Q: My husband and I have been in the market off and on for two years due to his job in the military being unpredictable. Now we have a baby on the way and just can't fathom having a baby in an apartment because the reasonably priced apartments in our area also tend to be full of partiers. I have been doing research on real estate for the two years and know all about the market, what we can get for what price, and (assuming no recession) where the prices will go. He has not. He only cares about the bottom line, in the last 2 weeks he has dropped what he wants to pay for a house from $300,000 (minimum for a nice house, nice neighborhood, great school district) to $250,000 (small house, iffy neighborhoods, average or below average schools). Our area is very expensive, the housing market is very cutthroat and it has some amazing schools, not 10 minutes away from horrible ones, so neighborhoods really really matter. He will not see to reason. We can afford $300,000 but he does not see that. Our mortgage broker said $300,000 (if the house also has high taxes) will be at the top of our budget but he thinks it totally do able. He sees the extra $50,000 as too much. Nor does he see if we buy a cheap house in a bad neighborhood with bad schools, we will not be able to rent it at such a price as to fully cover the mortgage and its unlikely we will be able to sell it at the price we bought it for let alone come out even at the sell, chances are we will loose money if we sell. I don't know what to do. I've tried compromising, I've tried explaining, he's obsessed with the bottom line and that's all he can see.I am petrified he will push until I relent and we buy a small house, in a bad neighborhood with bad schools and get stuck in this house. Cant rent it to cover the mortgage and can't sell it without loosing money and have to pay for private schools.
A:Before we begin... thank you for serving. As a DD-214 carrying former US Coast Guardsmen, I've had many friends and shipmates in the Norfolk area.
What you describe is an every day occurrence when it comes finding housing. As a matter of fact, I have clients who weren't pregnant when we started looking... and now that we finally found something, they're daughter is already crawling. A competitive market only ramps up the stress... and we have that in the greater Boston market as well.
Top that off with an impending expansion to the family and stress can be off the charts. None of us will have the answer you're looking for. What you both need to do is figure out what you both want together. What may be a better option is to find a 2- or 3-family that you can purchase... but I don't know if you can find anything in the types of areas you're interested in. As you are a military family, you're only going to be in an area for 2-4 years, very likely... so investing in a home can be challenging because you may be selling after a short time period without time to recoup your investment.
I will tell you from experience that spending at the top of your budget is a rarely a good idea. Being "house poor" is a real thing... and one unforeseen expense can send you spiraling into a tough debt situation that you will be challenged to dig out of.
If this is your first home, I am a big proponent of owning a multi-family home. It will reduce your overall monthly expenses as someone else is sharing in your expenses... and then when you move to another billet, you have a property working for you... while renters pay down your mortgage helping you to build equity much more quickly. There are also a plethora of tax incentives to this approach that are not available to single family homeowners.
One last thing - I've worked with a LOT of first time buyers who either have no children or have one on the way. It's very common to get completely fixated on the school systems. Here's the reality, from my perspective - most K-3 is pretty similar across the board. Schools really start to diverge at about 4th grade... and your child will be 9 about that time. You really have 8-9 years before you really need to start worrying about the schools. If you buy a solid first home in a decent neighborhood, you should be able to recoup your investment and then upgrade to a larger home in a better school district.
I'm sure you and your husband can meet somewhere in the middle. If you can find a 3BR/1.1BA in a decent neighborhood, you can probably find something... even if you have to put some sweat equity into the home. I'd just be wary of too much sweat equity with a newborn. Painting, tile work, etc... that should be fine. Any project that starts with the phrase "gut job" is too much.
Get out there and view some homes. You may "win the battle" without having to say anything when your husband sees what his $250,000 actually gets his family. Reality can be cruel sometimes.
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