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Need advice: What should i do given my financial situation?

 
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housingprospects
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PostPosted: Sun Mar 27, 2011 10:01 pm GMT    Post subject: Need advice: What should i do given my financial situation? Reply with quote

Hey guys,

Here's my situation: I'm 27 and work in town (Waltham) as a Software Engineer. My current salary is $95,000/year and I also have $120,000 in savings not including retirement accounts. I also live at home with my parents and I have been living here for the past 3 years so I can save for my own place.

My issue is that I STILL find prices to be way too high in the areas I want to live. My optimal housing arrangement would be a townhouse/condo somewhere close to work such as Waltham, Watertown, Arlington, Woburn, etc. I absolutely do not want to move far away and have a rough commute to work each day. To me, time = money and money = freedom and I don't want to be a slave to my commute.

I also do not want to be a slave to my mortgage payment, either, and the maximum i'm willing to spend is 300k and ideally a little less than that. I've seen some decent places in this range but they all seem to have a fatal flaw(s). For instance Repton Place in Watertown seems nice (modern, laundry in unit, good commute location) but the buildings abut an industrial park... There's been places in other areas like Medford or Somerville but the affordable units are invariably located in slummy locations.

The conclusion that I'm arriving at is that I should continue to live at home for a year or more and hope the market declines while I continue to save more money. Eventually it's going to become a little "weird" that I live at home with my parents while being late 20s and earning a reasonably good salary...

Does anyone else have any insights about the condo market in the boston area?
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PostPosted: Sun Mar 27, 2011 11:55 pm GMT    Post subject: Reply with quote

Financially speaking, I think it's pretty clear you should live at home until you inherit the house!

Otherwise, why not rent?

Also, what will your housing needs be in 5 years? 10 years? 30 years?
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CL
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PostPosted: Mon Mar 28, 2011 2:46 pm GMT    Post subject: Reply with quote

At 300K, the townhouse/condo is not going to be perfect. So your decision is to find a townhouse/condo that have imperfections which you can bear, or wait under your financial situation becomes better (ie bigger salary, bigger saving for downpayment, etc). I don't see renting in this case as a good financial choice as you can live with your parent for free.

I would rather live lean, save big, and buy a house that you know you can stay for 10+ years when you want to start a family. Buying a 300K condo now only to move again in 3-5 years when you want to start a family is expensive.
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Mon Mar 28, 2011 4:38 pm GMT    Post subject: Reply with quote

My situation is similar except a little older and have kids. Plan A for me is to move to another area with a lower cost of living like Austin or Raleigh. Plan B is to wait for interest rates to go up and housing prices to go down. Plan C is to cry.

You're near an age where marriage and children isn't too far off. The time frame for owning a house is 5 years in a good market and 10 in a bad so you don't have a safe time frame, though that doesn't mean you'd necessarily lose money. I would suggest buying a place that you'd be comfortable staying in during that time period if you're going to stay here. Maybe a 2-3br townhome in Newton, Lexington, Arlington, or Natick for example. The downside is that if you want something heavily renovated or new, you're looking at $400k - $500k. Possible with your income but will be a stretch until you get a second income.
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Mon Mar 28, 2011 4:41 pm GMT    Post subject: Reply with quote

[quote="CL"]or wait under your financial situation becomes better (ie bigger salary, bigger saving for downpayment, etc).[/url]

As a software engineer, his income isn't likely to change the picture much. He makes $95k now and in the next few years he isn't like to see more than $100k - $110k, which doesn't change the housing picture much. Another downside to buying now is that if he marries and gets a second income he'll likely want to buy again given the new options.

Live with parents or rent if you want some space. I live in Lonvgiewplace (also in Waltham) and it is very nice. I'd split the referral bonus with you if interested. In the mean time, you can curse your politicians for putting policies in place that have allowed housing to get where it is.
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GenXer



Joined: 20 Feb 2009
Posts: 703

PostPosted: Mon Mar 28, 2011 4:56 pm GMT    Post subject: Re: Need advice: What should i do given my financial situati Reply with quote

Keep it up. Put as much as you can away. When you marry/have kids, you have no idea where you will end up. Rent for as long as you can (or in your case, live at home). Besides, as an investment, it is better to put together a fixed income portfolio rather than waste the money on a house. If you've never been laid off, think about what would happen when you are. Financial security means having no debts of any kind, and being financially independent. The slippery slope starts pretty early, and doesn't end until many people simply can't afford their lifestyle. Wait until you get married and possibly have kids to buy - even then it is not necessary, and it is mostly a big money-waster (given local prices). Think about your future plans and don't try to follow the herd.

Here's something I wrote based on my observations:
http://litovskymanagement.com/blog/advice-gen-x-and-y-avoid-spending-much.html


housingprospects wrote:
Hey guys,

Here's my situation: I'm 27 and work in town (Waltham) as a Software Engineer. My current salary is $95,000/year and I also have $120,000 in savings not including retirement accounts. I also live at home with my parents and I have been living here for the past 3 years so I can save for my own place.

