Housing Regret: Advice to a Younger Dreamer

[LivingTheory]

Howdy. We’re in our early 30s and living comfortably in our current home. However, whether from the family growing or lifestyle creep, I would wager that we move to a larger house in the next 10 years. For anyone who has put off making the leap to a bigger house or has pulled the trigger, was there any regret?

Our house is worth about $500k, we owe about $150k. I foresee a future where we’re content in this home and reach FI much faster but I wouldn’t mind having another bedroom and more square footage or land. The next house up would probably run about $700k-$800k. I’m happy to sit here with a $600 mortgage payment and build up non-housing assets but I fear that’s too shortsighted and making the jump now would serve us better down the line.

Would love to hear any wisdom from the crowd. For context, neither place would make us house poor as we have solidly funded retirement accounts. Our household income is anywhere from $140k to $170k depending on bonus. My preference would be to pay the current house off in order to live debt free.

 

[Ramen]

I say stay put if you're comfortable and happy. There's nothing like being debt-free. Greener grass is rare and often turns brown eventually anyway. And making decisions from FOMO is a bad way to make decisions. If your current house's value keeps up with the market, you won't lose out by waiting to move when there's a better reason to.

 

[Aerides]

My preference would be to pay the current house off in order to live debt free.

So that means someone else has a different preference or you would not have started this thread? If so that makes it a personal/family decision, vs. a logical/financial one.

If you and your partner are intent on growing your family, which would be tight in your current home, then it probably makes more sense to move before that happens so you don't have two big changes/stresses at once.

That said, I wouldn't want to be house shopping in this market, and would want things to at least stabilize before looking much.

 

[Walt34]

In addition to the above replies I'll add in that a wise man said "Never buy a house with more bathrooms than you're willing to clean".

 

[rodi]

If you grow your family and feel tight in the space - do you have room to do an addition?

Do you foresee the possibility of relocation due to work? I'm in my third home - but the first two were sold because I moved out of the area for work.

Changing houses doesn't just change the amount borrowed... it adds transaction costs. (realtor fees, transfer taxes, points/mortgage fees, etc.) Those can add up. So moving frequently can hit savings hard.

 

[Texas Proud]

This might be one of the worst times to move from what I read...


The inventory at some locations is tight... some tighter than tight...


They are selling new listings in a few days or less at a much higher price than asked here... never had that happened before... other places yes, but not here...


Now, the flip side is that who knows how long mortgage rates will be low... looks like inflation is picking up which will lead to higher rates.... eventually....

 

[daylatedollarshort]

In addition to the above replies I'll add in that a wise man said "Never buy a house with more bathrooms than you're willing to clean".

+1. I actually would have bought a smaller house, if I had to do it over. Houses today are really big by historical standards, and compared to what most of our family outside the U.S. lives in. According to Yes! magazine, U.S. homes are now 961 sq ft per person. In 1950 it was 259.

 

[LivingTheory]

So that means someone else has a different preference or you would not have started this thread? If so that makes it a personal/family decision, vs. a logical/financial one.

That’s a fair assumption but actually it has more to do with worry that I’m being too conservative in my life. We’re in a good financial spot and a larger house wouldn’t be reckless by any means, but I can sometimes get too hyper focused on a goal and miss the forest for the trees. Just checking for others’ experiences in this area. I’d love to have more land or a bigger home but it’s a definite trade off.

 

[LivingTheory]

+1. I actually would have bought a smaller house, if I had to do it over. Houses today are really big by historical standards, and compared to what most of our family outside the U.S. lives in. According to Yes! magazine, U.S. homes are now 961 sq ft per person. In 1950 it was 259.

Very true. We’re in 1700 sqft and the next house would be 2500-4000 probably. Nothing here constitutes “small” but maybe “cramped” is a future possibility.

 

[FlaGator]

FWIW, I spent 17 years in the same 3 bedroom house. Two kids came along, first one less than 3 years after moving in. Second on after less than 6 years of ownership. Looked often at getting something bigger.

Held off on trading up, paid it off. Relocated 600 miles away after 17 years. Bought a bigger, modern house. By then was FIRE. Couldn’t have done that without holding in place when I was working/saving/investing.

