What to do-buy a house or continue to rent?

biochemgirl · April 2011

DH and I have always wanted to move back to NJ. We are both from there and our families are as well. My highschool self never would have imagined saying this, but, we miss our families. Everytime we go visit when we are driving back down 95 we feel so sad.

Ideally we'd like to go back in 4-6 years. Do you think buying a home now to sell within that time frame is too risky? I hate to keep renting, our rent is about 2k so less than a mortgage would be but still not cheap. However, if we rent we could save more money than we would be able to if we buy, resulting in a nice DP for a home when we do go back to NJ.

Just curious for DC nesties opinions on how you think the RE market will be 5/6 years from now?

Litasail · April 2011

I would continue to rent so that you have a nice DP when you move.

QueSrah · April 2011

I wouldn't bother. The first 4-6 years your mortgage is largely paying interest rather than principal, so unless you hit a soaring market where property values rise dramatically (I don't see that happening in your time frame) you're not going to get out much more when you sell than you put in when you purchase. It doesn't sound like paying more per month for your mortgage payment vs. rent means you'll save anything even once you can deduct property tax from your income taxes.

WinesNot Whines · April 2011

Litasail:
I would continue to rent so that you have a nice DP when you move.

I agree. If you know you're planning to move in a few years, I'd keep renting. You may move up your time frame and want to move sooner, and then you'd be in a bind if the market doesn't improve.

victoria1212 · April 2011

I would stay renting and keep saving as much as possible for future house in NJ.

biochemgirl · April 2011

Yeah that is what we were thinking too but I wasn't sure if others might have a different opinion.

Thanks all!

Hey Jellisy · April 2011

In what area of DC metro do you currently rent? What you looked at the housing prices (look at the recently sold prices, not the listing prices - they seem to vary a lot) and run them through a mortgage calulator to see what your payments would be. I only ask because our payments are not much more than what you currently pay in rent.

I think the DC market will have recovered in 6 years. In large part because DC is one of the few housing markets already recovering and we have much lower unemployment than the rest of the country.

There are of course costs to buying and selling. You would have to pay closing costs (about $12,000 give or take based on the cost of your home) and when you sell you would be paying 6% of your selling price to the real estate brokers. Depending on the market, you may have to subsidize the closing costs for your buyer, but this may work out in your favor if you buy now. You are also far more likely to spend money on improving your home than you would a rental. This can add up, fast.

Would you come out even or better, I think in 6 or 7 years you would BUT housing can be volatile and you have to decide if you want to take that risk. I will tell you owning has been a lot more expensive for us in ways you might not think of. Our house is bigger, so utilities are higher. When things go wrong, we have to cover the cost of fixing (hello sewage system backing up 4th of July weekend and needing an emergency plumber) but it's also been really rewarding having our own space and knowing that we can decorate, paint, and be in it as we wish. It's given us a different sense of community with our neighbors and allowed us to dream about our future in a more fulfilling way.

This was very rambly- my apologies. Best of luck deciding.

MrsSstrug · April 2011

rent.

we have no plans on leaving the area and i still wish we stayed renting.

Mrs.Handy · April 2011

QueSrah:
I wouldn't bother. The first 4-6 years your mortgage is largely paying interest rather than principal, so unless you hit a soaring market where property values rise dramatically (I don't see that happening in your time frame) you're not going to get out much more when you sell than you put in when you purchase. It doesn't sound like paying more per month for your mortgage payment vs. rent means you'll save anything even once you can deduct property tax from your income taxes.

I agree with this completely. Save for a DP in New Jersey.

vtkgirl77 · April 2011

No question about it, I would continue to rent. In your financial calculations, you also have to factor in the fact that you don't have to pay for any maintanence expenses on a home while renting. In the past few years, I've had to replace the HVAC system, a hot water heater, pay towards a roofing/siding project for my condo, fix a water leak in our ceiling which ruined the whole ceiling and did damage to the hardwood floor, and many other misc other expenses. All of those maintanence costs that you would be spending if you owned can go into your downpayment savings for the NJ house.

We are currently in the process of selling a home and it's a PITA. We just finished fixing all of the issues from the inspection and now the buyer's financing may have fallen through. So, if this buyer drops out, we are back to square 1 with finding a new buyer. Considering we have a baby due in a few weeks, it's just all a bit stressful.

So, I would save yourself the stress and hassel and just rent. It also gives you flexibility if you decide to move sooner than your current timeline.

What to do-buy a house or continue to rent?

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