Newish attending, not planning to buy a house for several years, re-assure me please

[Tim]

I think waiting to make partner is very wise. Most posters are blinded by the desire to buy a house. There will always be a house.

Buying a house (any house) seems to embedded in our culture.
Home ownership is in and of itself a marker of success. It is extremely difficult to swim against the cultural currents, ASAP. Hard to make the best choice within our culture.

[Dont_know_mind]

I don't know, I just would not be comfortable being short a house in the current environment (negative real rates, rising inflation).
I have been burnt being short property before. It is really unpleasant.

The perfect storm would be a sharemarket crash, rates stayed low and the residential property market went into full-on bubble mode.

Anyway, this should not be the OP's primary consideration. But will a booming property market hurt if you're short a house. Heck yes!

[StateOfMyHead]

I don't know, I just would not be comfortable being short a house in the current environment (negative real rates, rising inflation).
I have been burnt being short property before. It is really unpleasant.

The perfect storm would be a sharemarket crash, rates stayed low and the residential property market went into full-on bubble mode.

Anyway, this should not be the OP's primary consideration. But will a booming property market hurt if you're short a house. Heck yes!

I'm not sure what you mean by "short a house", were you renting? I'm all for sitting tight if the market is unfavorable and vehemently opposed to purchasing something based on FOMO which I feel like is what is happening in many cases now and suspect will result in a glut of buyer’s remorse.

[Tangler]

Buy when you're ready. You're not ready to buy so renting is the right decision for you.

This.

[Random1]

Buy a house if you expect inflation in housing to outpace your present costs of living, because in the short term that is the only way you will make money on the deal, it wont be by transaction costs, taxes , or home repairs. Most of your payments will go towards interest anyway. Also rising rates tend to negatively corelate with housing prices. But if you can predict all of this , you should let us know.

[Ozarka]

Absolutely nothing wrong with your plan. The best thing about your plan is that it'll allow you a ton of options between that income and the reasonable rent.

[AR]

I was in kind of a similar situation to you. I waited and I didn't buy until I was 4 years out. In addition to what has already been said, another good reason to wait is that when your income trajectory is like that, you will be able to much better house in 3-4 years than you can now. It's extremely unlikely that housing inflation will outpace your salary increases.

Now whether you should buy a much nicer house is a completely different question, but it is an option that will be available to you. And having more options is (often) a good thing.

[Tangler]

I think waiting to make partner is very wise. Most posters are blinded by the desire to buy a house. There will always be a house.

One on every corner; literally.

[Turf Doc]

Even if housing continues as it has for the next few years and you're "priced out", on this forum renting instead of buying, even if you knew you were going to stay in a given area, will always be the correct decision

[CordMcNally]

One on every corner; literally.

And all in between.

[xraygoggles]

Your plan sounds great. I am also in no hurry to buy a house, and am content with renting. It works well for some people.

Also, with your level of income and savings, you will be able to purchase whatever type of house you desire in the future.

[Tangler]

You CAN lose $ on a primary residence. I did this.

Even after 10 years I sold for around a 100k loss.

It can happen. It happened to me.

Renting is NOT throwing away $.

Often if you rent and invest the $ that you save on taxes, insurance, repairs, mortgage, closing costs,

and realtor fees, etc you come out with a higher overall return.

You do not have to own a home to make $.

If you want to buy, no worries, but know that you can win multiple ways.

Several threads like this:

https://forum.whitecoatinvestor.com/...ssic-money-pit

[Dont_know_mind]

I'm not sure what you mean by "short a house", were you renting? I'm all for sitting tight if the market is unfavorable and vehemently opposed to purchasing something based on FOMO which I feel like is what is happening in many cases now and suspect will result in a glut of buyer’s remorse.

I sold a house and kept this in cash for 4 years instead of buying a place that I eventually would need to. I still had offsetting other property exposure, but I was underweight what I should have been because I thought prices were too high.

When I say short a property, I mean short of long term desired exposure. In this sense most people are short stocks and real estate exposure when they are young.

I disagree with the forum on this matter. But I accept the other side of the argument and I think I understand it. The difference lies in
a) how people value projected losses and gains. To me a gain is worth nearly as much as a loss. So it is not FOMO to me. If you were able to buy a house 3 years ago for 1M and it is now worth 2M and you have to cover it and buy a 2M house now, to me you have lost 1M, compared to buying 3 years ago.
b) RE in some areas has had a positive long term after interest cost return. This is like the stockmarket. So being short RE to market time or because you can afford to wait has costs. I think this forum skews towards MCOL areas where if you get the market timing wrong, you can ignore it or rationalise it, because your income can make up for that. This is not the case in many HCOL areas.
c) debt aversion: I have struggled with this in the past and think I am relatively debt averse. But not as much as this forum. I took out my first mortgage when I was in my mid 20’s. It helped me grow my equity. I accept the arguments to wait until you make partnership, and maybe it does reduce behavioural errors. If however you know you will stay in a city, then I’m not sure the rules espoused are as black and white as they are made out.