As has been mentioned, lifestyle factors need to be considered though. Late wife never liked the old house, but appreciated the financial flexibility it gave us

 

[LivingTheory]

Thank you. That’s very helpful to read. I’m sorry for your loss btw.

 

[socca]

... but I wouldn’t mind having another bedroom and more square footage or land. ...

Will each kid get their own bedroom? I sometimes wonder what effect sharing a bedroom vs. having a bedroom to oneself has on a kid's mental development. I haven't googled this topic to see if anything pops up.

P.S. Each of the kids in my immediate family had their own room. I liked this arrangement. Now I live alone in my own house, and still like this arrangement.

 

[LivingTheory]

Will each kid get their own bedroom?

Yes at first, while one is a baby. Then maybe they’ll share as young kids. Eventually they’ll need their own rooms again as they get older since we have a boy and a girl.

 

[W2R]

I say stay put if you're comfortable and happy. There's nothing like being debt-free. Greener grass is rare and often turns brown eventually anyway. And making decisions from FOMO is a bad way to make decisions. If your current house's value keeps up with the market, you won't lose out by waiting to move when there's a better reason to.

+1

If it's possible, maybe it would help to build a small detached workshop or detached home gym in the back yard, to give everyone a little more space to spread out.

My family (my ex and I, along with our daughter, 4 macaws, 200 gallons of salt water fish tanks, and a half dozen parakeets) lived in a 1700 sf home in Texas and never felt the slightest need for more space. But with more kids, I suppose more inside space would be nice.

Outside space is nice, too, when the weather is nice. Our daughter had a swingset and a tetherball in the back yard, and my ex and I had a vegetable garden and rose garden to keep us busy outside the house as well. We did not build the detached workshop or detached home gym and really never felt we needed more space.

IMO 1700 sf is not terribly small and if you can manage to keep it, you might save money and also you might not have to downsize when your kids are grown and gone.

 

[Nick12]

Debt free is the best feeling. More house more space more headaches.

 

[RetireeRobert]

If you and your partner are intent on growing your family, which would be tight in your current home, then it probably makes more sense to move before that happens so you don't have two big changes/stresses at once.

That said, I wouldn't want to be house shopping in this market, and would want things to at least stabilize before looking much.

+1 Since there seems to be no urgency in moving to a larger house pronto, I second the idea of looking for at least some stabilization of the current real estate market. You might start window shopping at this point just to get a feel for the pulse of the market, then you can know when the pulse is slowing down.

 

[W2R]

Will each kid get their own bedroom? I sometimes wonder what effect sharing a bedroom vs. having a bedroom to oneself has on a kid's mental development. I haven't googled this topic to see if anything pops up.

I grew up in a well to do family, in a 27 room house. My two older brothers, who were one year apart, still had to share a bedroom. This was because my parents thought that would be good for them. They had no privacy. They also were dressed alike but in different colors. I was so glad to be a girl and have my own bedroom and get to choose my own clothes each day!

My eldest brother was a prodigy who went away to college at age 14, and when he came back for the summer they put him in a separate bedroom. I think they were hoping to protect the younger brother from picking up any degenerate college age attitudes or activities from him.

 

[FreeBear]

In addition to the above replies I'll add in that a wise man said "Never buy a house with more bathrooms than you're willing to clean".

I resemble that comment!

Yep, I’ve become the designated bathroom cleaner. I’m glad our new place has only 2, down from 3 in our old place. Enough for just 2 folks.

Every time I clean anything, the house suddenly looks huge. Now facing acres of kitchen countertop. Dark granite never looks clean...

 

[LivingTheory]

Seems like the consensus is that staying put makes the most sense long term and maybe looking at houses down the line. Also, bathrooms = bad. I’ll look for a 5 bed, 2 acre property with a single outhouse when it’s time. Sawdust can cover most smells, right?

 

[Starsky]

With housing, buying sooner is almost always better than waiting. Especially with interest rates this low. Unfortunately in this market, it could be more complicated than usual. The advice I was always given was to "buy as much house as you can afford" and I don't see why that advice would have changed over the years. Especially if you plan to be living there for awhile, large homes will appreciate more in real dollars and will be a better investment, all other things being equal.