My issue is that I STILL find prices to be way too high in the areas I want to live. My optimal housing arrangement would be a townhouse/condo somewhere close to work such as Waltham, Watertown, Arlington, Woburn, etc. I absolutely do not want to move far away and have a rough commute to work each day. To me, time = money and money = freedom and I don't want to be a slave to my commute.

I also do not want to be a slave to my mortgage payment, either, and the maximum i'm willing to spend is 300k and ideally a little less than that. I've seen some decent places in this range but they all seem to have a fatal flaw(s). For instance Repton Place in Watertown seems nice (modern, laundry in unit, good commute location) but the buildings abut an industrial park... There's been places in other areas like Medford or Somerville but the affordable units are invariably located in slummy locations.

The conclusion that I'm arriving at is that I should continue to live at home for a year or more and hope the market declines while I continue to save more money. Eventually it's going to become a little "weird" that I live at home with my parents while being late 20s and earning a reasonably good salary...

Does anyone else have any insights about the condo market in the boston area?
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Boston ITer



Joined: 11 Jan 2010
Posts: 269

PostPosted: Mon Mar 28, 2011 6:49 pm GMT    Post subject: Reply with quote

Hello housingprospects,

All I can say is that you're doing well & don't need to change anything. I'm one of the more bearish persons around here, in terms of the future of the Boston area. The time to have bought was 1998-2002; then you would have locked in some equity and been able to ride out the years ahead w/o much fanfare.

My basic stance is that the post-telecom/IT bust era (after 2001-2003) is a time where the MA economy had reverted to a guns 'n butter/high defense spending period where much of the support was based upon govt spending and that our mainstay companies like Fidelity, Gillette, Reebok, etc, have been laying off a/o moving jobs out of state. This is not a sustainable situation and unlike metro NYC, we're simply not a region with a lot of landed rich, people who make money in show biz, hedge funds, or trust funds. MA residents typically need to work for a living and the economic fundamentals don't bear well for the region.

Since you already have a place to live in, rent free, and could possibly inherit the place in due time, why fix what's not broken?
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Kaidran



Joined: 17 Mar 2010
Posts: 289

PostPosted: Tue Mar 29, 2011 7:10 pm GMT    Post subject: Reply with quote

I just wonder what his parents actually think. If they are happy with the arrangement then I agree that he should stay until the prices come down more or he has income enough to get something he would like. Is marriage on the table at the moment? Living with parents is unlikely to help this. Maybe it is time to rent an apartment?
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GDMA
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PostPosted: Wed Mar 30, 2011 3:54 pm GMT    Post subject: Reply with quote

Live with your parents, but pay them a rent to acknowledge that you're an adult and that you should contribute towards your expenses.

Continue saving.

Date without bringing anyone home.

Either that, or rent instead of buy.

You buy now, then if you marry in a few years time, and wife has other idesa about house, you'll just end up selling too soon.

We've all been down your road. Smile
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PostPosted: Wed Mar 30, 2011 5:11 pm GMT    Post subject: Re: Need advice: What should i do given my financial situati Reply with quote

If he is making $95,000/year and has $120,000 in savings not including retirement accounts, he is doing very well, especially at the age of late twenty. Renting a one or 2 bedroom apartment in Waltham is not that expensive. Can afford a $300k mortgage payment for a townhouse/condo? $300k mortgage is enough to buy a decent townhouse or condo in town like Waltham.

What exactly is the problem?
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PostPosted: Sun Apr 03, 2011 1:38 pm GMT    Post subject: Re: Need advice: What should i do given my financial situati Reply with quote

Anonymous wrote:
If he is making $95,000/year and has $120,000 in savings not including retirement accounts, he is doing very well, especially at the age of late twenty. Renting a one or 2 bedroom apartment in Waltham is not that expensive. Can afford a $300k mortgage payment for a townhouse/condo? $300k mortgage is enough to buy a decent townhouse or condo in town like Waltham.

What exactly is the problem?

+1. 74 possibilities in Waltham
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wherzmyhome
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PostPosted: Wed Apr 06, 2011 4:56 pm GMT    Post subject: Reply with quote

we have been renting in waltham for the last 7 years. when we moved here in 2004, we were just two adults looking for a good commuting location- which waltham certainly is! And then we had our first child, and now a second is on the way. Still we have not purchased a house becasue we are renting as long as we can. Next year our first will be off to school, so we definetly have to move out of waltham.

During the 7 year period we decided that Mass was the place to be living in (we have family here, no other reason), that my spouse's job in metro west was something we could bank on (i work in DT boston), that the only house we wanted is one where we can envision ourselves raising our kids (read town with good schools), and one in which mortagage was manageable even with me not working or working part time. Meanwhile we have saved well for the big purchase. Home maintenance, property taxes or relocating never worried us becasue of the flexibility of renting.

My advice is you are only 27, wait till you settle down with someone, maybe start a family and put off home ownership for as long as you can. The housing scenario is not changing anytime soon, contrary to media bs. and there are a lot of things that may change between now and your early-mid thirties when you are really looking to settle down.
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