Spending that little extra for the "Forever" home, your thoughts?

Question

Hey everyone,

This is one of my first few posts here. My wife and I are currently living in Orange County, California and we are looking to purchase our next home. We are being fairly picky and hoping we can find something we can call our forever home (Who wouldn’t like not having to move again, right?). Something we can foresee meeting anything our future might hold (Location, neighborhood, school districts, bed/bath, lot size, yard, slight fixer upper potential, etc). It turns out we are coming across a few that actually meet the criteria.

The issue is, our price range is 650-750k, and as you’d probably guess, the ones that hit our criteria are mostly on the 750k end, while the 650k ones look like they need close to 100k of rehab anyways. Part of me is wanting to wait and wait until that super discounted amazing house comes in at like 650 or 700k…  but I don’t know if I’m being reasonable expecting that and will miss a great home while I wait.

After running the numbers, it’s a 300-500/month mortgage difference. Which, with mine and my wifes work, we can do. It’s not going to break the bank. Also, even though It’s not in our plan A, a future refi can easily fix that mortgage difference down the road.

What I am wondering is, when it comes to that “Forever Home”, the home you hope to be in for 20-30-40+ years. Does that 50k purchase price difference really matter? Will I look back in 30 years and be super stoked I got what I could for 750 or regret that I didn’t get that killer deal? I could be potentially buying at a housing market high, but then again, will it really matter in that long of a run? Orange County is very pricey and desirable  no matter what the market is doing, so i don't see the real estate ever dying out around here.

What are some of your thoughts? Has anyone been in a similar circumstance? That spent the little extra on the place they know will be the longer-term place?

Any feedback is appreciated! On a side note, being set up in a home for the future and not having to save for the next down payment means we can start saving for some out of state rentals, which is our long-term goal as well.

Thanks!

Joe Homs · Answer

@Alex K. I have been in my home for over 40 years and counting.  We purchased the home because it was in a better area than we were in and started to have a family.  Having your "forever" home does not really mean that you are done.  I have remodeled my kitchen and bathrooms three times over the years (about every ten years.)  They say "Happy wife, Happy life."

I would however recommend that you purchase what you like for the long haul and put as little down as possible.  In this interest rate environment why put so much money down?  Why not leave some money to go out and purchase some investment properties?

My house is paid off now, it's on the larger size with only two of us running around cleaning inside and out.  If I sell, I will owe lots of money to Uncle Sam, so I stay and entertain the children and grandchildren when they come over.

Hope you have my issues in 40+ years.

Good Investing...

Alex K. · Answer

Thank you all for your input!

I’m 30 yrs old and it looks like we will be working with our budget a little closer to see what will and will not work.

Like most of you said, I think this one will be more personal long term reasons for buying our next place.

Nicholas Smith · Answer

Hey Alex:

My wife and I were in a similar situation 2 years ago. We were initially looking at some home that would require a 4-5 year exit strategy because they were not where we wanted to be long term.  Given that we have two young sons and had moved twice in the past 8 years, we didn't want to do it again anytime soon. She found home that was outside of what we were looking at, but had everything we wanted. Strangely enough, we dubbed it our "forever" home and made the purchase. We have been extremely happy. And like @Joe Homs said, we are not done with the property. We already have plan on what we want to do with it in the future as our needs change, but that won't require buying and moving to another home.

Jacob Repreza · Answer

Hey Alex! I get what you mean and while I haven't bought my first house yet I do believe that you should be able to splurge for your personal home. Now that doesn't mean overpay, always make sure you or your agent (if you have one) are checking the comps to make sure its reasonably priced and put in a reasonable offer. If it really does check off all your boxes and its reasonably priced do it! Even though my whole career is based around numbers and finding a good deal on houses, I believe there's some personal things that you just have to pay up for and hey like they say what's the point of having money if you don't spend it on stuff that makes you happy.

As a side note tho I don't think interest rates are ever going to be lower than they are now so I'm not sure if a refi will be possible in the future, and if they are lower then we as a country are going to have all sorts of other issues.

Also last side note, while I do think prices will be dropping in the next 6-12 months, going based off of the last housing crash Orange County held its own very well and didn't feel the drop nearly as badly as riverside, inland empire etc etc so you should be okay.

Dave Connelly · Answer

My wife and I just went through this and pulled the trigger on a place at 650k- a far cry from the 400k we spent 10 years ago on our first.

I think there is something to it IF you have pride in home ownership, have young kids or are big on entertaining- I personally love my house, it’s the fortress of solitude (well..relative solitude, see above about young kids)

Mark H. Porter · Answer

You don’t mention how old you are but if it were me, and in my 30’s or 40’s, I would have a shorter time line.  Schools, recreation, yard size ... all those needs change ALOT in just ten years.

Anson Young · Answer

A LOT of that is personal what works for your budget and comfort level.  I lean on the side of "its my home, I'm going to spend a little extra to make me happy", but that works for me and not for everyone :-)

Spending that little extra for the "Forever" home, your thoughts?

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