First-time homebuying advice?

[Sarah_Rose]

Hi! There have been a number of house-buying questions posted lately and there seems to be some fantastic advice on this board - I'm hoping you can help us out with our dilemma...

DH and I put an offer in on a new house yesterday. We are first-time home buyers and I am due in August with our first baby. We are currently renting a one-bedroom apartment that is just outside (within easy walking distance) of downtown Seattle. The cost of living is pretty high in Seattle, and we currently pay $1450 rent, including one parking space, a storage unit (for snow tires and camping gear), and pet rent for our two large dogs. We have looked around and the only place that we could rent that suits our needs (allows large dogs, 2 bedroom, near public transit, ground floor so I can take the dogs out without having to disturb the baby, available for April) was $1357. One place. In the entire city. And we didn't love it.

Based on DH's income only (because I plan to stay at home with our child) we were pre-qualified for up to $400 000, but are obviously not comfortable spending this much on our first house; we wanted to keep it under $300 000, and ideally under $250 000. This is a lot of money in a lot of parts of the US, but not in Seattle. We have toured many older houses in established (and not nice established!) neighborhoods and $300 000 buys you a 900-square foot, 100 year old, short sale or foreclosed fixer upper that needs a new roof and work on the foundation to be livable.

The house that we put an offer in on is $240 000, brand new, but a good ways out of the city.

The good points: The house is 3 bedrooms/2.5 baths, so a fantastic size for us. We are getting $25 000 worth of upgrades (including granite counters, all appliances, hardwood cupboards, tile floors in the bathrooms, hardwood floor in the kitchen, a fenced in yard, and landscaping) for free because the people who built the house pulled out of the deal on Saturday, and the developer listed the house for base price to try to move it quickly. The neighborhood is very family friendly with lots of green space, including a park at the end of the street that "our" house is on. The house is 2 miles from a train station with a train that runs into downtown Seattle - my husband gets a transit pass as one of his perks from his job and this transit pass would cover him taking the train to and from work. If we sign the contract, we would have a closing date of May 16th, which means that we'd only have to extend our lease on our apartment by one month.

The bad points: the subdivision is really in the middle of nowhere. It is surrounded by farmer's fields. It is also the last part of this area to be built on because it is in a flood plain. The land has been built up to take it above the flood zone (and there was a bad flood last year, and the land around the subdivision flooded, but none of the subdivision or the roads to get to/from did) and flood insurance is not required for the subdivision. However, we're wondering if the flood plain will prevent further development in the area, so it will always be in the middle of nowhere. The nearest elementary school is 4 miles away; this, of course, could change by the time our little one is school-aged. The house has a yard, but it is a small side yard that is about big enough for a bbq on the stone patio, and to let the dogs out to pee, and nothing else.

So, what do you think? Would you risk it? The house itself is very nice, and we think the subdivision would be a nice place to raise a young family, but we're worried about the long-term prospects of such a place. It's a long ways away from downtown, and we're wondering if the area will ever be developed with schools, etc. within walking distance. Also, a house in a flood plain scares me a bit, despite the proven fact that the subdivision is high enough to weather a bad flood. And, because the house is brand new with many upgrades, there is no money that we could put into the house to raise its value. We would have to rely on the area and the market to add value to our house. Is this a terrible investment for a first house? Should we rent for another year to save more money, to buy a house in a more established neighborhood?

Sorry this was so long! What do you think? BTW, we have excellent credit, and our only debt is our loan on our 2010 Prius (yes, a guilty pleasure!).

 

[msmayor]

First piece of advice? Never get emotional over a house.

You've raised some very valid questions (especially the flood-plain issues) and you would be well-advised to do your homework on these issues BEFORE you go to contract.

Buying a home is one of the biggest expenditures a person will make in their lives. It is one that requires homework before signing on the dotted line, to make sure that the house, the location and the deal are really right.

 

[Sarah_Rose]

First piece of advice? Never get emotional over a house.

