I’ve now been a homeowner for about six months and it has been a little over a year since I started the home searching process. Am I happy with the condo I have now? Absolutely. Do I think that I should have started the home searching process last fall and actually purchased a place? No.
Why do I think I wasn’t ready last fall? I didn’t have enough in savings. Here are what the numbers looked like:
- Down payment savings: $24,709.14
- Next vehicle: $3,213.54
- Vacation savings: $2,458.49
- Emergency reserves: $18,037.51
- Taxable investments that are currently at a loss: $2,901.60
- Miscellaneous savings that would take some significant effort to retrieve: $7,005.37
- Taxable investments that are currently at a long-term gain: $2,587.44 (selling would cost $168 in long-term capital gains taxes in April plus $9 in commissions) – post-selling value would be $2,578.44
- Auto loan payments: $858.94 (not available – will use to make the last payment on the auto loan this month)
That adds up to:
- Emergency reserves: $18,037.51 (~6 months)
- Money available to buy a place: $33,411.72 (down payment savings, vacation savings, taxable investments currently at a loss, taxable investments at a long-term gain)
So when I first started looking at buying a place, I had only $33k in cash available to me. But a realistic budget was $250-400k for a condo. $33k would only make a 20% down payment on a place worth $165k and that is ignoring closing and moving costs. The first places I looked at were clearly not places I wanted to live (though they were quite nice) and the process was quite frustrating. My parents gave me a sum of money that made the decision actually a viable one, but I really shouldn’t have gone ahead with the process last fall. Instead, I should have re-signed my lease and kept on saving for another year. I would have had about a $73k down payment fund right now and I would have had plenty of time to look for a place. I would have saved myself a lot of stress, about $4k in moving costs, and many months of lost social life. (All those dates I went on in the first half of 2012? I think I would have had better luck had I not been so stressed out with the condo hunt. That said, I am thankful for my now-boyfriend and wouldn’t change that part at all.) Sure, my rent would have been almost as much as I’m now paying for my condo per month, but I would have had more time to find what I was interested in and I would have known better questions to ask so I didn’t end up with a super pushy real estate agent who just wanted a quick sale.
Things worked out in the end, but I don’t think that I was ready financially when I started the process. If I’d lost my job, things would have been disastrous. Surprisingly, that’s about how things went when I bought my car as well…
I always, like Krystal, thought that I would buy a place with someone. I also thought I would be at least in my late twenties before I even considered buying a place. After university, the pieces fell into place quite nicely: I finished university somewhat young with an amazing salary, a job that I love and is quite stable, and made the smart decision of moving to a city where I would consider staying long-term. The piece of a significant other isn’t there, but that’s okay. I can most definitely afford this on my own with my income. – Buying a place: Property Search and Life Decisions (November 5, 2011)
Now that I’m in a serious relationship, I’ve questioned my decision to buy a condo on my own. It’s definitely weird trying to build this place into my home at the same time as my boyfriend and I are building our relationship. If he owns his own place, we would be in a weird situation of owning two places and if he doesn’t own his own place, we would be in a weird situation of me building equity and him not. (I’m looking at it from all directions so as to not discuss his financial situation whatsoever.) Also, I picked this place, but it’s possible that he never would have picked it in a million years. There are a few ways this could go/could have gone:
1) We eventually get married and move in together. We could buy into each other’s place(s) or declare them separate property in a pre-nup if the other party doesn’t have the funds to buy in.
2) We eventually break up and date other people. I keep my condo, he keeps his if he has one and nothing is really lost or changed. The situation would repeat with my next potential partner.
3) If I hadn’t bought a place and he didn’t have one, we might have moved in together in a rental some day, saw how that went, and then if we wanted to get married, bought a place. This probably would have meant several years out of the real estate market since I wouldn’t buy a place by myself while serious with someone, but I wouldn’t buy a place with someone without being married. Estimated down payment fund (just me): $73k (2012), $114k (2013), $165k (2014), $216k (2015). This wouldn’t have really been the end of the world. I/We probably would have skipped the “starter” condo/house phase and gone straight for a long-term house.
Back to my place, I definitely love this place! There are a few things I would change or would have done differently myself, but they’re not broken, so I won’t do anything about them. I’m definitely keeping notes on what appliances I will buy when the ones I have die a tragic death. I like the settling down feeling, I like the nesting feelings of wanting to make lots of little changes here and there. I also love the cost so far! My monthly costs are lower and more stable, so ignoring the cost of selling the place, it was immediately cheaper to own. I’m also really enjoying the location – I think it was a perfect choice for me.