How much house do you need?
We get many questions about housing, especially due to its rapidly increasing prices in North America. Almost everyone wants to live in a single-family home or townhouse, with exceptions for our van-life friends. When is a good time to buy a home? When is a good time to sell? How can I afford my down payment?
Let’s start back at the beginning. We know that your house will become your home, but that you can make “home” be wherever—a college dorm, an RV, an apartment, condo, trailer, or house. For now, we will assume you want to purchase a townhouse or single-family house.
Can you write down what you want from your housing? Do you want to be near work, or did your job become remote-only? Near family? Friends? recreation? Church? Schools? Trader Joe’s? Many times we consider things that we want in housing while making major trade-offs on things we actually need. It would be nice to be near the football stadium, but if we go there six times a year, does saving 20-30 minutes of driving really matter? (We once lived near the football stadium.)
We may go to school or work hundreds of trips in that same time span. Or maybe you “need” a bigger house with a home office or more closets (because you have skipped the decluttering phase) or with more bedrooms because a child is on the way? Perhaps some interior remodeling/design help would get the same job done in your existing home?
Where would you move? Think and pray about this decision. Would the only more affordable homes that meet your “wants” list be so far from friends, family, work, or church that you have isolated yourself?
Have you researched areas where you might want to buy, in order to see how much homes are selling for? Follow the homes on Zillow. What trends are you seeing? Are they gone in 2 days? Are any listings sitting on the market for months? (It’s not likely, but if you want to live in that neighborhood, you can probably find a deal!)
Is this a good time to buy? Maybe. The answer is personal to you. If you are financially prepared, with a down payment, and you currently rent, you plan to live in this house for many (7+) years, then now is probably as good a time as any. Would 2019 have been better? yes. Would 2013 have been better? Yes. But will 2023 be a “better time to buy?” That is unlikely! Inventory is expected to stay very low, so finding desirable homes will continue to be difficult.
Where should I save my down payment money? We would recommend a savings account if you plan to use the money in the next couple of years. You may also consider iBonds from the US government if you live in the US. We recently heard of an ETF specifically for saving for a home (HOM), but its fees are too high for us to recommend. You could save yourself some hassle with a low-cost S&P 500 fund at around 25% of holdings and iBonds or savings for the rest.
This is the first of my posts, so stay tuned. What else would you like to have covered with home buying? What other questions do you have?
Thanks for your blog, nice to read. Do not stop.