Question about affordability of a house (Lansdale, PA) (apartment, rental)

[cherenzig]

Hi all, I'm new here.

I'm looking to buy a house this month that's 315k in the Lansdale area. I earn 110k currently, have no debt (no cc or car payment), am single and have no kids. (Of course, being single means I pay more income taxes than a couple making 110k together would). Property taxes are about 5k/year. Insurance I'm not sure (does anyone know?) but I'm assuming no more than 1200/year.

The house is 3 bedrooms, about 1800 square feet, 17 years old, with a full basement and half-acre backyard.

I'm a first-time home buyer who currently rents an apartment in Philly. I've NO home maintenance/improvement type skills at all, and I probably don't have very much aptitude for that sort of thing.

Is this a foolhardy purchase? I've been looking more in the 250-275k range, but found nothing that wouldn't need more work and expense invested, and nothing that was nearly as nice. The reason I ask is the conventional wisdom that your house price shouldn't exceed 2.5x your gross income... but I've been unable to find anything that fits my needs in that range.

Thanks!

--- P.S. I should mention, I have the savings to put down 20% on this house.

[BPP1999]

I think you will be fine at that income for a house at that price range. ~$1,200 is probably fairly accurate for insurance.

Run a mortgage calculation to see for yourself what the monthly hit will be all in (principal, interest, taxes, and insurance).

[sj08054]

The question you may also want to ask yourself is a 3br SFH too much for a single person?

[Leon2014]

Unless you need the space, a house is a terrible investment. Especially bad if the space goes dormant.

[cherenzig]

Thanks all for the responses. BPP, that was helpful to know.

SJ and Leon, you bring up some good points. I did give quite a lot of thought to the space requirement (and it's something that's caused me to stay in my 1 BR rental apartment for five years now!) I guess my reasoning in favor of buying a 3BR SFH has been:

1) I do plan on getting married within a year or so, and potentially having a family as well, so my 1 BR isn't going to cut it very much longer.

2) I could have gone with buying a 2 or 3BR apartment, but there are points against that. Unless it's in a reputable (and therefore too pricey) co-op building somewhere in Center City, there are too many factors beyond your control that might mess things up (ever had bedbugs come in repeatedly from a neighbor who wouldn't cooperate with pest control? I did once!)

3) I need something that's single-level living, since I have elderly parents who visit and can't handle stairs. The house I'm looking at is a rancher (and a new one, with relatively low taxes, which is rare). The single-level requirement also eliminates twins or colonials that might have offered less space.

4) I've heard that some kinds of houses are just much harder to re-sell. Colonials with fewer than 4 bedrooms, or lacking a family room; Townhomes with fewer than 3 bedrooms (which would have been ideal, space-wise); Anything in a condo/rowhouse development that may soon be outpaced by newer condo developments coming up in the vicinity. Ranchers on the other hand there always seems to be a market for, especially if taxes are low (the older folks looking for single-level space, and not so keen on paying for a school system their kids won't ever go to).

5) A reason I'm not all that sure about, but anyway... it seems like the housing market is back on the upswing, and if I'm EVER going to make the investment in a house, this would be the time (before prices or interest rates got too high).

[sj08054]

Originally Posted by cherenzig

Thanks all for the responses. BPP, that was helpful to know.

SJ and Leon, you bring up some good points. I did give quite a lot of thought to the space requirement (and it's something that's caused me to stay in my 1 BR rental apartment for five years now!) I guess my reasoning in favor of buying a 3BR SFH has been:


5) A reason I'm not all that sure about, but anyway... it seems like the housing market is back on the upswing, and if I'm EVER going to make the investment in a house, this would be the time (before prices or interest rates got too high).

It's not longer an investment when you have too much house. You didn't state where you work but buying a house adds a lot of cost. You can always invest your money elsewhere buy later down the line.

My wife an I stayed at a 2br condo until our kids were 2 and 3. Staying in the 1RB allows you to saved all that money. Keep it going for a bit longer.

[toobusytoday]

Originally Posted by cherenzig

Hi all, I'm new here.

I'm looking to buy a house this month that's 315k in the Lansdale area. I earn 110k currently, have no debt (no cc or car payment), am single and have no kids. (Of course, being single means I pay more income taxes than a couple making 110k together would). Property taxes are about 5k/year. Insurance I'm not sure (does anyone know?) but I'm assuming no more than 1200/year.

The house is 3 bedrooms, about 1800 square feet, 17 years old, with a full basement and half-acre backyard.

I'm a first-time home buyer who currently rents an apartment in Philly. I've NO home maintenance/improvement type skills at all, and I probably don't have very much aptitude for that sort of thing.

Is this a foolhardy purchase? I've been looking more in the 250-275k range, but found nothing that wouldn't need more work and expense invested, and nothing that was nearly as nice. The reason I ask is the conventional wisdom that your house price shouldn't exceed 2.5x your gross income... but I've been unable to find anything that fits my needs in that range.

Thanks!

--- P.S. I should mention, I have the savings to put down 20% on this house.

Sounds good to me. For re-sale a lot of people in my age range (upper 50's) are looking to buy ranch homes and there just aren't any that are reasonably priced in a good location. Lansdale is a great town and that's a reasonable price. You are right about the housing market. In my neighborhood, houses were selling in the late summer/early fall within a week of listing. I'll also add that I think it's very nice of you to think of your parents and stairs.

[Blinx]

Just go into it with your eyes wide open, with plenty of contingency plans. I was in a similar situation - single, no kids, good income. I bought a single house with plans to improve it… and a few years later was laid off. Unemployed for a long time and took a huge pay cut when I found a job. All my plans for improvement went out the window. It's only because I bought under what I could afford and had plenty in savings that has allowed me to keep the house. Sorry to be doom and gloom, but life throws you curveballs sometimes...

Try to find out what utilities will cost -- is it oil or gas heat? Oil is a killer around here -- it was shocking for me to go from a small row house with gas heat to a single with oil.

Also, if the only reason you're looking for a rancher is for your parents' visits, consider looking at cape cods - Lansdale is FULL of them, and many are in the $215K - $280K+ range. You'll still get a full bath/bedroom on the first floor for your parents, but you might have much more of a selection to choose from.