What would you do - housing?

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GotNoWisdom
Posts: 16
Joined: Thu Aug 13, 2020 3:26 pm

What would you do - housing?

Post by GotNoWisdom »

Looking for some sage BH guidance on housing situation. The housing market is ridiculously hot in our location.

Breakdown:

38, Married, 4 kids (6/3/1/1), living in a HCOL 3 bed/2 bath. Kids doing fine sharing bedrooms but not a lot of space outside of that (our kitchen/living room doubles as dining, playroom, etc). So we are looking for more space, but it's expensive.
Wife is a SAHM. No nanny, etc., she does it all.

I am an ER physician and although my job is better than most ER jobs, the job market is on the decline. I've taken about 20% per-patient paycut over the last couple of years and have made up for that by seeing 20% more patients (more shifts etc.) to stay even. I make about $325k per year all-in which includes two side gig/part time roles that I have added in. My comp a few years ago was about $360k with less hours/work.

Current house - owe 330K, 320K equity
Current finances
401k - 300K
Cash - 180K
Taxable - 1 million
Roth - 100K
Loans - Student loans paid off, owe 10K on a Toyota at 0.9%
529 1 - 38k
529 2 - 18k
529 3 - 0
529 4 - 0

We currently live in an area with suboptimal public schools. There is a nearby reasonably priced private school which our 6 year old attends which runs $11k per year per kid, 4th is free, so looking at $33k/yr.

Options:

4 or 5 bed house in current area: $1.2-1.6 million (recently redone 3 BR/2BA two houses down from us went for 1.1 mil last month)
4 or 5 bed house in area where we could switch to public schools $2.2-2.5 million
Stay put: Free, except cost of sanity
Move: Would require new job (job switch prospects are poor in my field... I know as several physicians left our group after the successive pay cuts and they all tried to come back after 6-9 months and have now been left much worse off, or doing locums work for equal or less than what they were making.. a move would mean we would have to move to another city, but could find an area where we could find more affordable housing and go with public schools)..
Redo current house: Would have to move out for 9-12 months, add a second story on. Cost would involve renting for that year and I'd estimate the reno cost at 350K.

The good news is we have done a great job of saving thus far. However I am suffering from severe sticker shock at the potential cost of housing. Any wise BH thoughts?
Tingting1013
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Joined: Mon Aug 24, 2020 5:44 pm

Re: What would you do - housing?

Post by Tingting1013 »

The renovation route seems like the clear option.

Budget $500k all in for rental and construction overage.

End up with a house appraised at $1.5M
awval999
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Joined: Fri Apr 08, 2011 10:17 pm

Re: What would you do - housing?

Post by awval999 »

Would you consider moving?
You have a big family and a SAHM.
You can live like a King out here in the Midwest with a 5 bedroom new built house and make the same salary.
ThankYouJack
Posts: 5704
Joined: Wed Oct 08, 2014 7:27 pm

Re: What would you do - housing?

Post by ThankYouJack »

Are you saying your home is worth about $650k, but your neighbors sold for nearly double that? How much would a similar renovation set you back?

I would first talk to a realtor to get comps on your house. Tough to say since we don't know where the area is, but if you can get a 4 or 5 bed for about $300k more I would be in favor of doing that.

I would also consider renting if you're up in the air about staying long term - https://www.nytimes.com/interactive/201 ... lator.html
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cchrissyy
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Location: SF bay area

Re: What would you do - housing?

Post by cchrissyy »

I have 3 teens and we've never had or needed that 4th bedroom or more than 2k sqft.

So I think your home size pressure is either the layout or it's actually the stress of 2 babies/toddlers

Therefore, maybe wait it out, maybe move to a better floorplan - not something huge, just something better laid out. But no way would I take on the stress of a remodel/addition for the next year when you just had twins and quarantine and nobody wants the stress of construction mouse and a temporary move to a rental. The logistics and stress sound like too much if you are going into that already burned out.
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geerhardusvos
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Joined: Wed Oct 23, 2019 10:20 pm
Location: heavenlies

Re: What would you do - housing?

Post by geerhardusvos »

GotNoWisdom wrote: Sun Apr 11, 2021 7:20 pm Looking for some sage BH guidance on housing situation. The housing market is ridiculously hot in our location.

Breakdown:

38, Married, 4 kids (6/3/1/1), living in a HCOL 3 bed/2 bath. Kids doing fine sharing bedrooms but not a lot of space outside of that (our kitchen/living room doubles as dining, playroom, etc). So we are looking for more space, but it's expensive.
Wife is a SAHM. No nanny, etc., she does it all.

I am an ER physician and although my job is better than most ER jobs, the job market is on the decline. I've taken about 20% per-patient paycut over the last couple of years and have made up for that by seeing 20% more patients (more shifts etc.) to stay even. I make about $325k per year all-in which includes two side gig/part time roles that I have added in. My comp a few years ago was about $360k with less hours/work.

