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Home Prices Are Going Down, But We’re Still Not Buying

One of my aunts mentioned to me a few days back that she’d seen housing prices in our area were going down and this was being called a good time to buy. She asked whether we were considering it.

While I do enjoy walking around and looking at beautiful homes and gardens, I hadn’t given a minute of serious thought.

I have a “someday” picture where Micah and I have a little house with a bedroom and two little offices in the bedrooms/den area (no kids in the picture but that’s a whole ‘nother kettle of fish) and a somewhat larger kitchen (than what I have now…I want counter space!) and maybe a little garden with daffodils and herbs.

Or I wouldn’t mind taking the house she’s selling right now (but it’s in Europe and I’m not quite ready to emigrate). It is possibly the most beautiful house with the most beautiful garden in the most beautiful location that I’ve ever seen (by the grounds of a ruined castle, for goodness sake!). But apparently her new house is pretty sweet…otherwise they wouldn’t have moved.

Ok, drifting off point with that.

Anyway, I haven’t given any serious thought to buying. WHy?

Well, we have a mountain of debt. And no down payment. And a low income. So the only thing we’d really be eligible for is a subprime mortgage. While some people have taken their subprime mortgages and paid them off, I don’t want to take on that kind of responsibility and pay the extra price.

Second, we don’t plan to live here forever. Thank goodness. While there are enough trees and hills here (you wouldn’t think it) to keep me from going insane from cityness, I can’t escape the fact that we’re in a large city. I was raised in a suburban area, but I spent the last 4 years at a slightly (but not too) rural college. I’m a fan of places which are just suburban enough that you don’t have to drive 20 minutes to buy groceries, but rural enough that you have open spaces around.

And back from the rambling…we don’t plan to live here forever. Micah’s go a number of places he’s hoping to teach (not fall semester, but possibly next spring or the following fall) and are not here.

So we really wouldn’t have much time to put anything into the house. The first few years or a mortgage are pretty much interest anyway and, as I said, we have no down payment fund.

Plus we hate hate hate moving. Who doesn’t? So if we’re already moving in another year or so, no need to move again anytime before then.

No matter how comparatively good the prices are or the payments are, there’s just no way in heck we’re buying a house now. Which my aunt said makes sense. It’d be nice to have a house of our own (renting or buying) someday. Maybe even in a few years. But until then, we’ll be happy with our little apartment. Less to clean anyway. πŸ˜‰

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Becky@FamilyandFinances April 15, 2008 at 11:49 am

I’m so glad you’ve thought it through rationally instead of buying just because that’s what people do in America!
I’m a homeowner, but I have complete respect for the fact that it’s not for everyone and that even if you do want to own, you should wait for the timing to be right!

Kacie April 15, 2008 at 11:56 am

Good for you! I’m in total agreement. We’re not in a position to buy a house, either, and we’re hoping we won’t be living in this area forever.

So, I don’t care if I could get my ‘dream house’ for $100k–I’m still not buying.

For me, there’s more to life than a house. And, renting isn’t all that bad πŸ™‚

Four Pillars April 15, 2008 at 12:43 pm

Good call – if you are probably moving in the next few years and can’t afford a house anyways, then that’s a great choice!


Fabulously Broke April 15, 2008 at 1:19 pm

Yes, it’s a sound decision.

It kind of sounds like something I’d be doing in the next couple of years -renting, and trying to find a urban but not too urban, suburban place to live and raise kids

L@spillingbuckets April 15, 2008 at 1:24 pm

I am in the same exact spot you are in. I would love to buy a house, but we don’t have the money and aren’t sure we want to stay in our current location long term.

It’s nice to see someone else in the same boat.

Eventually we both will have houses, but I am in no rush, and it doesn’t seem like you are either. πŸ™‚

Vered - MomGrind April 15, 2008 at 3:08 pm

I completely agree that market conditions are not the only thing to consider when buying a house. Especially if you may find yourself wanting to move in less than five years. You’re doing what’s right for you, and that’s great.

plonkee April 15, 2008 at 3:17 pm

I’m going to say what people said to me. I hated it but they were right. You are too young to be contemplating buying a house. In a few years time you’ll be in a much better position.

Of course now I’d caveat that further and say that in a few years time you might not want to *own* your own house at all. Renting long term isn’t a bad thing.

Funny about Money April 15, 2008 at 8:08 pm

You are so smart!

The first few years of an academic’s career are volatile. Micah may find himself (and you) going from job to job over the next five years or so. You’ll be so much better off to rent, pay off that debt, and save up a few shekels than you would be to tie yourself down with a piece of real estate you may not be able to unload on short notice.

Hang on to your mobility and freedom for a while longer! You’ll find your place…but take your time.

Dad April 15, 2008 at 10:03 pm

All of your reasons and the ones in previous comments are very good ones. One thing you hinted out but which hasn’t been said yet is the cost of buying and selling. My father years ago gave me a rule of thumb that if you are in a house less than two years, the cost of buying and selling will eat up any principle you gain. While his numbers may need revising these days, the point is still valid. You spend at least several thousands of dollars in buying a house and you don’t get it back in the short term. There is the realtor’s fee, the transfer tax, the cost of getting the property surveyed, the cost of searching the title to be sure it is clear, and the cost of title insurance. There is also a cost for an attorney to close the deal for you. When you think you are going to stay in an area for a while, you take the chance that you will pay off enough so that the principle gain will cover these costs. But in the short term, renting is financially safer.

Money Blue Book April 15, 2008 at 10:22 pm

Mrs. Micah,

*High five* !

I’m with you on this…I’ve been a renter for years now and love it. It’s afforded me the chance to live in many places and not have to feel tied down to one location. Buying a house is important to long term wealth but only when the time is right. This market still has a long ways to tank…I can see it by the number of desperate condo sellers in my newly leased condo that I’m renting. The number of those real estate agent key pad locks hanging on our front building gate seem to increase every day.

Frugal Trenches April 16, 2008 at 8:43 am

I feel the same, it will be a few years before I buy. I was watching a financial program last night and they said that those that will do well out of this tough economic time are those who are able to save a deposit and buy when houses hit an all time low. I’m working very hard to try to build about a $50K downpayment (I live in the UK) so that in 2011 or 2012 I can puchase a home – albeit a small one πŸ™‚

Also like Dad said, buying and selling is very expensive!

Mrs. Nathan April 16, 2008 at 9:14 am

Totally with you on this. 283746574892873465748932 of my friends are buying houses now and I do get a little jealous, but then I think about all the things I am saving myself from by not buying too early. We won’t have to worry about scrambling for monthly payments, fighting over money (which we inevitably would), cleaning a huge house (cleaning an apartment is enough work for now!) and we have the freedom to pick up and go on vacation or live abroad if we choose to. We don’t have to feel pressured to stay in the same jobs if we hate them, or feel pressured to always be on the look out for better-paying employment if we like our low-paying school jobs.

(plus I’m secretly glad that you all not buying a house might mean that you could come back and live near us!)

thebaglady April 17, 2008 at 4:43 pm

AMEN! The hubby and I can afford a house, but we just really don’t want to because the cost of owning a house is much greater than renting. Additionally, we’re not sure how long we will stay here in the SF Bay Area, either. We both agree that this is a horrible place to raise kids so we may move, too.

AndyS April 23, 2008 at 2:41 pm

Great post as usual. I am in a similar quandry to you though for different reasons. I am writing a post on this topic soon and my research shows that as rent prices rise, housing will start to look like a better option. This is why we have cycles I guess and eventually the lure of home ownership and a stable economy will revive our sagging property markets.

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