If I was giving advice to myself as a 35 year old, my advice would be: man up, take on the debt you need to, don’t avoid it, if a storm comes take it on the chin.

My advice to my kids if interest rates and prevailing conditions are simillar to now would be to take out a big mortgage when you can get one and buy a good property earlier.

I think if you are renting, unless you want to rent forever, you are short a house and will have to cover at some stage. I would cover that short ASAP, based on my own experiences.

Being short a house in a hot housing market hurts when you are short a house. It’s like the reverse of owning a house during a boom.

At first there’s denial. “Renting is fine”. “I’m happy renting”. And then when the correction doesn’t materialise and if it keeps booming, it’s not a good feeling, particularly when you have to cover (buy the house). You may have kids and a spouse wanting you to cover, because they don’t want to rent anymore.

Ultimately it boils down to buy when you can. If you want to buy when it’s right for you, there’s no reason why conditions will align. It’s like farming and when to plant the crop. I’d say if you are buying in a VCOL market, saying I’ll plant when I feel like it, can result in a headache.

[Dont_know_mind]

Buy a house if you expect inflation in housing to outpace your present costs of living, because in the short term that is the only way you will make money on the deal, it wont be by transaction costs, taxes , or home repairs. Most of your payments will go towards interest anyway. Also rising rates tend to negatively corelate with housing prices. But if you can predict all of this , you should let us know.

Being priced out definitely happens.

Less so for Dr’s in HCOL areas. They just end up devoting 4 years of savings at 250k (after tax savings per year) to make up the 1M market timing error, if it turns out to be an error, which no one can know in advance.

The funny thing is, what is the downside vs the potential loss.

Say you buy 1M house today. Which is worse?
A) you sell 4 years later at 50% (500k) loss if you get kicked out as partner.
B) the other way round, market melts up and you have to cover 2M house (1M) above what you could have paid today.

The thing with being short though is that theoretically the price can go to anything. And it will feel like this when you have to cover, which is why people will tend to cover at the cycle peak.

[StateOfMyHead]

I sold a house and kept this in cash for 4 years instead of buying a place that I eventually would need to. I still had offsetting other property exposure, but I was underweight what I should have been because I thought prices were too high.

When I say short a property, I mean short of long term desired exposure. In this sense most people are short stocks and real estate exposure when they are young.

I disagree with the forum on this matter. But I accept the other side of the argument and I think I understand it. The difference lies in
a) how people value projected losses and gains. To me a gain is worth nearly as much as a loss. So it is not FOMO to me. If you were able to buy a house 3 years ago for 1M and it is now worth 2M and you have to cover it and buy a 2M house now, to me you have lost 1M, compared to buying 3 years ago.
b) RE in some areas has had a positive long term after interest cost return. This is like the stockmarket. So being short RE to market time or because you can afford to wait has costs. I think this forum skews towards MCOL areas where if you get the market timing wrong, you can ignore it or rationalise it, because your income can make up for that. This is not the case in many HCOL areas.
c) debt aversion: I have struggled with this in the past and think I am relatively debt averse. But not as much as this forum. I took out my first mortgage when I was in my mid 20’s. It helped me grow my equity. I accept the arguments to wait until you make partnership, and maybe it does reduce behavioural errors. If however you know you will stay in a city, then I’m not sure the rules espoused are as black and white as they are made out.

If I was giving advice to myself as a 35 year old, my advice would be: man up, take on the debt you need to, don’t avoid it, if a storm comes take it on the chin.

My advice to my kids if interest rates and prevailing conditions are simillar to now would be to take out a big mortgage when you can get one and buy a good property earlier.

I think if you are renting, unless you want to rent forever, you are short a house and will have to cover at some stage. I would cover that short ASAP, based on my own experiences.

Being short a house in a hot housing market hurts when you are short a house. It’s like the reverse of owning a house during a boom.

At first there’s denial. “Renting is fine”. “I’m happy renting”. And then when the correction doesn’t materialise and if it keeps booming, it’s not a good feeling, particularly when you have to cover (buy the house). You may have kids and a spouse wanting you to cover, because they don’t want to rent anymore.

Ultimately it boils down to buy when you can. If you want to buy when it’s right for you, there’s no reason why conditions will align. It’s like farming and when to plant the crop. I’d say if you are buying in a VCOL market, saying I’ll plant when I feel like it, can result in a headache.

Thank you for the explanation. I totally agree re MCOL vs HCOL and all my experience is in MCOL where over the last 30 years it has been largely ebb and flow. I also leveraged and purchased when I was in my 20s often biting off a bigger chunk than I probably should have but it worked out well. I think a big caveat for me is I was not someone who couldn't delay gratification and wait out a dry spell which I think many ?younger? people now are not willing to do. I'm not risk adverse but I'm also not interested in overpaying for something on the chance that it could be worth more in the future and like walking away from a slot machine I don't look back or consider it a loss. I much appreciate your take on this topic. No absolute answers, kind of like medicine in many cases.