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Debating a Home Move
Old 04-26-2013, 07:42 PM   #1
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Debating a Home Move

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.
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Old 04-26-2013, 07:45 PM   #2
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I don't have any specific input...but do want to ask if you really need to buy?...perhaps consider renting?

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Old 04-26-2013, 08:10 PM   #3
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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!
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Old 04-26-2013, 08:15 PM   #4
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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.
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Old 04-26-2013, 09:09 PM   #5
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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?
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Old 04-26-2013, 09:12 PM   #6
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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.
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Old 04-26-2013, 09:44 PM   #7
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Quote:
Originally Posted by chasesfish View Post
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.
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.
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Old 04-27-2013, 05:34 AM   #8
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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.
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Old 04-27-2013, 06:35 AM   #9
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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.
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Old 04-27-2013, 02:08 PM   #10
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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.
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Old 04-27-2013, 05:21 PM   #11
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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.
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Old 04-27-2013, 05:54 PM   #12
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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.
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Old 04-27-2013, 05:58 PM   #13
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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.
Safest is (1) Mom and Dad, (2) daughters and (3) sons. If not moving for family growth is important, this will usually do it.

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Old 04-28-2013, 12:11 AM   #14
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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)
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.
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Old 04-28-2013, 07:03 AM   #15
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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.
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.
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Old 04-28-2013, 08:37 AM   #16
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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.
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Old 04-28-2013, 08:58 AM   #17
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Here's my situation – I'm debating a home move.

We are 31 ....
Say no more. Do it. You have plenty of time to recover if it doesn't work out.
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Old 04-28-2013, 09:04 AM   #18
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Say no more. Do it. You have plenty of time to recover if it doesn't work out.
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Old 04-28-2013, 12:32 PM   #19
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Say no more. Do it. You have plenty of time to recover if it doesn't work out.
Best response yet!
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Old 05-04-2013, 05:05 PM   #20
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Say no more. Do it. You have plenty of time to recover if it doesn't work out.
Excellent advice. If we had to move to the Atlanta area I would much rather live in the city than in the suburbs.
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