better for quality of life.
I know very few people who regret staying in the city or inner ring suburbs when it comes to commute time and quality of life. I myself love space and property, but even we are compromising on that with cost to remain as close as possible to my husband’s work, after having done the commuter suburb thing in our previous home and finding it miserable after a few years. Almost 2 hours lost every day to drive time, and up to 3 in bad weather? That was much worse on our kids than having a smaller yard or using parks but seeing daddy an extra hour and a half each evening.
Personally? Rent and bet on the “crash†there. It won’t really be a full crash, but a plateau.
I would say engage an agent to tell you what happened to SEA prices from 2006-2011. And also ask about appreciation and desirability of single family vs condo.
Per Case-Shiller, it went from 192 in Jul 2007, and bottomed at 129 in Feb 2012 actually. It now stands at 232. Huge gains (80% over 5 years) for those who bought from Feb 2010 to Feb 2012, but you also had to time it right. If you've owned since before the crash, then you're still up 21% (< 2%/year).
Obviously, that's a high-level look, because anecdotally, we know prices in many neighborhoods have risen 20+%/yr in some Seattle sub-markets.
If you can find good schools, in your budget, in single-family, then go for the shortest reasonable commute over house size. That's where "location location location" comes in. Assuming everything else is "equal" - the closer house is the better house.
Buying a house require a lot of responsibility. First, you have to make sure you are financially capable of keeping up with all expenses down the road, let's say 15 to 30 years depend on the mortgage you are going to get. Second, if you or anyone in the family who contribute to the expense of the house, and suddenly lose of income or simply cannot pay for the mortgage, what would be your backup plan. Third, what is your ultimate goal of having a house? If you plan on living in the same house for the rest of your life, then that would be a justifiable answer to buy a house. If you just want to buy a house because you worry the price just going to keep going up and up, then I don't think that's wise.
What you need to look at - and what SO MANY people don't think of before they're already in this position - is the cost of childcare.
In our low COL area, childcare in a facility (the safest option, for your child, unless you have a kind relative or close friend lined up) is going to run *at least* $200/child. Until kindergarten. You'll still need before/after childcare, even if it's full-day K (not every district has this - find out), which will run at least $160/week... until they're old enough to stay home alone until you get home from work.
How much will you end up making, after paying that? What is the cost of GOOD childcare within 10 minutes outside of your normal commute? What hours do they offer? Is it still worthwhile to work? Can you shift, beforehand, to working from home and at what income? Consider at-home childcare. You can watch up to 2 children who are not your own without registering as a childcare provider. Despite what many think, one child is difficult. Two+ children entertain/occupy/amuse each other. It will be easier, not harder.
We found it wasn't worthwhile for me to work. I stayed home after the second was born (would have stayed home after the first if my mother hadn't been available then to watch our first.)
If you're planning to have children, make plans around reducing bills/payments as much as possible, not increasing them. Go down to one vehicle. Pay off debts. Reduce living expenses. Children don't cost much (excluding childcare) until they're in school; the older they get, the more expensive they are. (This is true no matter how frugal a mindset you have.) You have time to move up before they're in school... it'll be the longest 5 years of your life.
And on the quality of school district issue: Unless it's actually DANGEROUS for your child to be there, the rating of the district doesn't matter. You can drop off/pick up to avoid shenanigans on the bus. But for schools, the education is as productive as it is well-received. If you're an attentive, involved parent, they will receive a good education. (Again, as long as you know your child is safe.)
I made $350/week (her mother was desperate for someone she could trust), watching a 2 year old along with my 3 children. Easy and benefited our family enormously.
Really think through the childcare/working issue. It's something I see my peers struggle with quietly all the time; they're shocked at the "normal" life event of children impacting their financial lives so drastically. They'll think of starting a family, CAN afford the "successful-family" home they ideally want, then have children... and are then desperately strapped/struggling for the next 10-14 years or get divorced, whichever comes first. Someone always feels underappreciated/overextended. The only thing worse than having a family in one home with a strapped budget? Having a family in two homes with a strapped budget and virile resentment between the parents.
Think it through and be severe about cutting the budget.
In many areas, it's much cheaper to own than rent. Around here, a 2BR condo is about half of what it would cost to rent a similar 2BR unit. If renting is cheaper than owning in Seattle, but you intend to stay there, I would buy as soon as you are able. While the rate of appreciation may not be sustainable, I can't see SEA real estate stalling out or declining.
How long is that "twenty mile" commute? A twenty mile commute in intense urban traffic can take well over an hour. Personally, I would go for a smaller home in a similar school district with a better commute. I commuted an hour each way (though in a rural area) for years and my dad did the same thing. That kind of commute can really wear you out, especially in urban traffic and with kids.
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