You've raised some very valid questions (especially the flood-plain issues) and you would be well-advised to do your homework on these issues BEFORE you go to contract.

I entirely agree. Can you suggest some avenues of research for this issue? The subdivision is only 2 years old, so there's no proven evidence of change in home values in the area. Overall, Seattle real estate is going up; property in the first-developed north end of the city is most valuable. Because it is so expensive to move in there, and so desirable, development is now tracking south, which is where this house is. So overall, the area south of Seattle is expanding, but I'm not sure there is anyway to know definitively whether this particular subdivision (and amenities surrounding it) will expand.

Any ideas on what to look into?

 

[minnie1928]

I recently helped friends relocate to Seattle (Issaquah/Bellevue area, to be specific). I'm just curious where you are looking at? How are the schools rated in this area? That could be a big determinant in how your property values go in the future. If it's a good school, that should help prices. Bad schools, probably not so much.

I've also noticed that many of the homes (newer ones) have tiny yards...is there a park nearby?

 

[Tnkrbelle565]

Is it common in that area for people to live within walking distance of schools? 4 miles seems close to me (and I live in the suburbs of Boston!) I would primarily look into the school systems in the area. If the schools are decent...I would be more willing to sign.

It sounds like this house won't be your "forever" home so you have to decide how long you would want to stay there. If you want to move in the next 5 years or something...it probably isn't a good choice because the economy probably won't turn around fast enough by then to make it worth it.

Is there any way for you to talk to some of the other people in the sub-division and get their impressions???

 

[Sarah_Rose]

I recently helped friends relocate to Seattle (Issaquah/Bellevue area, to be specific). I'm just curious where you are looking at? How are the schools rated in this area? That could be a big determinant in how your property values go in the future. If it's a good school, that should help prices. Bad schools, probably not so much.

I've also noticed that many of the homes (newer ones) have tiny yards...is there a park nearby?

The house we put the offer in for is actually in Kent, but it is "zoned" as being Auburn, so we would be in the Auburn School District, which is decidedly middle of the road. The current catchment schools (and this could obviously change quickly with all of the new development in the area!) are ranked just about in the mid range for the state. So nothing spectacular and nothing particularly bad.

And the yard is definitely tiny. The fenced area is about 50 ft x 10 ft - I'm not sure why they even bother fencing the yards, but it's the norm for the neighborhood and we're getting the fence for free, so we're not complaining. The area does have many park areas - actually, the street the house is on is designated a "linear park" (which I've never heard of before!) but it includes an extra approximately 10 ft between the road and the sidewalk on both sides of the street, which is landscaped and upkept by the subdivision. It means that your front yard is actually quite a bit bigger than your own property, and kids riding bikes or playing on the side walk have a wide green buffer between them and traffic on the (relatively quiet) street. There is also a large park at the end of the street, which is on city park land (with subdivision "improvements") and includes a footbridge across the nearby river to a jogging/biking path that runs a long way (as in 20+ miles) down the river.

 

[sanibelover]

As a former Realtor, the best advice I can give you is the location is EVERYTHING!!! If you plan on staying in the house for a long time, then it won't matter as much, but you will probably sell in 5 - 7 years (or at least you will want to since it is your first home), so it is very important to buy in the most desirable area that you can afford. Obviously, the house has to fit your needs, but it is better to sacrifice some of your "wants" for a better location. The best thing you can do is to purchase the least house in the most neighborhood and not over improve whatever you do buy. First time home-buying is difficult, you almost always have to settle. Just make sure that the decision you make is forward thinking - not so much about what you want at the moment. ie Buy less house on a better street vs. more house on a main road.

 

[PA Princess]

You have been given sound real estate advice, but I am going to offer advice in another area.

Changing to a full time mom is an adjustment. I did it with my first. Consider how you will feel being in that house for hours and hours a day with a baby. Are there other moms around? You describe the location as remote, so having people in the neighborhood you can connect with will be invaluable.

Also, since you will spend far more time in the house, having one in good shape like a new house I consider a real plus.

