House and Home, Marriage, Personal Finance

Home without a House

The Shmoopy and I recently contemplated entering the complex and exhilarating world of house-ownership. After nearly seven years of renting a condo in our exciting suburb outside of Dallas, we thought we might like a little more space. We dream of a larger kitchen, one that will accommodate both of us at the same time and where Brandon can finally hone his culinary skills. We long for a second bathroom and for unshared walls so that he can play his primary instrument – drum set – without disturbing any neighbors. We yearn for a yard for that dream alpaca herd. Or just for a garden.

Nearly everyone we know has purchased their house. We are friends with exactly one other couple who we know for certain rents. For the most part, our friends and family have dutifully committed to the American Dream of house ownership, and it seems that the people who do rent are single or in some way transient. Something about our culture indicates that buying a house is a rite of passage into adulthood and something you must do (if at all possible) prior to bringing tiny humans into the world.

We originally held off on purchasing a house (and delayed the tiny humans) because Brandon has been in graduate school for the past 5+ years. We probably could have handled a mortgage payment because I have had a decent income, and he was fully funded during grad school (another topic for discussion another time…). Over the past seven years, several properties in our neighborhood and in our condo complex have popped up that I wished we could jump on. In particular, a three-bedroom condo came on the market about three years ago as a foreclosure, and it would have been a good real estate investment at the listed price. However, an academic’s life is uncertain. B-Seitz went to graduate school because he wanted to mold young minds. He received a scholarship and a stipend while in school. But, there was never any guarantee that he would find steady academic employment post-doctorate, and we had no clue where he would find an academic job if he found one at all. We fully expected that when Brandon graduated, we would be looking for an assistant professor position and would need to be open to moving anywhere a job came available. We decided that purchasing a house or a condo or town home as investment property with no long-term plan to stay in the Dallas area would have been a fool’s errand. We truly had no idea where we would end up. There was no way to predict that.

Today, happily, we know that we are staying in Dallas. B-Seitz secured a position with a small liberal arts college this past fall, and we are thrilled to be able to stay near our church, friends and family for the time-being. This spring, we began the conversation about purchasing a house, and that conversation was (finally!) based in reality.

Headily, we contacted a Realtor to help us. We set up an MLS search and began perusing properties (some lovely, some not so lovely). We contacted several lenders and got pre-approved for a mortgage. We even went out and looked at a few houses in specific neighborhoods we like. We heard and continue to hear the message that we should buy now to take advantage of historically low interest rates. Our specific area of Dallas stands to grow substantially over the next few years as several high-profile corporations bring thousands of jobs to the area. We are very well-qualified to purchase a house and have zero unsecured debt, so this seemed like reasonable thinking to us. At first.

Here is why we have decided (for the moment) to fore-go the purchase of a house. Please note that we are not saying that our decision is the right one for everybody, but I would encourage anyone and everyone to carefully evaluate such decisions. Much of the advice one hears about the advantages of buying also comes from people who stand to gain from purchases.

1. We do not actually need more space.

One of the reasons we contemplated buying a house right now is that we have reached that critical juncture in marriage at which many duets decide to become trios. We are not expecting a child, but we think we would like to grow our family within the next year or so. At first, we reasoned that it would be next to impossible – or at least highly undesirable – to care for a baby in our two-bedroom, one-bathroom, fully-equipped condo.

I’ll let the absurdity of that statement sink in for a moment. How would we possibly raise a child without a yard? There was much hand-wringing and gnashing of teeth. We took leave of our senses for a few days.

And then we took a giant step back from our emotions and from what American middle-class culture tells us about what child-rearing and family life should look like. We realized that if we got pregnant right now, the soonest our child would be even remotely close to independently mobile would be in approximately 18 months, give or take a few weeks depending on our child’s impending advanced genius. Would-be Tiny Human could not reasonably enjoy outdoor living space such as a yard for almost two whole years. Even at that point, said outdoor living space would be a luxury rather than a necessity. And luxurious amenities for humans who don’t even pull their own weight around here seems slightly ridiculous to us (<–sarcasm). We live in a relatively safe suburb of Dallas with abundant parks and several nature preserves nearby. We have access to limited green space right outside our front door and a local elementary school playground within half a mile. Private yards and spare bedrooms, we now realize, are luxuries. If luxuries is too strong a statement, they are at the very least preferences. They are not needs upon which survival depends.

Also, while children do require some stuff, we believe parents make choices about what tools to bring into their child-rearing process. Did you know babyhood is a $23 billion a year industry? Every time I head out (<–birthing joke) to purchase a gift for an expectant friend, I am shocked by the strange and interesting array of single-purpose gadgets that fill the aisles of our local big box stores. When the Big Shmoopy and I got married, we steered clear of single-purpose gadgets like avocado slicers and garlic presses in favor of high quality, multi-purpose tools such as stainless steel and cast iron cookware and high quality cutlery. We fully anticipate doing the same thing when preparing for a baby.