Current house - owe 330K, 320K equity
Current finances
401k - 300K
Cash - 180K
Taxable - 1 million
Roth - 100K
Loans - Student loans paid off, owe 10K on a Toyota at 0.9%
529 1 - 38k
529 2 - 18k
529 3 - 0
529 4 - 0

We currently live in an area with suboptimal public schools. There is a nearby reasonably priced private school which our 6 year old attends which runs $11k per year per kid, 4th is free, so looking at $33k/yr.

Options:

4 or 5 bed house in current area: $1.2-1.6 million (recently redone 3 BR/2BA two houses down from us went for 1.1 mil last month)
4 or 5 bed house in area where we could switch to public schools $2.2-2.5 million
Stay put: Free, except cost of sanity
Move: Would require new job (job switch prospects are poor in my field... I know as several physicians left our group after the successive pay cuts and they all tried to come back after 6-9 months and have now been left much worse off, or doing locums work for equal or less than what they were making.. a move would mean we would have to move to another city, but could find an area where we could find more affordable housing and go with public schools)..
Redo current house: Would have to move out for 9-12 months, add a second story on. Cost would involve renting for that year and I'd estimate the reno cost at 350K.

The good news is we have done a great job of saving thus far. However I am suffering from severe sticker shock at the potential cost of housing. Any wise BH thoughts?
Staying in your current house is the best financial decision. Buying in a lower cost of living area is great too if you can be employed there. I wouldn’t buy a house in a high cost of living area right now.

When considering house buying: Check this out for starters
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sport
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Re: What would you do - housing?

Post by sport »

awval999 wrote: Sun Apr 11, 2021 7:41 pm Would you consider moving?
You have a big family and a SAHM.
You can live like a King out here in the Midwest with a 5 bedroom new built house and make the same salary.
+1 In my area I would expect ER physicians to make about the same amount. However, you can get a nice 4 bedroom house in a suburb with excellent schools for about $400K. You could pay cash for such a house and not have mortgage payments in your budget.
il0kin
Posts: 465
Joined: Mon Feb 26, 2018 7:19 pm

Re: What would you do - housing?

Post by il0kin »

Geographic arbitrage seems like the best option although I can understand how family ties limit that.

In my major Midwest city of 2M+ people, you can find a great 4-5 BR, finished basement home with top quality public schools for $400k or $325-350k if you're willing to do some renovations. A new build would run in the $450-500k range. You could buy this house with cash and then slow down your work in the ED to spend time with your family, while still making $200k+/yr and having PLENTY of money to enjoy life. PM me if you want to see examples of these homes.

If you aren't willing to move, renovation seems like a no brainer despite the inconvenience of moving out for 6-12 months.
ThankYouJack
Posts: 5704
Joined: Wed Oct 08, 2014 7:27 pm

Re: What would you do - housing?

Post by ThankYouJack »

If relocating is an option, I would consider other parts of the country as well (especially the more progressive parts of the South). Granted a nice 5 br house may be more in the $6-800k in certain desirable areas, but as a multimillionaire ER doctor, there would be no issues with affordability.
I-Know-Nothing
Posts: 224
Joined: Wed Feb 24, 2021 4:54 pm

Re: What would you do - housing?

Post by I-Know-Nothing »

I also recommend considering moving. I live in Southeast FL (PM me if you want the city) and you could get a really great 4 or 5 bedroom house here for $600k (significantly cheaper houses exist too). The public schools here are awesome as well. And there’s no state income tax. I have no idea what ER doctors here make, but they are in demand.
Golf maniac
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Joined: Wed Dec 27, 2017 1:02 pm
Location: Florida

Re: What would you do - housing?

Post by Golf maniac »

I am assuming you don’t want to relocate. I would either do a major renovation to your existing home or buy in your area a bigger home. Send the kids to private school.
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Watty
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Re: What would you do - housing?

Post by Watty »

GotNoWisdom wrote: Sun Apr 11, 2021 7:20 pm 38, Married, 4 kids (6/3/1/1)....
One thing to consider is what living there will be like for your kids when they are gown up and ready to move out on their own. You are likely only about 16 years from your oldest being at that point. :shock:

It was a long time ago but when I was right out of college I lived in the Bay Area for a while which has always been expensive. One thing that I saw was that some of my older coworkers had grown up kids who were well into their 20s and still living with their parents and that was not always a good situation. The problem was that they did not high paying jobs so they could not afford an apartment even with roommates.

I have moved around since then and I am retired now and in contrast where I live my son was easily able to afford to buy a nice house that is about ten minutes from us so we frequently get to see our grandkids. Virtually all of his high school and college classmates who stayed in the area were able to afford to buy nice homes when they were in their 20s. We also have some friends have a son who is severely dyslexic and who barely graduated from high school. At one point he was working in a chain muffler shop which is a good honest job but I am sure that it did not pay a lot. Even with his income he was able to afford a small older house in a marginal but not terrible part of town.
GotNoWisdom wrote: Sun Apr 11, 2021 7:20 pm I make about $325k per year all-in which includes two side gig/part time roles that I have added in. My comp a few years ago was about $360k with less hours/work.
Working three jobs is a no win situation. As others have said moving to a lower cost of living area would make things a lot easier even if you have to change the direction of your career.
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