Submitted by Slow-Suspect-8460 t3_11dbv81 in personalfinance

Hello, I live in Seattle and am 28. I have a goal to buy a condo by 30, which after April will be a year from now. I saved like a total of 90k for a down payment and hoping to get to 110k to buy a condo at 300-350k with a hoa fee under 500/month.

Getting closer to the time I actually should buy I wonder if buying a condo a smart is a investment or should I stick to renting and put my money in a better investment plan?

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bulldg4life t1_ja7orjp wrote

What’s the rest of the financial picture look like? Retirement saving, e fund, etc.

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WastinTimeTil5 t1_ja7ozri wrote

Seems like a reasonable goal and you are on your way to achieve it. I think the question you need to answer is if buying a condo is right for you. Do you plan to stay in Seattle? Will a condo still cover your needs 5 years down the road? Or would you rather save for a little longer and buy a single family home that you can stay in for 10+ years?

Also, how does the condo and HOA fees fit your budget? Are you lowering retirement savings for the monthly payment?

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Nagisan t1_ja7p5l6 wrote

Buying a home to live in isn't a great investment plan. If you can't sell it free and clear, and not have to spend money from that sale as a result (such as for rent or a new place to live), it's not really an investment...or at least not a great one. That ~$100k you have could be put into the market and earning a larger return on average than average home appreciation is. There's so many factors though...would the condo be cheaper (mortgage + HOA + maintenance, etc) in the near term than your rent would be? If not you have lost opportunity cost of what investing the money while renting could build up in that near term too.

If, on the other hand, the cost of housing is cheaper than renting in the near term, buying would probably be better. Additionally, consider that condo's appreciate slower than single family homes, so the average appreciation mentioned above will be even lower - which favors renting.

For my situation, buying has never the best financial choice for me...but if you're trying to start a family or need the extra yard and such to be happy, sometimes making the best financial choice isn't the most important thing.

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StoopitTrader t1_ja7ptvx wrote

In most cases, long term you will do better in the market than your return on a house / condo purchase. What this purchase does do is lock your housing costs in (somewhat) and get you to the point of owning your place. If you plan to only stay there a few years (under 5-7) it's not a great idea as the market could decline and you could end up selling at a loss. Buying and selling has a cost. If you do buy do your research well, either lean on someone local that really knows the area or use a buyer's agent that can tell you the best areas and where you would be best off buying. Real estate location matters and can affect the long term value greatly.

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oledawgnew t1_ja7q2hl wrote

It is a smart goal as long as the rest of your financial house is in order...primarily emergency fund and long-term investing for retirement. Both of those pots of money should be above and beyond condo savings.

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RemiMartin t1_ja7tm44 wrote

I did that, in hindsight I should have just gotten a townhome/sfh by saving for a bit longer.

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93195 t1_ja7xpqx wrote

Buying isn’t about age, it’s about need, income and finances.

Your down payment is already fine. Regarding need, you should be stable in the area, stable in your job, and anticipate owning this property at least 5 years. Regarding income, your monthly mortgage payment (including taxes, homeowners and HOA) should be under 28% of your gross (not net) monthly income.

If all that’s true, it doesn’t matter if you are 22 or 82.

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bingbangbio t1_ja7y33o wrote

Housing is not an investment for most people. Recent housing market has been loopy, but usually housing trails market returns and barely beats inflation.

If your goal is to invest in RE the math is different than if you simply intend to own your home. If your goal is to simply increase NW with minimal effort then the market is a much better option.

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dawntylr1 t1_ja81jpo wrote

My first home was a townhome. It was the right choice and perfect fit for me as a first time home owner. In my opinion, looking at what you get with the HOA is super important. I didn’t have a huge emergency fund, so the fact that the outside stuff, like the roof, wasn’t my responsibility, was a huge relief. Home maintenance can really add up. It was also great because the yard work was also part of the HOA, which saved me from having to invest in yard equipment. HOA dues can and will go up. Eventually mine went up so high it no longer made any sense for me to stay there, when looking at the cost of a SFH. I was there 7 years and by that time had fixed some stuff up and had significant equity that I was able to sell and purchase a nice SFH.

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delicious_points t1_ja88h5o wrote

On the other hand, you get really cheap leverage on your down payment, a 30 yr mortgage is a spectacular deal (lots of upside of rates go up, no downside if rates go down since you can refinance), and big govt subsidies (mortgages are subsidized plus multiple significant tax breaks for homeowner)

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