Debating a Home Move

chasesfish

chasesfish

Recycles dryer sheets
Joined
Feb 23, 2013
Messages
124
Location
Marietta, GA
Here's my situation – I'm debating a home move.

We are 31 and currently have $540,000 in retirement accounts and savings. Net worth is about the same, have about the same in home equity as we have in student loans @ 3%. I currently work for a megacorp with a pension I'm 10 years into. My wife also works and we make a really good income for our age (~ $200k combined). I also have a nice little pay bump (25-30k) built into my comp structure that starts hitting in just under 3 years. I think we saved around $75,000 last year.

I'm debating moving moving from the suburbs to “in-town”. We bought a nice, reasonable house in the suburbs because it was affordable and in a good area. It also is in a good school district, but little ones are probably not in our plans. This would be a lifestyle choice for me to regain 10 hours of my life a week I spend commuting. It would also allow my wife to more easily change jobs for similar income (currently works right next to the house, but has a geographic non-compete).

The equity in my current house would fund my down payment, even if I had to shuffle money around short-term

My current house in worth around $230,000 and the new house price range would be between $400,000 and $500,000. This would run my mortgage debt from $125k to $300-$400k.

I'm estimating it would be a one time hit of$25,000-$30,000 in transaction costs, then I would be increasing the interest cost on my home by $12,000/year and have increased property taxes of $2,500/year annually. The savings would be gas, lower maintenance, and regaining the 10 hours a week of my life I currently spend in a car getting angry at Atlanta traffic. We also would spend less time commuting on weekend activities that's starting to drive us nuts.

Has anyone else had to go through this decision process? How did the end result turn out? Any advice would be appreciated.
 
I don't have any specific input...but do want to ask if you really need to buy?...perhaps consider renting?

omni
 
My situation has differences, but it's similar enough that I'm commenting :) I was married and living in the suburbs. After my divorce, I moved to the city (renting) and am currently in the process of buying a house in the city.

The decision to move to the city was perfect for me. Had I stayed in my marital home or bought in that suburb, I would have been commuting about 10 hours a week on the freeway (I got a new job at the same time my divorce happened, so I hadn't had this commute before -- worked in the suburb.) Now I bicycle commute 2 miles.

The running is better here, there are more things to do, and it's just an ideal fit with my lifestyle. I could go weeks without using my car since everything is close. My social life has taken off.

Living in the city is certainly more expensive than if I had stayed in the suburbs, but I feel that you can't put a price on quality of life. Every morning on my run I contemplate about how much I love living in the city and marvel at how lucky I am.

For me, the reason I save so much and want to ER is because I want to live instead of just exist. Living in the city will further this goal, even if I wind up working a bit longer than had I lived a more spartan existence in the suburb.

This might not be the most popular advice, but if you can afford it and you think that it will improve your life, I say go for it!
 
Avoiding Atlanta traffic? - Priceless.

But beware, with that extra ten hours a week you just might find out that "little ones" are on the way after all.:cool:
 
I'm all for saving 10 hours commuting a week.
I already think you are crazy commuting downtown from Marietta :)
Where do you want to buy? What part of town do you work?
While with your income you could easily qualify for 500k house, maybe there are cheaper options?
 
I think you will find that your quality of life improves dramatically (see Marathoner's post) and your housing costs are still very reasonable in relation to your income.

Not sure if you have two cars or one but if you have two you might even be able to drop down to one car and gain some additional savings to offset the increased housing costs.
 
chasesfish said:
Here's my situation – I'm debating a home move.

We are 31 and currently have $540,000 in retirement accounts and savings. Net worth is about the same, have about the same in home equity as we have in student loans @ 3%. I currently work for a megacorp with a pension I'm 10 years into. My wife also works and we make a really good income for our age (~ $200k combined). I also have a nice little pay bump (25-30k) built into my comp structure that starts hitting in just under 3 years. I think we saved around $75,000 last year.

I'm debating moving moving from the suburbs to “in-town”. We bought a nice, reasonable house in the suburbs because it was affordable and in a good area. It also is in a good school district, but little ones are probably not in our plans. This would be a lifestyle choice for me to regain 10 hours of my life a week I spend commuting. It would also allow my wife to more easily change jobs for similar income (currently works right next to the house, but has a geographic non-compete).

The equity in my current house would fund my down payment, even if I had to shuffle money around short-term

My current house in worth around $230,000 and the new house price range would be between $400,000 and $500,000. This would run my mortgage debt from $125k to $300-$400k.

I'm estimating it would be a one time hit of$25,000-$30,000 in transaction costs, then I would be increasing the interest cost on my home by $12,000/year and have increased property taxes of $2,500/year annually. The savings would be gas, lower maintenance, and regaining the 10 hours a week of my life I currently spend in a car getting angry at Atlanta traffic. We also would spend less time commuting on weekend activities that's starting to drive us nuts.

