Brockton - 26 year old single male wants to buy a house? (Quincy: apartments, rent)

[Amontillado]

A couple of things to look at are real estate taxes and auto insurance. Towns that are nice to live in usually have well-behaved people who are careful drivers. Towns that are dangerous to people are dangerous to cars too, and you'll pay for that. And taxes to keep a declining city propped up may be fairly high too.

[wxjay]

I really don't think you are being realistic with your money situation, and I would strongly advise you not to buy in this current market (I know you said you are waiting a year, but even then I am not sure...). However, if you are still considering it, please heed the following advice.

First and foremost, never put your budget by what a bank states you 'can' afford. If you want to buy a house, these should be considered first and foremost.

(1) First, determine your monthly TAKE HOME income. And even though you are 'pretty sure' you will get a promotion, the fact is - you don't have it. Anything can happen in a couple of months, especially with this economy. You might get the promotion and it might be only to $50K instead of $55K. NEVER use anticipated income when considering a housing budget.

(2) Are you funding a 401(k) at work to the point of a match? If not, increase to the point of the match right now.

(3) Do you have a Roth IRA? Are you funding that to the max each year ($5000/yr)? If you have money sitting in your savings account ONLY and not put into a Roth IRA, you need to do that. Open up one and start investing in no-load mutual funds, some ETFs, etc. Dollar-cost average in (i.e., don't dump $5000 and pay for shares in mutual funds all at once - instead, deposit so much per month or biweekly and buy shares with each deposit).

Have those tools/questions answered first and start now. You might find that, for example, you don't have a Roth IRA, so you need to divert your money toward that.

So let's say you answer those questions and are still thinking about buying a house. Then move to the following questions.

(1) Do I have 20% in cash to put down?

(2) If you do, then when you use your savings to pay 20%, do you have an 8-month emergency fund? This is important - now you have to anticipate how much mortgage, insurance, property taxes, maintenance on the house (that MUST be budgeted), gas for your commute to work (or the train fare), food, 'entertainment', utilities (I don't know what you pay now for them, but for an entire house they can be a lot, especially in the winter if it is an older home), etc.

Estimate high - you have to. One major problem with the furnace might cost $5000-7000 - all at once.

If you cannot answer those questions positively, then, in my opinion, you cannot afford the house. Period. Don't ever push your budget to the brink because, with this economy, for example, your job could be lost or your salary cut, and then boom - it's all gone. Not only that, but real estate is an investment. Just buying a house because I can afford it and I want to play my electric guitar are not smart investment decisions. Eventually, you will sell the house. If you buy a cheap place in a crappy neighborhood, then you will have a hard time selling it.

My opinion - get out of your parents' house first and 'enter the real world' - pay rent somewhere (other than to your parents, if you do at all) and get responsible. Build up your credit.

[NotAPrincess]

Originally Posted by Union Thug

Let me put it like this. I'm a single male age 26 with no intentions on marriage or kids. I'd be waking up at 7am, driving to work in Quincy, leaving work at 4:30, coming home, parking my car in a garage, and spending the rest of the day indoors until i go to sleep, then wake up and repeat. Weekends, won't even be in Brockton. Probably do all my food shopping on the way home from work and not in Brockton.

IMO, you shouldn't buy a house in a neighborhood that you don't at least somewhat enjoy. Add to that a house requires regular maintenance, so the idea of working all week, spending all your evenings inside, and being away all weekend means you won't have time to properly maintain your home. If you don't feel comfortable and/or don't want to spend time in your yard mowing the lawn, planting bulbs, raking leaves, etc. then I don't think it's a good choice for you. I see two options:

1. Buy a condo/townhouse and enjoy the more indoor-type projects. Some townhomes have a small outdoor area where you could have your dog or a grill and a patio set.

2. Buy a home in an area you enjoy.

Unfortunately, for 180K, I'm not sure you have great options for a single family though.

Admittedly, I know nothing about the towns south of Boston, but it looks like there are some (small) homes for sale in Rockland and Abington in your price range.

This 1950's bungalow is cute:
11 Stanton St, Rockland, MA 02370 | MLS# 71257348
or this one:
38 Coleman St, Abington, MA 02351 | MLS# 71248033

[Monsieur Boston]

Originally Posted by wxjay

My opinion - get out of your parents' house first and 'enter the real world' - pay rent somewhere (other than to your parents, if you do at all) and get responsible. Build up your credit.

All sound advice except the last point (in my opinion). Stay with the parents as long as possible to save up as much money as possible. While I understand on the one hand what wxjay is saying, on the other hand you're pi$$ing your money away paying rent. You get absolutely no return on what you're paying, whereas you can bank your paychecks while staying with the parents and earn some interest.

