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  • To buy a house now or later?

    My wife and I are at a crossroads on deciding when to go down the pathway of considering home ownership. We are currently renting in a very expensive market for both renting and owning. We are planning on staying in this area for family and career reasons. We currently live in a 1BR ($3000/mo) and want to plan on having kids in the next 2-3 years. Ideally we are searching for a 3 bedroom house, which goes for $1-1.5M in this area to buy, or approximately $4-6,000/mo to rent.

    Me: Current resident with 2.5 years left to go. Expected salary upon graduation 350-400k

    Her: Non-medical professional, current W2 ~300k/yr, with average 5% increase in total comp per year.

    No student loans remaining. No consumer/car loans.

    Current savings: 130k liquid for downpayment, 200k in 401k/403b, Roth IRAs

     

    Our options are:

    1) Go into market now, fearing home prices will continue to increase in this area and interest rates increasing. The downsides of this are that we won't have enough downpayment for standard 20% down and would have to resort to physician loans at slightly higher interest rates. Also, there is the uncertainty of not having a post-residency job yet.

    2) Wait a few years until finding first attending job.

    3) Rent forever. According to NYT calculator, we are right at the cusp of whether we should rent/buy and can tip it either way based on changing a few small variables.

     

    I'd love to hear experiences of people who may have had to make a similar decision and would like to hear other considerations I may not have thought of. Thanks!

  • #2
    It's wonderful that you have no student loans. Even so, I would be very careful about buying a $1M - $1.5M home with 2.5 years of residency left, even with a HIP spouse. You don't know how kids will change your list of prerequisites for a home and you aren't even sure where you'll be working after you finish training, so you could end up 30 miles from your job. Being locked into a mortgage may sway you to accept an offer that is close to home but not your ideal choice.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      I would wait until you have the attending job and like it, and maybe even wait until children are on the way.  If you purchase a house now and find the commute too much, the job itself painful or kids never materialize then you've just lost a considerable amount of money for a quick turnaround to selling again.

      Most of the time when people ask this question they end up buying a house despite what anyone suggests.  On the positive side, I expect interest rates to be higher in 2.5 years and locking them in now may save you some money...

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      • #4
        I'd at least wait to find a job.

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        • #5
          Echoing Johanna, since you don't know where you will find an attending job, buying now will force you to sell in 3 years probably at a loss.

          And what happens should your spouse lose here job unexpectedly. Renting offers a chance to move into a lower rent apartment which is not possible with buying and having a high mortgage.  When you are an attending and there are 2 incomes you can take bigger risks.

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          • #6
            I have to echo the others:  wait until you actually HAVE an attending job in the area and are reasonably certain it will work out long-term before you tie yourself down to a house!

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            • #7
              Rent until you have a job you like in a place you like it. Maybe that place will be one in which the price of a one-bedroom apartment is not literally twice the price of my 2800-sf two-story house.

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              • #8
                You are doing well compared to most residents who post this question. You have no loans. You have a high income spouse. You have some savings. I will tell you the same thing that I have posted before. Wait until you finish residency and have a job. Lots of people end up leaving that first job. I know I did. A house complicates your ability to be flexible

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                • #9
                  You're in a pretty great financial situation so when you're ready to buy you'll be able to get a great deal.
                  But, are you certain you're going to want to/be able to practice in the area you plan on buying?  As everyone else said, once you own a house switching jobs becomes a lot more complicated.  I've talked to plenty of physicians over the years who needed to relocate and couldn't find a buyer for their house.  Most of them end up paying two mortgages or trying to be landlords.  One girl that started working with our group about 2 years ago, wasn't able to sell her home for about 1.5 years.  She had two mortgages that whole time.  That's the biggest thing to think about in my opinion.  It can be incredibly stressful to be in that sort of scenario.  Renting has its downsides, but the freedom it gives you to be able to pick up and move whenever you feel like it is pretty awesome.  Don't give that up until you're certain you are ready to stay put.