Has anyone else had to go through this decision process? How did the end result turn out? Any advice would be appreciated.
Click to expand...

You didn't mention the sqft. I would suggest that you get a big enough house, for the coming little ones. So that you don't have to move again.

And you can also take advantage of the current low interest rate.

Good luck.
 
I really appreciate everyone's replies so far, here's some more information:

- I work in Vinings and could potentially see my office being moved to 17th street. If I move, I'd probably move to Vinings. There are "cheaper" options than $400k-$600k, but they then either involve condo association dues or going to dreaded Fulton County and paying double in property taxes plus higher utilities, ect. The houses near where I work have sticker shock compared to a mile or two away, but carry about the same all-in cost. Its really just a function of the dirt they sit on is worth $200,000-$300,000 for a build able lot, for all the reasons discussed above (desirable county, inside the beltway)

- I'm in about 2400sqft now and would be perfectly happy in the 1600-1800sqft range.

- Marathoner - the commute cuts horribly into my running hobby, especially in the winter when the hours of daylight are short. I'm primarily running on trails.

The real hurdles I have to get over is getting comfortable with eating the transaction cost (I'm fairly cheap some might say), and tacking that kind of leverage on my balance sheet. Its not a decision I can go and take back.
 
A friend is preparing to do this right now. The motives are two, they want to be closer to work and also closer to areas where they have many leisure activities. Their expectation is a roughly similar housing price, higher total housing cost because upkeep and taxes will be higher, much lower commuting costs, and both "regain" many hours of life currently spent in an auto.

Suburban vs urban lifestyles are much different. Marathoner brought this up, its an important aspect that might have a big impact. The other thing is the spouse's commute. If she can easily find a new job at a similar income level it helps, that is something I would want to test first, just to make sure this isn't trading one commute for another.

This can make a lot of sense as long as the destination fits the lifestyle and also is a shorter commute.
 
Or you can buy the other house, and keep the current as a rental.

It is easier to switch back to the current home when you have kids.
 
Well, you know what side I'm coming at this from, but again, I think that since you can afford it, you have to look at quality of life and what would make you happy. Where do you want to live?

Assuming this would be your house for the next 30 or so years, the transaction costs amortized over that time are so small as to essentially be insignificant. And, if you can drop down to one car, as pb4uski suggested, you essentially recoup everything right there.

If you were able to save $75k last year, if the leverage on your balance sheet is really bothering you that much, you can definitely pay it down rather quickly to get to the point where you are now (though with rates so low, perhaps you don't want to.)

This past year of life-turmoil has demonstrated to me that there are more important things than money. We only get one life, so if you're irritated having to commute (during the week to work and on weekends for activities), you don't have enough time for running/leisure because you're commuting such a long distance, etc., and feel that living in the city would improve your life, I'd put greater weight on that than having extra money in the bank.
 
Keep in mind the fact that children do live comfortably in urban settings.

Buy a home with at least 2 bedrooms with a park within strolling distance. You may never have a child but if you do you won't be forced to move and if you sell in the future the home will be very marketable.
 
Brat said:
Keep in mind the fact that children do live comfortably in urban settings.

Buy a home with at least 2 bedrooms with a park within strolling distance. You may never have a child but if you do you won't be forced to move and if you sell in the future the home will be very marketable.
Click to expand...
Safest is (1) Mom and Dad, (2) daughters and (3) sons. If not moving for family growth is important, this will usually do it.

Ha
 
chasesfish said:
I really appreciate everyone's replies so far, here's some more information:

- I work in Vinings and could potentially see my office being moved to 17th street. If I move, I'd probably move to Vinings. There are "cheaper" options than $400k-$600k, but they then either involve condo association dues or going to dreaded Fulton County and paying double in property taxes plus higher utilities, ect. The houses near where I work have sticker shock compared to a mile or two away, but carry about the same all-in cost. Its really just a function of the dirt they sit on is worth $200,000-$300,000 for a build able lot, for all the reasons discussed above (desirable county, inside the beltway)
Click to expand...
When you looked at 400-600k houses, are you talking about older houses, not having Home Owners Associations? I thought most of planned communities around there had HOAs and only older homes did not
Or are you also considering condos? Maybe a townhouse is in your future?

I hear you about the county taxes - We are in Fulton County and pay $4k on 266k house, I was surprised, when I checked Cobb taxes, being about $1k on $500k houses.
 
sailor said:
When you looked at 400-600k houses, are you talking about older houses, not having Home Owners Associations? I thought most of planned communities around there had HOAs and only older homes did not
Or are you also considering condos? Maybe a townhouse is in your future?

I hear you about the county taxes - We are in Fulton County and pay $4k on 266k house, I was surprised, when I checked Cobb taxes, being about $1k on $500k houses.
Click to expand...

