Question

So my hubby and I are debt free and now on the next goal of buying a house. But trying to figure out the best financial decision. We live in SoCal where houses are expensive and we’re on 1 income cause I stay home with our 2 kids. We currently rent a 3 bedroom house with a yard from family and we get a super good deal cause the house is paid off. We LOVE our neighborhood but the houses are way out of our price range. Like even if we had 20% down (which would take years to save) we still couldn’t comfortably afford a mortgage. But, we could afford a townhome in our area in probably a year or so. But the townhomes we can afford are across town so my daughters would change schools and of course we’d lose a yard and the whole neighborhood experience that we have right now in our house. So, should we buy what we can afford sooner just so we can start building equity even though we’d be downsizing (our girls already share a room, so that’s not an issue) and then buy our dream house eventually after we have equity? Or should we stay in our comfortable renting situation and just save and wait for either the market to drop or we have enough down to buy a house in our current neighborhood? EDIT: I feel like I should show real numbers here. Current rent is $1700 Houses in our area are over $500k (if we have 20% down our mortgage would be close to $2000) Townhomes are anywhere from $380-450k. We are staying and saving in BOTH scenarios, the question is more how long we’d have to stay and save. And being realistic on what we can afford.  

Answer 1

I would personally save and wait.  

Answer 2

Stay. Save and wait. It sounds like you have a really good set up with a yard and the deal with the house. Any possibility they would sell the house to you in the future? I mean. if you would want it. You could negotiate a deal.  

Comments

@wisnicki I did ask about buying it, but it’s my cousin who we rent from and they have kids and want to pass it on to one of them eventually.  

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Ohhh totally understandable.  

Answer 3

I would save and wait! Don’t feel pressure to buy a home. Sometimes renting is the responsible financial decision! There are a lot of expenses with home ownership and it could cause you to rebuild the debt you worked so hard to erase. ❤️

Comments

@examen I’m not really feeling pressure, just thinking about how interest rates are so low right now and housing prices are rising. And our rent is going to nothing. That’s why I’m thinking of the townhome route because the mortgage would be cheaper than our current rent and we’d also be building equity.  

Answer 4

Where in So Cal? We moved from Hermosa Beach out to Temecula Valley to buy!  

Comments

@dunlavy we’re in Santa Clarita, so just outside LA county! I love Temecula! I’ve been wine tasting out there!  

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We're in SD and planning to move to Menifee!  

Answer 5

My family and I are on exactly the same boat! We rent sp cheap for SoCal, so we plan on staying here for another year and save us as much as possible! We will see how the market is by the time we have a good down payment and if it is still expensive crazy like it is now, we decided to move to Menifee in Riverside so we can buy a newer nicer home for a decent price than what is available her in SD.  

Answer 6

Wait and save! Why compromise and get someplace where you won’t be comfortable and happy. Besides owning a home is expensive. Tons of hidden costs.  

Answer 7

Would the family member consider selling the house and you pay them without going through a bank including interest? Not sure how old they are but if they pass away you may need to get a loan to pay off the heirs. But you would all ready be building equity. I have seen several people do it this way. They are already renting to you. But you would have to pick up the property taxes and maybe you can not manage that. In which case. Think in 2 years would your daughters use the backyard as much. Also just because town house doesn’t mean you won’t have community/neighborhood feel. Townhomes and some regular homes pending on where you live have associations and community facility districts or Mel Roos which end but the community facility districts don’t. When comparing options find out the details of the property taxes and other fees

Comments

@flyblow buying our current house isn’t an option. I did ask. It’s my cousin and they have kids of their own and want to keep it for one of them someday. But the townhomes in our area do have pools and playgrounds, so yes it’s not too much of a compromise!  

Answer 8

Wait, and save.  

Answer 9

Stay and save. When the kids get bigger, do you plan to return to the workforce? 2 incomes versus 1 would change what you can afford for sure!  

Answer 10

Stay and save

Answer 11

I would stay if you are getting a sweet deal, you like where you are and your family is happy that's all that matters. Save money till it's actually time to move like when the house is passed on. Not everyone has to own a home especially when you are in a market that would stretch your budget. If you need a solid plan and have years there then get a $ amount you need for down payment in the area you want to live in. Go for it. I don't see rent as spinning wheels when you are making progress towards a goal.  

Comments

@poore that would be awesome, my only fear with this plan is if housing prices keep rising, we’ll never be able to keep up no matter how much we save. Right now in order to not be house poor, we’d have to save about $150, 000 to put down in our current neighborhood. If we got a townhouse we could get a mortgage LESS than our rent and only need to save about $50, 000.  

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@merely keep an eye here soon, looks like housing market is going to take a dive along with interest rates.  

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@poore I hope so. I know the economy is supposed to take a hit, but everything I’ve read about the housing market is that it likely won’t be as affected by the economy. Hoping that prediction is wrong.  

Answer 12

I also live in SoCal (south OC) and we are currently living in our townhouse. We thought we will be here for a couple of years but we are going on 10 years. To say the least it’s frustrating. My kids are getting older and want more space, we always have to worry about parking, noisy neighbors (shared walls), etc. We had our neighbor flood us last year and we had to use our insurance because hers refused to pay for it. I know it feels like wasting money but I would suggest staying there and continue to save. Maybe try to find a side hustle to help you. You can always talk to lender to see your opinions and what yours payments will be. Our community currently doesn’t allow FHA loans so if we sell we can only accept conventional loan offers. I wouldn’t be surprised if there are other properties like that.  

Comments

@recrystallize8 thank you so much for your perspective. Those are good points. Our kids are 5 and 3 and I could definitely see them sharing a room for awhile. But we are looking at 3 bedroom townhomes so there would still be the option for them to have their own room. Our credit union has a mortgage calculator based on their current rates and I input the numbers on both scenarios. The townhome would be cheaper mortgage than our rent. But with property tax and insurance I guess it would come out to around the same. The houses in our area are pretty much laughable on when we can afford them. Like I feel like it’ll take at least 5 years or more.  

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@merely I hear you on those prices. It’s ridiculous. A house in my area is $750+ and in most cases is not even remodeled. I would honestly then sit down and write down the pros/cons, not just money but lifestyle. My kids are 10 and 7 and although content (for the most part) you can tell they get frustrated when they can’t really play outside as our patio is not huge and the other side is our garage and shared motorcourt area where they can’t really ride their bikes/scooters. Everything then has to become planned. I promise I am trying not to be a downer. Our mortgage is very reasonable and offsets the negatives (for the most part). Maybe go get pre-qualified (which you will need to start looking with a realtor) and go from there.  

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@recrystallize8 oh I totally understand. You’re not being a downer at all. I really like your perspective. It’s helpful for me to look at all angles. Cause that’s one of the things that’s holding me back from a townhome is the lack of a safe neighborhood street to ride bikes on. Although one of the townhome complexes I’m looking at is right off of a paved bike path that’s separate from the street. Like not even close to the main busy street, it’s behind the complex. And theres pools and playgrounds in the complex. Plus our city has a million parks. So it’s not like the kids wouldn’t have options, it would just look slightly different than how they play now. Where we just go out front and see the neighbor kids.  

Answer 13

I live in San Diego, my bf and I have talked how OVERLY priced the house are out here, so we have decided that when we decide to buy we are definitely gonna search out in Menifee, Temecula, and Hemet. But on my advise, stay and save :D nothing like having your dream home