These are not monetary things per se, but both can play a huge part in making that adjustment from full time work to full time mom.

 

[minnie1928]

You have been given sound real estate advice, but I am going to offer advice in another area.

Changing to a full time mom is an adjustment. I did it with my first. Consider how you will feel being in that house for hours and hours a day with a baby. Are there other moms around? You describe the location as remote, so having people in the neighborhood you can connect with will be invaluable.

Also, since you will spend far more time in the house, having one in good shape like a new house I consider a real plus.

These are not monetary things per se, but both can play a huge part in making that adjustment from full time work to full time mom.

I agree completely. We had our son about 1.5 years after buying our first house. The home was in an established neighborhood. There were no kids even remotely near his age (I saw lots in high school) and I felt very isolated & alone during the day. I stayed home with him for about 7-8 months and decided I needed to go back to work. If I were in a different neighborhood with other moms nearby...it might have worked out differently.

FWIW, I would lean towards something in a better school district. You may be utilizing the school system down the road...are you ok with that? And again, I think the school system will play into how well your home appreciates/maintains it's value.

 

[msmayor]

I entirely agree. Can you suggest some avenues of research for this issue? The subdivision is only 2 years old, so there's no proven evidence of change in home values in the area. Overall, Seattle real estate is going up; property in the first-developed north end of the city is most valuable. Because it is so expensive to move in there, and so desirable, development is now tracking south, which is where this house is. So overall, the area south of Seattle is expanding, but I'm not sure there is anyway to know definitively whether this particular subdivision (and amenities surrounding it) will expand.

Any ideas on what to look into?

Go directly to the town government offices. Speak to the Building Codes folks. Find out about what can and cannot be built in that flood plain area. (side story: acquaintances bought a beautiful home on a large lot along the edge of our development, with the intention of putting in an in-ground pool. They found out AFTERWARD that their property bordered too close to wetlands, rendering nearly all of their backyard "un-improvable"...meaning no in-ground pool)

Find out if there are any easements on the property for utilities or other items. Find out what the land surrounding the development is zoned for (you don't want to find out some big mega-mall can legally be built right next to your development, possibly lowering your property value). Know what can and cannot be built around you.

Ask to see what construction, if anything, is already permitted in the area around your development that hasn't been built yet. That can give you an indication of what to expect in the future. (side story: acquaintances bought a beautiful home on a large lot along the edge of our development, with the intention of putting in an in-ground pool. They found out AFTERWARD that their property bordered too close to wetlands, rendering nearly all of their backyard "un-improvable"...meaning no in-ground pool)

 

[kacaju]

FEMA changes their floodplain map every few years so even though you are not in a floodplain righ tnow, in a few years if they re-zone it you may be in one.
I live in *HIGH FLOOD* zone according to FEMA, never mind the fact I do not live anywhere NEAR a large body of water that would flood us out. We do live near a swamp so that is why it pushes us in it. We were put into the high risk after we refianced so we do not pay flood insurance, yet our neighbors tried to refianced and got stuck paying flood insurance at a tune of an extra $100 a month!!
I would be very leary on moving into a place surounded by a flood plain

 

[Blue.Fairy2]

our first house was a foreclosure 1500 square foot older home fixer upper would not trade that for a brand new house. We lived in it for 10 years and sold it for way over what we paid. It was in the most desirable part of our city so location IS everything. 5 minutes from downtown and the revitalized riverfront area.

We paid $16,500 and sold it for $75,000. Wish we had kept it 2 more years the next couple did nothing to it and sold it 2 years later for almost $200,000.

 

[ohlas]

FEMA changes their floodplain map every few years so even though you are not in a floodplain righ tnow, in a few years if they re-zone it you may be in one.
I live in *HIGH FLOOD* zone according to FEMA, never mind the fact I do not live anywhere NEAR a large body of water that would flood us out. We do live near a swamp so that is why it pushes us in it. We were put into the high risk after we refianced so we do not pay flood insurance, yet our neighbors tried to refianced and got stuck paying flood insurance at a tune of an extra $100 a month!!
I would be very leary on moving into a place surounded by a flood plain

you are so right about the
FEMA flood map what are they board in that government office....