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                  • #10
                    Thanks for all the comments. This definitely is a good reality check I was hoping for to not rush to a hasty decision. To be more specific, we live in the SF Bay Area. I won't pretend to forecast the real estate climate here, but I have noticed prices of homes in the area increasing yearly, which makes us anxious to pull the trigger sooner rather than later. Honestly, I do see ourselves settling here full-time. I would say that my wife's job is tying us here more than my future job. She has a much higher salary ceiling (tech) at her current trajectory and our priority for moving in the future will probably depend more on her job than mine.

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                    • #11
                      Many residents of the Bay Area have relatively significant commute times due to the inflated market. I've had colleagues move several times in the same number of years simply to cut down on daily travel. As others have posted, it'd probably be more prudent to secure your job before settling down on a house even though your wife has a sizable income that could grow even more. That being said, I also have had friends purchase property in the Bay Area and still able to unload it quickly due to the current hot market.

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                      • #12




                        I would say that my wife’s job is tying us here more than my future job. She has a much higher salary ceiling (tech) at her current trajectory and our priority for moving in the future will probably depend more on her job than mine.
                        Click to expand...


                        I know you said you want to stay in the Bay Area in part for family reasons, and obviously that needs to be taken into consideration.  But as far as salary is concerned, don't make the mistake of looking solely at your wife's salary ceiling!  You have to evaluate the total package:  salary + cost of living.  It's quite possible that your family's overall economic situation would improve if you moved to a lower cost of living area, even if t caused your wife's salary to peak at a lower level.  (In particular, your salary might actually be HIGHER in a lower cost of living area, which could very well offset your wife's salary decline.  I'm making anywhere from 30-50% more working in the Midwest than I'd earn as a pathologist on either of the coasts.)

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                        • #13







                          I would say that my wife’s job is tying us here more than my future job. She has a much higher salary ceiling (tech) at her current trajectory and our priority for moving in the future will probably depend more on her job than mine.
                          Click to expand…


                          I know you said you want to stay in the Bay Area in part for family reasons, and obviously that needs to be taken into consideration.  But as far as salary is concerned, don’t make the mistake of looking solely at your wife’s salary ceiling!  You have to evaluate the total package:  salary + cost of living.  It’s quite possible that your family’s overall economic situation would improve if you moved to a lower cost of living area, even if t caused your wife’s salary to peak at a lower level.  (In particular, your salary might actually be HIGHER in a lower cost of living area, which could very well offset your wife’s salary decline.  I’m making anywhere from 30-50% more working in the Midwest than I’d earn as a pathologist on either of the coasts.)
                          Click to expand...


                          True, it would undoubtedly be cheaper and more profitable for them to move to the midwest or some other lower cost of living area, but money isn't everything in life.  There are a lot of benefits to living in the SF Bay area that you just can't get in the midwest.  You have to chose what makes you happy and I'm sure they enjoy living where they do.  I know I would LOVE to live in SF.  But, my wife wants to be near her family and unfortunately that means we're in the  midwest!  For now I just have to settle for visiting CA as a tourist (which I do every chance I get).

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                          • #14


                            True, it would undoubtedly be cheaper and more profitable for them to move to the midwest or some other lower cost of living area, but money isn’t everything in life.  There are a lot of benefits to living in the SF Bay area that you just can’t get in the midwest.  You have to chose what makes you happy and I’m sure they enjoy living where they do.
                            Click to expand...


                            That is absolutely true.  But a lot of people, in my experience, naively assume that high-salary positions are only available in high cost of living areas.  That's true in many other fields, but medicine is a big exception to that general rule, and the OP should know that.

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                            • #15
                              We have looked into the salaries of my specialty outside of the Bay Area and there are definitely higher paying areas in other areas. We also know that there are other areas that are also up to 5x cheaper for real estate. We are definitely paying a high premium to stay in this area. At this point in our careers and life, with family and an established social support group, the question we are pondering is timing of real estate in this area. I'll continue to survey the job market through alumni from my residency program and try to get a sense of what the job market will be like when I graduate in a few years time.

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