I'm actually looking at both. There are numerous early 60's to mid 80's homes without HOAs. One challenge is its hit or miss on whether they've been taken care of and people with more means (or high consumption habits) are buying them to do a raise and rebuild and put their McMansion on the property.

Its really amazing how limited the inventory is right now in any of these mature zip codes, I think this will be more of a long-term process that I have to be willing to say "yes" to when the right hose comes up. That's not necessarily a problem since I already have a place to live

FYI - Cobb taxes aren't quite that good, we're roughly $1.10 per $1,000 in value right now all in. I think the number you saw is only picking up the county or the school tax, not both. If I were to move across the river, I think I would have the pleasure of dealing with the city of Atlanta.
 
DW and I have been in a similar situation. The numbers for housing are almost exactly the same as yours but our income is higher. Most of our urban options would be older (100 years+) and, while some of the detail of those homes is amazing, neither of us wants the hassle and constant risk of old homes. So we'd either find a lot and build, or maybe find a rare newer build. So that takes a pool that's already small because of geographic area and low inventory and makes it tiny.

I would caution against moving around town for a job if moving means buying a new place. As someone else suggested, renting may be a lower-risk way to try that. Perhaps a lease-option could work as well and give you access to the inventory of for-sale homes which is often nicer and bigger than for-rent homes.

As far as kids go, I don't know the Atlanta area, but in our case the urban areas typically have terrible public schools whereas the suburbs we're in now have some of the top rated in the country. We are also on the fence about having them, and find the suburban-urban debate to be a catch-22. Maybe if we lived in a more urban area we'd realize not having kids is the way to go and it'd be perfect. But we could also see being too past the lifestyle that often comes with urban living and realizing we either want to live in the slower/quieter suburbs and/or have kids. In either of those cases, we'd kick ourselves for having to move AGAIN to get back to good schools, or stump up a fortune for private school. We're a few years or so older, so the kids decision is more pressing.

If I could jump back to your age, I would be really tempted to try the urban. But I would do it by renting in the urban area or doing a lease-option. Or even find a small, inexpensive 6 or 12 month rental for $1000-$1500/mo in the urban area and hang on to the suburban house.

Having said that, for now, we're staying put in suburbia and doing some work to the current place to make the DW happier. We are still keeping a little eye out in case something perfect pops up elsewhere. We are worried about the proverbial grass on the other side of the fence and our seeing all the benefits but not considering the downsides. Also, even though a move would probably keep us under 10% on the mortgage's DTI, it would make it harder to cover our expenses on DW's income (which is significantly smaller than mine) alone.
 
Just a quick update - no move yet, I'm still struggling with deciding between doubling my house value (and going from a 120k mtg to 380k) for a single family or getting a nice, new townhouse without the pain of exterior maintenance. The idea may sit on the sideline for a few months because my commute is worlds better for the next 2.5 months. No school zones!
 
I missed this thread the first time, but I had a similar situation last year and we decided to move.

At 37/41 DH realized that there was no reason for us to keep living in the suburbs in a good school district when we're not going to have kids. We were spending 3-4 evenings a week travelling to another neighborhood where all our favorite bars, restaurants and friends were.

We started looking for a house, and after 2 offers that we're glad they didn't work out, we found our dream house. We doubled our mortgage debt, refinanced our old house to get a bigger down payment and moved. We're renting our old house out, since property taxes are tied to when you bought your house in CA, the property taxes are so cheap it's worth it to keep it. It was a hard choice, because we went from 10-15 years from paying off our house to having 2 30 year mortgages, but someday the rental income should cover property taxes for both houses.

We've been extremely happy with our move. Our quality of life has increased, our circle of friends has expanded, and we walk to bars and dinner all the time. We didn't even move our cars this weekend.

Our commute is actually slightly worse than before, but now we don't have to commute for fun. We have a house that fits our needs better (great room instead of small separate living and family rooms), is actually bigger, but has a much more reasonable yard for what we need.

I'd think about your quality of life. Do you want to live in a city? Are you ok with closer neighbors and possibly higher street traffic? Does your wife want to change jobs, or would you just be trading your commute for hers?

My biggest problem now is that I like my house so much I don't want to go to the office anymore. :)
 
Thank you for the reply - I'm finding out this is just going to be a long process, I want to move and it opens up my wife's employment options if she were to change jobs, it's going to take time to find an affordable single family with a couple of the non negotiables we want in a house. Double the mortgage debt also still scares me, probably because I've been hanging out on this site and really want FI as soon as possible
 
Just a quick update - I'm still looking for the right place. The search is getting a little more promising, the uptick in mortgage rates has finally slowed turnover and there's actually some inventory. The downside is I'm probably doing a 10yr arm instead of of a 30 year fixed.
 
Don't think of it as 10 hours a week. Think of it as 480-500 hours a year, or about 20 full days in traffic.

Move.
 
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