bostonbubble.com

[Guest]

[outoflucktoo]

I respect your opinion, genx. However, we won't put all of our money into a house. The payout will be substantial and will cover paying off our student loans, a new down payment (we will keep a mortgage for tax benefits), and we will see a financial planner for the rest (probably about 500k invested). I don't want a really expensive house. I just want a house I can do what I want to and pay it off in 15-20 years (we will probably pay double on the mortgage or get a 20 year mortgage while my husband has such a high salary) and enjoy with my family. Some of the most financially well-off people I know are ones who bought a house 30 years ago and have it all paid off. We have been investing 10% of our income with 6% matching since we were 22 years old so we already have a decent start on our 401k. I'm paying cash for my current schooling (state school). So I think we have a good plan in place and we will see a financial advisor for help with the rest of the windfall since we don't want to blow it.

Part of my reasoning for really wanting to move is for the school district. Our current district stinks and we want to be closer to our free baby sitters in another town. I don't think this is blowing our money if we plan on being there for the long hall. I know buying impedes our flexibility when it comes to job prospects. However, we plan on buying a moderately priced house that we could rent out if we need to and it should cover the mortgage. Plus, I think he could get a job anywhere at this point. He is just really good at what he does.

[GenXer]

Let's hope he gets it. It's great that you already have a nice amount saved - in that case you are probably all set. Very few (literally in single digit %) have that much saved. It's a bit hard to plan with something you don't have yet, so I guess the speculations are a bit premature.

Let's not reverse cause and effect - some well-off people just happen to have bought long enough ago and are doing well, not because they bought 30 years ago. That's a fallacy to think that if you buy, in 30 years your house purchase will do well. Not the case for many people. Besides, you will most likely not stay 30 years in one place - that will change, most likely unpredictably. Some will, no doubt, but most won't.
It also sounds like you'll be getting a job, too, so I think that works out for you. As far as school district and any other reasons for buying an overpriced house, there are plenty of threads that tackle that here. Just make sure its a good financial decision before you make it an emotional one.

[outoflucktoo]

Thanks genx. I have read the other posts regarding school and home prices and I think I am convinced of the right town for us. I just have to convince the husband that the "best" town around me is not really that great. The town I'm speaking of (I will reveal later if this actually goes through) has decent scores and good facilities. The town I am in has crappy scores and even worse buildings and the prices of houses are not really all that much cheaper?! My husband wants to avoid buying an ostentatious house (that's what he accuses me of) but wants to buy a similarly priced crapbox house in an "elite" town. I say what's the difference of getting a good sized house (2500 sq ft) house in a decent town for xx vs. getting a out of date small hole (1500 sqft) in this other town for xx. People are still going to know you paid what you paid so you might as well get the good bargain. I'm a product of a very bad school system but I graduated top of my class and got many scholarships. I don't think I would have done as well in a more competitive town. My mother supplemented my education with museum trips and LOTS of books. I don't think you need that high priced education to do well. I just want a district that I think is safe (relatively free from drug peer pressure ...i.e. where I grew up). I recognize not every child is as steadfast in their beliefs as I was. On the other hand, I don't want a town where you have to buy stupid Abercrombie or Prada to fit in. That's stupid and I refuse to waste my money on that junk even if I have extra money so I'd be the "mean mom." I really want to avoid that trap.

Sorry for the ramblings and hijacking the original post.

And you're perfectly right, if this doesn't go through then it's all a waste of breath (or typing). In that case, then you will all yell at me for my proposed plan of getting out of here. I'm sorry but we made a really bad choice for town and I think it's a bad investment. I just want to cut my losses and move on.

[mpr]

[GenXer]

Statistics is a dangerous thing and can be misused - people don't live in 'average' houses - and that's the problem (for those people who use the statistics wrong).

You got it. No need to prove anything. I simply pointed out that it is not a given that if you bought 30 years ago that you will get 'inflation' or even a positive 'profit' on your 'investment' given what you put into a house. There is a wide specturm here, and it does depend when you buy and where. But that's one thing I'd avoid taking for granted. Just like some people think that if they buy their stocks for 30 years they are guaranteed a profit. It may turn out this way, but it is far from guaranteed. This is why I try to tell people that they shouldn't assume that just because they plan to stay in a house for 30 years that this investment of theirs will turn a profit. Once you can afford it, it is just a place to live in, nothing more (and if it truns a profit - fine, so be it).

[john p]

Part of my long term strategy was to buy a house that had the potential to serve my long term needs, primarily to avoid transaction costs.

Buying a condo, to then buy a starter home to then buy a larger home seemed like an awful lot of money going to realtors and banks not to mention that in one of those transactions you might need to carry two mortgages.

I think a lot of people in my generation (I'm 40) heard their parents say:

We bought this cape for $27k and that big house up the hill was selling for $35k; we should have spent the little extra back then, but our parents went through the Great Depression and they taught us to be conservative....

I told my wife that we should buy the house we have because it was just $30k more than this other house we were pursuing yet it had an extra 1,000 square feet, and given our benchmarks it would only take a complete economic meltdown of historic proportions to make this beyond the risk we should take....


I think all you guys are right in your own way, sure you have to have a long view, but we really do have this 800 lb gorilla.

How much does a gorilla weigh? I want to get that line down right.