Im so above sea level its not funny, but across the street is a floor zone, we had a 100 year flood and i was the only house on the block not flood out my down stairs,,

If this is your first baby you might want to think about staying in the city you can walk the baby around places and you will not really need to move till the baby is around 1 year old.. plus how much longer will it take your hubby to get home??????

I would stay in the city. get a two bedroom if you want more space,, more then likely if you brest feed and stay home your baby will sleep near or with you for while

ps you have nesting desires when your prego

 

[Sarah_Rose]

Thanks for the advice, everyone! I'm still so torn about it all.

Buying within the city is simply NOT an option for us, at the moment. We would pay $300 000 (the maximum we can possibly afford) for a foreclosure on a busy street in an established but not particularly desirable neighborhood. And the house would require at least $30 000 to get it comfortably livable, which we just would not have. We've looked at dozens of houses in person, and online MLS searches show that there are a very small number of houses in our price range that don't need to be knocked down, or aren't in a major crime area. Seattle is simply an expensive city to live in and prices are going up.

Renting is, of course, an option. However, we have two large (90 lbs) dogs. That greatly limits our options right there. Many apartments are dog friendly, but few houses or townhouses are. And I am not willing to compromise on the ground floor location - we are currently on the 4th floor of our apartment building and taking the dogs out is a big production, requiring shoes, coat, keys, leashes, bags, and at least 10 minutes. If I'm home all day with a baby, is it really going to be feasible to do this 4-6 times a day? If the baby is fussing but the dogs need to pee, do I just leave the baby alone for 10 minutes to take the dogs out? Uh uh. It just is not happening. I have found exactly one location that meets our needs (and is available when our current lease ends next month) and is within the city of Seattle. It is not a walkable location (no stores or amenities within walking distance) and would still be a 45-60 minute commute by bus for my husband, despite the more central location. There are other options located outside the city of Seattle, but they'd have the exact same drawbacks as buying a more remote house - except for the fact that we'd be leasing, not buying.

So I feel like I'm kind of stuck, you know? I have three non-ideal options, and am just trying to decide which one is the least non-ideal. No where that we can afford to buy or rent will give us a quick commute, a great neighborhood, or a livable house. At least with the rental option we could try again next year (or the year after that, etc.) after saving more money. But the way that housing values are going up in Seattle, I wonder if we'd ever hit the point where we could buy something we were comfortable with.

I'm leaning towards buying the house. Worse comes to worse, the house is not going to LOSE value over the next 5 years (housing in Seattle has not been hit like it has in other parts of the country, at least at this level. Of course, the $900 000 townhouses next door to our apartment? They're not going anywhere. And yes I did say $900 000... for a townhouse. On a busy street.) and should at least keep up with inflation. So even if we don't sell the house at a significant profit when we do sell it, we've at least put some money into equity instead of throwing it at rent.

We heard back from the developer today and our offer has been accepted, including them paying ALL closing costs. Our only up-front cost would be our down payment, as the house needs no work and comes with all major appliances, landscaping, and a fence, and that is very attractive right now.

I'm still so confused. I know location is everything, but what do you do when all of the "desirable" locations (even tiny houses that are falling down and bank-owned, or one bedroom condos) are all priced at well over half a million? In our area, $300 000 buys a studio condo. This is just not an option for us right now.

 

[MG3G]

I would go for the house
If it is a new neighborhood that usually means that new young families will live there. Generally the schools, services, stores will follow. Think of it this way - your are a settler in the wilds of suburbia. No rec center? Make friends with the other mom's and host play time at each others houses. No shopping? Online stores deliver A new house with no worries is going to be a great place to raise a young family!!! 4 miles to school - kids LOVE riding on buses. Much better then a crime ridden busy street or throwing money away to rent. Small yard does suck but at least you don't have to mow- and you have lots of green space and a park on your street that is a huge selling feature! Make sure the flood plane issue is ok and then go for it - Deals such as this with so many upgrades are rare and when the economy picks up you will be laughing!

