We Bought A House
In my first year at StartupVille, I was smacked, unexpectedly, with a 15 mile commute that took about 35 minutes each way. A few times a week, due to a traffic accident or construction, this would turn into an hour or more, making the total amount of work-related time spent in my car about seven hours a week.
Also, my girlfriend and I were living in a 700 sq. foot apartment together, and felt a little constrained by space.
The solution for both of these problems seemed to be to buy a house together, which we did in early 2008.
You’re probably aware that there was a big housing market boom between 2000 and 2006. By 2007, the market had slowed down, with many areas losing value. Although this was good news for us and anyone else looking to buy, we didn’t make the decision to own a home for financial gain. In fact, many experts were still predicting that homes would continue to fall in price, i.e. the floor in real estate had not yet been reached. (Turns out, they were right.)
We targeted smaller, well maintained homes in a very specific location — one which offered an improved commute to my current job with StartupVille, but perhaps more importantly was situated in a place that made it easy to travel to multiple job hubs. I live in Massachusetts and the prime technology parks are along I-95, in the Cambridge area, downtown Boston, and west of Boston in suburban towns Natick and Framingham.
I figured: I’ve had three jobs, and every single one of them — three out of three, for Cthulu’s sake, has moved. SoftwareCompany went to Denver. FinancialCompany’s IT department shifted from Boston to the sticks. And now StartupVille’s offices have relocated, too. It’s only a matter of time before I either get moved again, or have to find employment with another company, and I want to be in a place that’s commutable to other locations.
Unfortunately, the area equidistant to these employment hubs and close to StartupVille was insanely expensive, but we pushed forward anyways, figuring that a) houses in desirable areas are more likely to retain value through slumps, b) we’re not going to get a huge place anyways, which will keep the cost down a bit, and c) the freedom and flexibility in terms of being able to work for employers in multiple areas without a backbreaking commute was worth it.
Put simply, I’d realized that most people in my age group were switching jobs every 3-4 years and so I figured: I’ve got at least a few more GenericCompanies to work for before I hit the end of my FI journey. Better be ready for the switch when it comes.
So we did it. In early 2008, with the US housing market coming down and the stock markets showing the initial phases of weakness following the run-up of the previous few years, we bought a 3BR 1500 sq. ft place for 650K. (Yes, I know, this is a ridiculous amount of money for a so-called frugal person to spend on a house.)
As expected, living in the target area did wonders for our commute. My girlfriend in particular was thrilled about the change. Prior to the move it was taking her about an hour and a half to get into Boston. She’d share the 30 minutes in the car with me from our apartment to StartupVille, and then transfer to public transit to get the rest of the way into the city. Reverse the process to get home, and you have one very long day, resulting in one very irritable SO.
In the new place, I was able to drop her off in just two minutes — there was a commuter rail station less than a mile away from our home. Plus, the trip itself was shorter. She instantly got about an hour and fifteen minutes of her life back every day.
On my end, I was able to cruise up to StartupVille in under fifteen minutes each way. Also, I had suddenly reversed direction on the highway, going north instead of south, and there were fewer cars moving in my direction. This made the flow of traffic more predictable: there was less start-and-stop jerkiness and the frequency of backups and accidents encountered went down from an average of three to a little over one per week.
Total hours commuting reduced from over seven to under three. It was a day of victory for sanity.
I’ll cut right to the chase.
From a strictly financial perspective, buying a home was not a good decision over renting. If we’d managed to get a place in the 400K range, it could have been closer to a wash, but not at our 650K price point.
But it was difficult to find a home that met our criteria in our target area for under 650. Originally we started looking in the 500K range but this line crept up as we searched. We wanted the extra bedroom in case we had children. We wanted to live on a street without yellow lines, if possible, because bypassing traffic would be slower and safer. And we justified the price creep because the last thing we wanted to do was buy a place, pop two or three kids out, and feel like we already had to move again, just three or four years down the line. (At the time, we thought kids were likely in our future.)
As it turned out, we don’t have children and we’ve spent quite a bit of money on space we don’t use.
Additionally, we spent significant amounts on improvements — about 60K over the seven years we’ve owned the house. Most of the updates are justifiable — replacement windows and doors, insulation and attic sealing, removal of through-the-wall AC units, a new roof, a new heating system (the old oil boiler was 40 years old and ready to die), new kitchen appliances (the original microwave and stove died on us in year 5), and so on. We didn’t do anything completely impractical like build an amusement park in our backyard, but still, the costs added up.
Our home is valued around 750K at this point so we’ll make some of our money back when we sell, but in the end we’ll take a net loss of perhaps 30-40K.
I have mixed feelings about the experience of home ownership. There are times when the additional space was valuable (example: hosting events such as Thanksgiving and Christmas) but most of the time, having that additional square footage registered in my brain as being shockingly wasteful.
Another unexpected benefit of owning is that I’ve had an opportunity to learn a wide range of DIY skills — simple plumbing and electrical, painting, tile and toilet and vanity installation, landscaping, gutter cleaning, and so on. There are only a few things I won’t do — attic insulation and air sealing come to mind here.
I’m not saying I regret buying the house. We’ve been here for a decent chunk of time, interest rates have been low which keep our monthly payments down, and there are lots of good memories here.
But memories can be created anywhere.
If you’re considering a home purchase yourself, I strongly recommend you read jlcollinsnh’s blog post on Why Your House Is a Terrible Investment.