[wxjay]

Originally Posted by HS_DUDE

All sound advice except the last point (in my opinion). Stay with the parents as long as possible to save up as much money as possible. While I understand on the one hand what wxjay is saying, on the other hand you're pi$$ing your money away paying rent. You get absolutely no return on what you're paying, whereas you can bank your paychecks while staying with the parents and earn some interest.

I think that leaving the parents' home is more of a step forward toward being 'on his own' and getting ready for that. If he is very disciplined (as he may be, depending on what he has done with investments I pointed out), then I can agree with you. If, however, staying with the parents is a 'safety net' and relies on that, then I think there needs to be an intermediate step taken.

Just my opinion though.

[Monsieur Boston]

I don't disagree with you. Maybe ask the parents to collect monthly "rent" payments which they hold in an account for him.

Just a thought. Looking back at my life, I wish I hadn't rented so long before buying...my only regret was that I made someone else richer when I could have been investing in my own future.

[massnative71]

Sorry but I think you are all crazy those who say not to buy now. What do you want to wait for the rates to jump back up which the Federal Reserve will likely have to do soon? Do you expect the housing prices to go much lower? Maybe we have not hit the bottom yet, but we are in a down market and that is when you buy folks. If you wait for the very bottom to come you will surely miss it.

As for the OP being disciplined, the kid has 50K saved up. That speaks for itself. Very few at any age could brag such a thing.

[wxjay]

Originally Posted by massnative71

Sorry but I think you are all crazy those who say not to buy now. What do you want to wait for the rates to jump back up which the Federal Reserve will likely have to do soon? Do you expect the housing prices to go much lower? Maybe we have not hit the bottom yet, but we are in a down market and that is when you buy folks. If you wait for the very bottom to come you will surely miss it.

I personally believe that when you buy real estate, there needs to be major certainty that you can afford it and that the place you buy is a good investment. By your logic, you would simply buy a stock that was priced low, even with outlooks pointing to it dropping 10-20% in the next year or two.

As far as interest rates, that works both ways. When interest rates jump on loans, the interest rates on your savings accounts also increase (no, not to the same level, but they do as well). But I think the idea of jumping on depreciating investments for the sake of the fact that they are cheap now is insufficient to make such a big decision.

As for the OP being disciplined, the kid has 50K saved up. That speaks for itself. Very few at any age could brag such a thing.

I agree about that - but why does he have $50K saved up? How much rent does he pay? If he were paying the equivalent of a mortgage for rent and utilities for a 1-bed apartment (say, $1200/mth), gas, food, entertainment, etc., then that is impressive.

The rest at his age may not have that much saved up because they pay rent, pay off school loans, fund a 401(k), a Roth IRA, etc. Just having liquid savings is not enough. That is why I gave my advice. If he does have those other things funded too, then excellent. But if he doesn't, then he should divert savings to those tools and THEN evaluate what he can afford. Even for a $200K house, he needs $40K for a downpayment. That depletes his savings to $10K, which I can guarantee is not an 8-month emergency fund when owning a house.

[Charliekeet]

Originally Posted by massnative71

Sorry but I think you are all crazy those who say not to buy now. What do you want to wait for the rates to jump back up which the Federal Reserve will likely have to do soon? Do you expect the housing prices to go much lower? Maybe we have not hit the bottom yet, but we are in a down market and that is when you buy folks. If you wait for the very bottom to come you will surely miss it.

As for the OP being disciplined, the kid has 50K saved up. That speaks for itself. Very few at any age could brag such a thing.

Not at all crazy to wait to buy: 1. Prices are not all of a sudden going to fly up again when they do start climbing, and
2. there's LOTS of inventory, or so they say
3. One reason that prices have only dropped slowly after the huge bubble is that interest rates have remained low, so a prospective buyer can still "afford" more house. If rates climb, prices have to come down a bit correspondingly or things won't sell. Plus I'd rather have a lower principal (price of the house) than lower interest, cause maybe I can refi later, and if not it makes it easier to sell quickly.
4. I'd say it's better to miss the bottom and then buy instead of buying knowing you could lose a good deal of your down payment in value over the next year or two - lots of people bought a year or two ago and unless they had to (I mean if they were buying as an "investment") they probably have lost something.
It is great that he's got the dough saved, but still have to be careful with it.

[maggiekate]

Originally Posted by massnative71

You say you eark 40K and yet are looking at spending 180K? Unless you have an enormous downpayment that sounds like a big stretch to me, be careful what you get into. Most people underestimate the true costs of owning. If I were you I might look at condos in the 120K range. There are a bunch in Weymouth, Bridgewater, etc.

My thought also and he is too young to deal with a broken home and repairs.