 

[msmayor]

"Worse comes to worse, the house is not going to LOSE value over the next 5 years"

Don't be so sure about that....real estate is a tricky thing, and one of the reasons this country got in so much economic trouble is because people thought their houses wouldn't lose value. You buy a house because its where you want to LIVE, not because its going to make more money for you.

Hearing you say you remain "confused" at the point when the builder has already accepted your offer is not a good sign. I wish you luck; I think you'll need it.

 

[Sarah_Rose]

"Worse comes to worse, the house is not going to LOSE value over the next 5 years"

Don't be so sure about that....real estate is a tricky thing, and one of the reasons this country got in so much economic trouble is because people thought their houses wouldn't lose value. You buy a house because its where you want to LIVE, not because its going to make more money for you.

Hearing you say you remain "confused" at the point when the builder has already accepted your offer is not a good sign. I wish you luck; I think you'll need it.

I think you're entirely misunderstanding my point.

My question is really: is buying a house that is a great deal (with the free upgrades, lack of closing costs, etc.), that I like, that I like the neighborhood that it is in, and that I can live with the non-ideal location of, but will likely not be a great financial investment, such a bad thing? It's been drilled into my head that your first home should be something that you make a profit on so that you can move up later. This house would not do that. However, it is a house that I am very comfortable buying right now (both in a financial and practical sense), and that I will be very comfortable living in for the foreseeable future.

You actually have answered my question though, with this post. We're going to buy the house.

 

[msmayor]

I've never subscribed to the idea that your first house should be an investment to allow you to make money and move up later. I've always viewed a house as a place you love and where you want to live.

It came from a time when we were very young. We decided to jump on an opportunity for a brand new house in what was supposed to be a growing area. There wasn't a lot of shopping or services in the area, but everyone said "Wait...in a few years this place will be a wonderful town area with everything you'll need close by." We thought it would be just the stepping stone we needed...live here for a few years, watch the value go up and then get a bigger place closer to DH's office.

There were some delays by the builder, and it was taking too long, so we exercised our option to cancel without penalty six months after signing the contracts. Today, 25 years later, we are so glad we did. The area never developed as they said it would and the purchase would have been a huge mistake.

As long as you're happy with the house and the area enough to remain for more years than you'd planned, then its a good value. Good luck.

 

[rbork]

There is a thing call "buyer's remorse". Sounds like you have alittle considering you already put in your offer at the time of the original post. And now that it has been accepted you are going forth. I've been there, trying to convince myself that I made the right decision. (Been through 8 real estate transactions) I've learned not to buy on emotion. That cost us alot of money once. Bought a brand new house in a rotton location. Put it up for sale 6 mos later. Indeed location and environment are huge. Doing your homework pays off in the end.
GOod Luck and Do What's right for you.

 

[Sarah_Rose]

When I really thought about it, the idea of being on the same street as a large park with a children's playground and basketball courts, and having a relatively young population with many children my own (future) child's age are really huge positives to me. Also, and this is HUGE, the proximity to a long, safe, jogging trail is just a dream come true. My husband and I both run marathons and being close to a good running trail was on our "desires" list but we never thought we'd get it in our price range.

My husband also hates to commute by car, but doesn't mind public transit. He likes the idea of having a nice quiet extra hour on the train each day to read a book or listen to music. The train also has free wifi on it, so he could catch up on his work emails in the morning on his way into work, as some of his coworkers who take the train from that area do.

I think it's a good fit, and an incredibly nice house. I was just stewing over the financial aspects. But you're entirely right, you can't buy a house to live in only looking at the "investment" value of the area. There's just too much unknown involved (especially with today's economy) and I needed to remember that I actually need to LIVE in that house.... which is especially important when I'm about to become a stay at home mom.