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Hello, long-time lurker, first time poster. Have a very real dilemma on my hands. What would you do?
Fact: Yesterday, I've been laid off of my job with 4.5 months of severance pay, paid monthly for the next 4.5 months
Fact: Because of the way the severance is paid, HR will show me as an employee for the next 4.5 months
Fact: We have 6-8 months of expenses saved in money market right now
Fact: Our little family (me + spouse + dear child) lives in tiny 1-br condo that we were getting ready to sell as we are expecting to add another addition to our family
Fact: I can get 3 bedrooms, 2 baths in *very desirable* parts of the city (Chicago North Side) for my monthly nut on the 1-br condo (...condo has unreal assessments)
Fact: My spouse has a good job but makes about a third of what I make but has lots of flex hours at job
Given: We sell the condo regardless as the space will not suffice in a few months
Given: I have not explored the job market since I just found out about this yesterday but have heard horror stories about the doom/gloom (I will not share what I do but will share that it takes a lot of high quality (& cost) education to get into it)
Given: Spouse is very attached to their job
Given: Spouse (& even I) will only consider living in Chicago North Side, if we have to be in Chicago at all, so moving to some suburb with lower costs has a remote chance of actually happening
Given: Getting a loan right now will not be an issue since I will show as an employee for the next 4.5 months
Question: Should I consider buying that 3-br/2-bath home, since my cash flow on a monthly basis will be the same as it right now on the condo? If I get what I think I will get out of selling our condo, the equity will make an easy 20% down payment on the bigger home. But then I'm locked into another home (& Chicago) without knowing what the job market will bring.
OR
Should I rent instead? For the same monthly nut as my condo (or even $500-$800 less), I can get the 3-br/2-baths easy in desirable parts of Chicago North Side. And I will have the money from condo sitting as a cushion for rainier days.
Issue: Main thing will be that spouse will be upset with the idea of rentals. It involves an additional, interim move and will not get us the same level of upgrades that we can get by buying (and, of course, paying the 20% down).
So, what should I do? Buy or rent? How should I convince my spouse? Spouse is reasonable so normally I would know what to do. But given the shock of yesterday, I don't trust my own judgement at the moment and am inclined to give the group a chance. So, please have your say. Thanks for reading it all.
More details:
We will not stay more than 3-5 years in the bigger place before moving elsewhere or upgrading
Last edited by anon10001; 02-26-2009 at 11:53 AM..
Reason: spelling
RENT and scale back costs AS MUCH as possible. i.e. RENT CHEAP, reduce costs....
Then once you are back on your feet then start considering buying a new place. (once you have a job)
Odds are prices will be better in a years time anyway. So you win out by waiting anyway.
Spouse needs to understand you are not working and hence deal with renting.
I suspect you already know what to do: you should rent. I make good money, but when storm clouds were fast gathering on the horizon I sold my house that I didn't want to move my family from, and am now renting. There are advantages to renting a house, like you get to ignore all the niggling maintenance issues. So far I'm liking it a lot more than I thought I would. I rented in a neighborhood I eventually want to buy in. The biggest advantage of renting now is that house prices are highly likely to keep falling, even plummeting, for the next year at least. Look at rentals on craigslist; you might be surprised at the quality. Lots of upgraded houses for rent (because owner couldn't or wouldn't sell) in my area.
It is ironic that because we have options *at the moment* (4.5 months severance pay + 6-8 months expenses banked + spouse maintains job albeit a less paying job), it is actually *more* difficult to convince spouse (& sometimes myself) to rent. If I find a job tomorrow (dream on, right?), all of this is moot and we buy...but what if there is nothing to be had and I remain unemployed for longer than 4.5 months. That's what scares me; that's what is discounted by the spouse. Boy, I'm glad for the anonymity of these forums!
When I sold my house I gained about 5 years of cashflow. I'm worried that that may not be enough, esp. since I want to retire someday. The economic situation is a lot worse than even the mainstream media portrays it, IMO. Obama and others are trying to be optimistic, since pessimism will only make things fall faster. For one thing unemployment is higher than it was at this point in the Great Depression, when calculated in the same way as it was then (like not ignoring people who exhausted their unemployment benefits).
RENT until you find a job!! Explain to spouse the inconvenience of an interim move and dealing with the temporary less than desired decor/ammenities is by far more comfortable than going through forclosure, ruining your credit and being forced to become long-term renters.
Why not table the decision until your house sells? What if it doesn't sell as quickly as you want or for the amount you expect? What if you can't find a job in the next 6 months? Lots of what ifs, but if I were you, I would start with the actual sale of my condo.
I guess the big question would be, if you couldn't find a job, could you continue to pay a mortgage on a new house over a period of time without worrying about money?
I think if it were me, I'd go look at the job market before considering anything because IF you guys had to move out of the area, renting might be the wiser choice.
Maybe doing nothing does make sense. The condo will go on sale soon and who knows how long it will take to sell it. In order to buy, we need the equity from the condo; so unless it sells, we can't buy. I suppose if it sells and I don't have a job lined up, then this issue will raise its head even more strongly. There is also the issue that I might find an attractive opportunity outside of Chicagoland, in which case buying at any time before finding a job will be harmful. Of course that raises another issue of the spouse not wanting to leave their job or Chicago. Maybe I should the ask the mods to move this to relationships and get it out of real estate?!
I agree the first step is when you have a sale of the condo..
As for either choice.. renting is the safe choice.. it is the logical choice and it is a choice voiced by the media and people here who complain about the mortgage prices and people who got in over their heads and were irresponsible..
but you could make buying a house, with yes without a job right now and you could make money in other ways or line up a job for yourself.. it all comes down to you and what you believe... It is the ballsy choice but if you believe you will be supported, you will be..
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