Tuesday, March 5, 2013

Stay or Go: A Guide to Figuring Your Real Estate Shiz Out

Hello friends!

Happy Tuesday! Yesterday was my birthday. As long as I didn't think too hard about the number attached to said birthday, I floated through the day on a cloud of birthday happy and Facebook messages from good friends. Since I'm still kind of floating, I thought I'd settle in and talk a little bit about that house hunting thing we've been doing and impart a little wisdom we've learned over the past few months.

Namely, this: how on earth do you figure out whether or not to pick up and move?

In all honesty, we're still right in the middle of this decision. We think we've finally figured it out, but I can't guarantee that our minds won't change sometime in the next 24 hours. Or the 24 hours after that. Or next week. But, over the past couple months, we have learned a lot about the questions we should be asking ourselves.


One: What do we need from our home? 


For us, the answer to this question is space! Our house is, essentially, a one bedroom, and it's tiny. For now, it's perfect for us, just two people and a few pets. But, there's no space here to grow. By that, I'm not saying anything about when we're planning on growing our family, just that someday, we know we'll probably want to add a couple tots. We're a typical young couple! We can't, however, envision doing that in our teensy little bungalow, especially not long term.

Two: Does buying a new house make sense, financially? 


This is, of course, the biggest question and contains a heck of a lot of other questions:

  1. What can we afford?
  2. How does purchasing move us forward?
  3. How long do we need to live in the new house to pay off realtor fees, land transfer taxes, lawyers, and all the other expenses that come along with moving?
  4. Will a new and better house make the financial cost worth it?
  5. How is our lifestyle going to change if we purchase a more expensive house and therefore, increase our financial burden?
Anyone who has experience with the Toronto market can find that first question depressing. That burst in the market that everyone claims is just around the corner? We certainly haven't seen any signs of it. But it's the second question that always stops the Husband and I. We view our real estate as not just a home, but as an investment. How is purchasing going to solve our space needs while also helping us move forward, financially? Is there a chance to renovate and improve a property to add value? Enough rental income to help us carrying a larger mortgage?

And then, there's the thing I always forget about: those closing costs. Closing costs make buying and selling expensive. We'd be looking at least 2-4 years of owning whatever home we purchase to make that cost worth it.

But, perhaps the improved home would be worth all that? 

Three: Where do we want to be, long term?


The answer to this question affects how we view those closing costs I spoke of earlier. See, we're both country kids, and we've always asserted that we won't be here in the city forever. When we first got here, we always said we'd only be here for a few years. We're coming up on 3 this spring, and our feelings about the city have changed. We've come to appreciate it, love it some days. The close proximity to our neighbours, the ease of movement around the city, the opportunities here, even the dog parks - there is so much we would miss if we were to find ourselves back in the country.

On the other hand, there is so much we miss about those wide open spaces; the stars, the trees, the sharpness of the chill air in the winter, the space to put the snow from the driveway, the large backyard for the dogs to explore. 

We haven't answered this question yet. Perhaps we never will, and one day, we'll realize that life made the decision for us.

Four: What other options do we have?


This is a question to take the stress off as you work through all the other questions. If you need something more from your house, but it doesn't make sense financially and you're in the same place we are, still struggling with what is coming in the future, realizing that there may be other options can buy you time to figure life out, save more money, or wait for the market to be a little friendlier.

Thankfully, we do have other options! 
  • Renovate! I've talked a lot about this option here and I'm going to talk even more about it, hopefully soon. It remains at the top of our list of options.
  • Reclaim our rental space. We have a beautiful basement apartment that we've been renting out for the past year and a half. We love the extra income and wouldn't want to give it up, but it is an option should life get really confusing. This isn't an option we plan on acting on, but if you're in similar situation, keep in mind that it's possibly cheaper to lose that bit of income than move houses.
I know a lot of my readers have gone through this experience themselves, struggling through the real estate game as second-time buyers and discovering a whole new set of challenges. What other questions did you have to ask yourself as you made the decision, and house hunted or turned to your other options? Care to share your thought process?

13 comments:

  1. Great post! I also struggle with this question- should I move up to a bigger place? can I afford the closing costs AND increased mortgage/main fees just for a bedroom?? Would I need to give up my lifestyle due to increased cost of living? Its a tough question and sometimes I feel you need that push (like a marriage in my case, or a baby in yours) to solidify your choice because hey- you get by ok in a small space now!

    No right answer and very daunting indeed. best of luck in whatever you choose!

    BTW- HAPPY BIRTHDAY!!! :D

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  2. Thanks for the solidarity Casey! It can all be so confusing! So confusing that, just watch, that big lifestyle change will come along and we'll just stick that baby in some corner of our living room until its so big it doesn't stay put anymore and demands its own bedroom.

    Whatever. We'll figure it all out someday!