2. Cash is king.

Over the past several years while the Big Shmoopy has been in graduate school, we have worked to save in our emergency fund. We set and achieved a goal of saving enough to cover six months of expenses. Since we are now a solidly dual-income couple, we have been adding to our stash and contemplating what our next goal should be.

To purchase a house, we originally planned to take some of that cash and use it as a down payment. But then we started running some numbers. Using this online calculator, we figured out the true cost of a house financed over 30 years with PMI, taxes and insurance. And OUCH. Right now, we do not have enough in savings to keep 3-6 months of expenses liquid AND to pay 20 percent down on a mortgage AND make an extra payment on the principal each month in order to save tens of thousands on our ultimate true home price. In order for us to buy a house now, we would need completely empty our savings or throw away more than $100 a month on private mortgage insurance. Unlike taxes – which in theory go towards things like local and state infrastructure from which we do benefit – PMI is money we would truly never see again. One could argue that funds paid toward property taxes could also be viewed as money you’ll never see again, but taxes are also inevitable. I know some would reason that paying rent is just as much a throw-away as PMI. However, in our estimation, at least for the time being, there will be a cost associated with living anywhere. We also have a unique rental situation which I’ll address below.

We have chosen to let the current low interest rates pass us by knowing that cash is king. When we actually need to buy a house (i.e. our family has reached its tolerable capacity in its current space), we plan to have enough saved for a down payment so that our monthly payment will not overly stretch our budget and we will not throw money away on PMI. Who knows? By that point, our goals may have completely changed. It’s completely possible that by the time we reach our initial down payment, savings and investment nest egg goals, we won’t want to buy a traditional house at all. It’s entirely possible that we might want to buy a few acres in the country and build a tiny house. The possibilities are endless!

3. Reasonable rent. No deadlines.

Here is our special rental circumstance. We rent from a family member who owns the condo free and clear. We pay reasonable rent and are not locked into a lease. As such, there is no looming date on the calendar when we need to consider moving out. We don’t face an annual deadline when we have to decide whether we want to sign another yearlong lease, which also takes the pressure off of us to buy a house. If I had to guess, I would estimate we would have paid 40 percent more in rent over the past six years had we rented from a traditional apartment complex not to mention the fact that we would have been locked into a yearly lease. We fully recognize that this living situation is an incredible privilege that not everyone can access, and we do not take that lightly.

To be good stewards of our family member’s property and generosity in renting it to us at such a reasonable cost, we do some handy work around the house when needed. For example, the kitchen faucet recently cracked. Our family member paid for the faucet, but we took care of the labor. This saved the cost of a plumber, which could potentially have been more than $150. Another example: last year, we scraped all the wallpaper off the bathroom walls, re-textured, repainted and hung new all new fixtures. The work badly needed to be done, and it was something we could do to help increase the value of the property for our family member. As a bonus, the freshly painted bathroom is a vast improvement over the old painted wallpaper and weird built-in light fixture. Sure, we were improving someone else’s property. Technically. But, we also got to choose the color we wanted, purchase the fixtures we wanted and generally have a more pleasant place to live for not much money. And we learned valuable skills for improving future Shmoopy abodes. Our next project will be to scrape the popcorn off the bathroom ceiling. Doesn’t that sounds like a good time?

4. Fear and loathing in Shmoopy Land.

Ultimately, our decision to not buy a house at this moment in American history came right down to fear. We are not afraid to buy a house. But we WERE afraid that if we didn’t buy right now yes please, we would be left behind by all these excellent mortgage rates and get priced right out of some future housing market. Everywhere we turned, we felt bombarded with the dire consequences of failing to lock in a mortgage today.

“Home-prices are only going to rise, and you need to get into the market now while you still can!”

“Renting is for fools, and you don’t want to be a fool, do you?!”

We like to joke that we both have acute cases of paralysis by analysis. It comes and goes, but the gist is that when faced with significant or potentially life-altering decisions, we freeze. We analyze and process from every angle. It takes a very long time for us to make decisions. Big Shmoopy’s paralysis by analysis is more pronounced than mine and spills into smaller decisions which I find too tedious for such shenanigans. But, generally, we face most major life choices – especially purchases – with this level of intentionality.

It is not such a bad thing.

When it came to our potential house-buying decision, we realized we were potentially biting off much more than we could chew. We stood to increase our monthly housing cost by almost 50 percent (by the time we added taxes, insurance and PMI), and we knew that with a Baby Shmoopy potentially joining us in the next year or so, the last thing we wanted was to be bogged down by an emotionally charged expensive choice we made with much less information and data than we will have at that point.

Basically, we were considering buying a house because we were afraid we wouldn’t be able to do so because of hypothetical future economic situations which no one – not Realtors, not lenders and not investment bankers – can realistically predict.

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