Reply to Getting desperate: What would you suggest to a first time home buyer?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]My coworker is drinking every night thinking about this. Praying for a crash.[/quote]
Ha, yeah me too. 3 years ago we were trying to save for a $1.2M home, now that we could afford that, the same home is $1.4-1.5M. In another 3 when we can afford this, those homes will be $1.7M. F this mess. We are just going to throw our money away on rent and live in the home we wish we could buy in the neighborhood we love. Funny thing is, we are so rich ($270HHI) but we can't afford a 3br home. Nuts.[/quote]

Ummmmm…. $270K HHI isn’t really enough to buy $1.2M house  in my book….[/quote]

That HHI can be enough, but it depends on a lot of things. We make about $280K, not including bonuses (which we save/invest anyway) and bought for 1.3M last year in McLean. At the time, we had zero debt (aside from mortgage and a small low-interest car payment that we could have paid off if we wanted to... but why do that when I'd rather have the cash for a down payment?) and a healthy savings account in addition to some crazy equity in our previous house. 401Ks are maxed (or close to it), 529 plans for two kids are funded monthly, and even set aside some money that goes into my brokerage to buy whatever when the the market takes a random dip. Both kids just started public school, so the $2K+ per month that was going to infant care and pre-K for the better part of 4 years is now going into our savings.

But what made the biggest difference for us is really that we made good long-term financial decisions over 10 years ago. That and we got very, very lucky in our timing. We purchased our starter home at the bottom of the market in 2008, which is obviously just stupid good luck in retrospect. However, we were questioning whether it was a smart financial decision for more than half the time while living there (newlywed couple making maybe barely 150K HHI at the time buying a 400k foreclosure that needed work in an economically depressed area with not great schools... then, suddenly, Amazon HQ2). Being mostly debt free (also stupid good luck/privilege - both our families had saved for our undergrad, grad school was paid for by each of our employers) was another big factor in being able to afford our starter home in the first place, which is why I was adamant we start a 529 plan as soon as our kids were born. Seriously, student loan debt is crippling and will follow you to the grave.

My advice to the OP, make some compromises and buy the home that fits your needs for the next 10 years. Get your financial ducks in a row that way you give yourselves the best chance to succeed down the line when you are able to buy your dream home in the area you want. Real estate, like the stock market, isn't the get rich quick scheme many think it is. It's a long game so play to win that one.[/quote]

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