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  3. Happy Birthday Jeanette!

    I completely understand where you're coming from with the housing issues... it's all so complicated. We've been waiting for THREE YEARS for our condo to be done. Now that it's around the corner (late summer they say) I already feel like we've "outgrown" it and we haven't even lived there yet lol

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  4. As you know, we're going through the real estate game ourselves, and truthfully, after this experience I never want to sell another house. I'm just hoping that the insane market brings multiple buyers to our place so that for once I can have a good experience. When all is said and done with this, we won't have made any money. To quote Alan, "this house was the single worst financial decision we've ever made." And a lot of that goes back to location, location, location. We bought in an up and coming neighborhood. It was cute. The house was lovely. We thought we could be happy there. And then violence. Tons and tons of violence. So now matter what you do, and no matter how cute a place might be, I strongly encourage you to not sacrifice cost vs safety, because in the end, you'll eat what money you saved.

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  5. I totally am in the same boat. Well not really - we need to start planning for LAG (life after graduation), and I need to wrap my head around "owning our own home and living < 20 min away from work in the part of the country we want to be" means a studio flat (condo). Staying put (where we both have firm job offers) means a house with separate office spaces and a full basement workshop and a garden ...

    brainstorming here, but would living in status quo for a short while allow y'all the option of buying a country house (for weekend vacations and retirement) in a part of the country that is cheaper?

    Also I keep reminding myself that there are lovely, vivacious people living all around me, and it's the memories that make a place special - everything else is logistics/details. But I am so.with.you.

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  6. NK_StyleingwithChildrenMarch 5, 2013 at 3:41 PM

    I've been reading your posts on looking for another house and it has been very interesting! We are in the process of selling ours with no place but a rental to go. With a 4 year old and another one on the way in 20 weeks or so. One word - stressful.
    We are selling a house we just spent 3 years renovating practically from scratch. It is beautiful and entirely too huge for us, even with the addition of a 2nd kid. We are very happy with our decision to sell. However, we are lost as to what our options are for the next property.
    The goal has been to find a smaller, more cozy place with a more open layout. Something that would allow us to live on 1 income, and use income 2 for savings/fun things. Our prospects are pretty grim. Everything is expensive or in the boonies. Even the boonies are expensive (for our goals).
    Now that we've renovated a home, there's no way we can live in a cardboard box with stock everything. And majority of builders have very limited choices to adjust plans and choose finishes (down to grout line widths!!!!).
    And it doesn't help when you are also tied into school zones for the kids and public transit for work downtown.
    All I"m saying, I've loved reading about your experience and your decision making and really look forward to more posts! :)

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  7. Ah, you don't know how much I appreciate hearing you say that! I'll admit, I've been a little hesitant about sharing too much of our musings about real estate. I mean, really... do people care?

    I can totally get how stressful your housing struggle must be. I mean, I find it kind of stressful, and we don't have any deadlines or kids to maneuver around! I'm sure you'll figure it out though - things always seem to have a way of falling into place.

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  8. I love your brainstorming! And yes - we've been kind of thinking of something along those lines, just... different. Hopefully, I'll have some news to reveal about that one of these days! Or, maybe I won't: at the moment, all those types of thoughts are just fleeting musings.

    Good luck with your decision! I'm sure you'll end up happy with whichever one you go with, but I definitely think it's true - the grass is always greener on the other side! We have the same thoughts, often, just opposite! Stay in the city in our teeny bungalow, or buy a house that's comparatively, a mansion in the country, but give up our incomes? Aaah... so confusing!

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  9. Ouch! :(

    Seriously, your situation sucks. so. much. I am so glad you are out of that place! Safety is such an important consideration in real estate. You're right - it's never a good idea to buy a house in an area you don't actually want to - can't! - live.

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  10. Thanks!

    We walked past your building last night! It's up to 7 storeys! Every time I walk past, I think of you - that waiting must absolutely suck! :( Sigh... trying to figure out the whole real estate thing... so confusing!

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  11. Ack we just accepted an offer on our house so we need to find our next place... So many options even within our little suburban area... Do we want to spend more and do less work? Do we want to spend more and get more potential (but need to save for renovations)? Do we want to spend less and get a small finished house? Do we want to spend less and spend a ton more of renovating the whole thing? That plus the lowest inventory the Boston area has had in a while are not working in our favor... Our goal is to see as many homes as possible this weekend!

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  12. I've been following along with these posts and I feel for you. We bought our house as an investment - something we could live in for a few years and fix up so that we could hopefully sell it and make enough money to invest in a longer-term house. Sometimes I'm tempted to think that we could make a longer go of it here, but other days I'm convinced we need more space and I'm more and more drawn to the idea of building our next place. All that to say that I think we all struggle with what is the right decision, the best decision - based on a future that we can't really predict. Thank you for sharing your story!

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