If you aren't in a big hurry to move, you might consider looking for a nice big home in a new, unbuilt development that wouldn't be ready for awhile. With that home in hand, you could even choose to decide whether to move in when it's ready, or don't move in and flip it for a profit when it's complete. I've found that buying into a development early will inevitably lead to pre-move-in property appreciation as new phases of the project are released and the property approaches completion. Most active buyers are looking for an immediate move-in, so these homes may not be so competitive to purchase either. Just a thought...

P.S. 1,700 sq. ft. with a family is a very small home these days. You're way too young to scrimp on space and have plenty of time to pay off this house before you RE. Trust me. You'll be much, much happier with an extra 1,000+ sq. ft. Imagine the extra storage space!

 

[Markola]

In hindsight, had we kept our starter home rather than upgrading to a larger one requiring more utilities, taxes, upkeep and everything, we could have saved more in our retirement funds and retired much sooner than 54 and with more money. So there’s that.

 

[jollystomper]

If you are not looking to FIRE by 40 or 50, and you can afford the down payment and monthly payment, and are very sincere about not choosing to move again, then at you age is probably a good time to look for your "forever" home. A 30 year mortgage means it will be paid off (if you keep to the schedule) by your early 60s.

Yes, this is a hot market, but as was mentioned sometimes the decision is more "emotional" than financial. The "best" financial decision is to stay put and pay off your house as early as possible. But some of us do not look at our homes as investments, we look at it more as a place to live comfortably. That is one factor driving the current housing market.

We made an "emotional" housing decision when Megacorp moved us to a new area when I was 32, 31 years ago. Our advantage, however, was moving from a market that was going from warm to cool to a market that was cool. After 3 months of looking our choices boiled down to a house within our "affordable" price range, and one that we were able to get for $10,000 above our target range. The latter house had twice as much land and 50% more square footage, and we thought it was worth stretching for. We are very glad that we did. Today I look around the house and still feel amazed that we live in it. It was not the "best" financial decision we could have made at the time - particularly if I was thinking about FIRE in the near future, which I was not - but it was the best emotional decision. Just something to consider, YMMV. Good luck.

 

[pb4uski]

My best advice to you is to view your home as a place to live and not as an investment even though it has aspects of an investment.

We've owned three houses and one condo... and currently have a house and a condo.

Our first house... which was a financial stretch for us (but with a 13% mortgage interest rate)... was during the early-to-mid 1980s. Housing prices in the greater Boston area were rising rapidly. Between appreciation and the increase in value from sweat equity of adding 3 bedrooms and a master bathroom and a roughed-in common bathroom in the 3 years that we owned it it almost doubled. Lucky... right time and right place.

Based on the metrics at the time, we could have spent 2x what we did on our second house... but we chose to buy a nice but modest 4-bedroom home that would accomodate our growing family. We were there about 25 years and did a lot of updates over the years and sold for a very modest profit. Similar story with our current summer home and winter condo... they are worth a little more than what we have invested.

You'll find stories where people have made a lot on homes and other stories where people have had significant losses... in many cases due to bad luck/poor timing or overimproving the property.

Other than very early in our marriage, our lifestyle has always been lower than what we could afford according to the experts... but that provides leeway in the event of adverse experience like an unexpected job loss (fortunately never happened) and more importantly, leeway for higher savings.

 

[Gumby]

My best advice to you is to view your home as a place to live and not as an investment even though it has aspects of an investment.....

Agreed.

The only house the young wife and I have ever owned is the one we currently live in. Counting the initial purchase price and the cost of adding on to the kitchen and putting on a garage, it has basically just kept up with inflation over the last 29 years, with an abnormal bump up in the past year. We periodically refinanced for better rates, but never took money out, and we were mortgage free after 23 years.

I don't count the home value as part of our portfolio, although I do expect the day will come when we sell and use the money to buy into a CCRC.

 

[Midpack]

That said, I wouldn't want to be house shopping in this market, and would want things to at least stabilize before looking much.

Though you’d have to act quickly in today’s market (maybe that’s all you’re suggesting), financially it’s mostly a wash for current homeowners? E.g. you’ll pay more for the new house but you’ll get more for the old one as well, same in a down market lower buy and lower sell price. And today you can sell easier too.