Recently moved to LA and want to buy a house -- talk some sense into me

[Anonymous]

Okay, so I don't live in DC anymore but did as of six months ago. I recently transferred from DC to LA for my (very stable) govt job. DH will be going to school for a master's without taking out student loans, but we already owe $500/month in student loans with no other debt. We would be able to afford about a $500K house on my salary alone. We have never owned before and could put 20% down but that would wipe out all our savings. We have a 2yo DS so don't have to consider schools yet but will soon. The mortgage, taxes, and insurance for a modest home in a neighborhood with good (not great, we can't afford great) schools would be equivalent to what we would pay in rent for our slightly smaller duplex in a nicer neighborhood, not factoring in the mortgage interest deduction. It's ridiculous to buy a house without knowing where DH's eventual job will be, right? Also, we're in the middle of a 12-month lease. Also, we may have another child. It's just that we're in our late 30s and anxious to buy. Prices have come down a lot here, and interest rates are just so damn low. Just need a dose of common sense to douse my house fever.

[Anonymous]

how the schools where you rent?

will DH work during grad school or go full-time?

buying a house isn't the great investment it used to be. but people still get very worked up about it.

[Anonymous]

In our case, the impulse to buy is primarily emotional. The elementary school where we rent is actually quite good so there's no urgency on that front. DH will not be working during school. So, in theory, our homebuying budget will be bigger when he gets out.

[Anonymous]

Be very careful about the schools where you want to buy. I have friends who moved there and ended up home-schooling their kids because the elementary schools were so bad and they couldn't afford to buy in better school districts. And traffic in that area is known to be very bad - I don't think I'd buy if it might mean having to sell to avoid an incredibly long drive. I'd keep renting if I were you. There are a lot of advantages to renting.

[Anonymous]

Yes, anyone thinking of buying a house in CA is crazy at this point in time. The state isn't healthy at all from taxes to schools to infrastructure, etc. If you said you were going to live in that house forever then I would say go for it but without knowing where your DH's job will be eventually? If you buy it you may own it forever, but you may not live there ever again. Do you want to be a long distance landlord?

[Anonymous]

We also live in CA. Always owned but have remained renters for the past year. From what I've been able to figure out, between our real estate agent and our financial planner - California has another 8-10% on the downside and it could be another year or two before things stabilize.
Even if that wasn't the case however, I would not buy if I were in your situation. Continue renting and save as much as you can so that you can buy a home in a good neighborhood and in an area you know you will be living in for a long time.

[Anonymous]

I think renting makes the best sense for you. Nobody knows if home prices might drop again, especially with the prospect of interest rates going up. Also, buying would seem to deplete your emergency funds...and you need that if you have kids in the mix. Like 16:29 said - you may not want to live there again and you'll be stuck with the place. It's not like in the boom where you can buy something and sell it in a year an make money. You may have to hold for more years to break even - factoring closing costs.

[Anonymous]

You are going through a lot of changes right now, wait, see what happens with new work place, dh's school and your government job.