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July 14, 2009

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I don't understand where you live. I find it hard to believe that you can get three or seven acres in any "city." Maybe you use that term loosely.

I also don't understand why anyone needs three acres for a garden and a dog.

Why don't you just move to the country if you really want all that land?

Wow, I didn't realize the amount of time you've spent with this possible move. I think you're being very wise to wait. You're weighing the pros and cons very well.

Based on what you wrote, I would offer a low bid on a house, if they don't accept, then it's no real loss to you.


You are thinking too much.

Too much "theroy" and possibility and potential gains and interest rates and opportunity costs and leverage way too many assumptions.

Make it real simple.

Do you want to move or not?
Can you afford it?

You don't need a spreadsheet to answer yes or know. You already know the answer. So answer it. Then do it. or don't.

You only have one life.

Aren't you missing the other costs of moving associated with the transactions (selling yours, buying another) themselves? Lawyer fees, inspections, mortgage fees, realtor fees, etc.

In line with one of the earlier comments-

I'm also looking to move, but I'm not moving with the consideration of what the house will be worth when I am ready to retire. I'm investing in my life, where I want to live and my kids to go to school and grow up. It's more about 'sense' to me than dollars.

I think I agree with what Bob is hinting at. If you want the "better" place, you may have to pay for it. So what if you are $400K better off 10 years from now? What are you going to do with that $400K - Wait until you retire and buy yourself a better wheelchair? OK - that comment is a bit sarcastic, but the question is serious - What will you do with the $400K that will give you more pleasure/security/satisfaction in life than the new home will give you? If you can answer that, then skip the move, and save the $400K.

Do you hate your job so much that you are counting the years to retirement? Maybe you should get a new job AND a new home!

John Z --

I took those out of the net amount I thought I could get from my house.

Is it a need or want? The question is when you want to retire (the earliest the better is not a good answer) and whether you can still reach that goal with the purchase of a more expensive home.

Mark --

One of the things I've also learned in this process is that my current home is a lot nicer than I had originally given it credit for being. So I'm not sure I've seen a "better" place. I may write a post on this later in the year.

Everything we buy is a trade off of cost versus "happiness" (or "benefit" if you like.) I haven't yet found something that's worth the trade-off yet.

Dog --

Using the term loosely. These are "country" places.

Bob --

So your point is that if I want to move and can afford it then I should, right?

Isn't this post about the first criteria -- whether or not I want to move given the financial trade-offs? That's what I thought I was writing about...

It seems that you are happy with your current situation and that additional land (in a nicer area with better schools) will not yield more happiness for you. Well, I should say that a nicer place with more land will not yield happiness for you *in the long term.*

It's common for folks to play the sort of game that starts something like: "if only I made a little bit more money per year or drove a slighly nicer, more modern, vehicle, then my quality of life would increase." Happiness and/or satisfaction isn't a function of # of bedrooms, amount of land, yearly salary, etc.

There's some great empirical research on happiness at: http://www.sciencedaily.com/releases/2008/04/080428104537.htm

Best,
Vince

I agree--you're thinking too much.

You seem in my opinion to be under-valuing the non-tangibles here.

You have spent $ that you didn't need to by even getting married and having a family in the first place, right? You have spent $ on experiences, right? These things you rightly see as part of your vision of your life, as you want to live it. And there's nothing wrong with that!

Your life on a large estate with lots of outdoor room to live and play, your life in a much larger house with more room for your family member's individual activities and also more guests---it is going to be way different than your current life, I imagine.

Do you want that life?

Or do you want a life of not being really satisfied with what you have, and of spending even more than 3 yrs (3 yrs!?!) of your time in a possibly endless search for some kind of perfect "deal" which probably doesn't even exist?

Life is short. It sounds to me like you want that other life. So I'd say you can't "afford" to wait any longer--you're wasting your precious time. Besides, mortgages and real estate are not going to stay cheap forever! And while you never know what the future will bring, you do know for sure you can't take it with you.

Just my $0.02.

I'm with Mark. Money is to be used, life is to be enjoyed. As long as you're not setting yourself up for an impoverished retirement, then go ahead and do it.

Your relationship with your wife is probably different, but my wife would definitely have a strong opinion about moving , one way or the other (and she'd let me know!). In the end what would make me the happiest would be to make her happy.

MC --

When I say we've been looking for "three years", you understand that that's three years of mostly summer looking (winter here is a bear) and maybe once a month in those months, right? It's not like we've spent every weekend for three years looking at 10 homes a day...

Even looking "only" in the summer would be too much for me! Also, it sounds like you have spent lots of time debating and calculating and debating again about the issue. Like I said, life is short...!

At some point in time (not sure how long that will be), housing prices are eventually going to rebound. The new home would then have greater potential for an overall increase in equity. That could offset some of the incremental expenses that occur over the time you spend in your home.

Separate from that, I do agree with others in that if you have worked and saved diligently over the years, at some point, it is time to at least enjoy some fruits for that. Don't feel guilty for buying the home.

At the same time, you are taking the right approach. This is a buyers market. You have the ability to wait for not only the right property, but for the right deal. It has taken time for some owners to get real on valuations, but people are coming around. At some point, you are likely to find the right fit at the right price.

I thought the rule-of-thumb was to buy the cheapest house possible in the best neighborhood you can afford. There are financial and quality-of-life issues involved in making that decision. Keep your cash, retire early, do more with your family, travel, and life your life. Don't work to support a house that you think will provide a better quality of life in the future.

Those extra acres will be a lot more work. I moved from a 1/4 acre lot to 6 acres. I got the house that I wanted because I designed it and supervised the construction. I used to go fishing and play golf. Now I do landscape and garden work. It's been OK for me but you need to consider it. What will you give up to accomplish the extra chores?

FMF

My point from above is don't try to nail it perfectly, because there is never a perfect.

Keep it real simple. Forget the financial trade offs for a moment. It is not that they are not important, but I think you are making them too important.

What is most important is what you want. Not what makes sense, or what others want, or what you should do, could do, have done, or might do. What you WANT to do.

It sounds to me like you want to move to a house with some room. So move. Make it happen. Ten years from now is not guaranteed. Investment returns are not guaranteed. Life is short, and it never goes according to plan. If you think yours is, just wait.

So my advice is go for it. Don't spreadsheet justify the opposite of your heart. Follw it.

You are successful, debt free, etc. Your ducks are in a row. So go. If you have to spend a bit to get what you want, then spend it.

And my most important advice is what does your wife "want". If it would make her happy (disregard the money) then your question has been answered my friend.

I have a nice home on land 5 minutes from work. Nice cars, ducks in a row, spreadsheets, etc. When I was 21 I bought a Convertible sports car. I financed it. It was not the best thing financially, not by a long shot, but I would do it over in a heartbeat. I lived. I had fun. I have memories of me and my now wife driving to the lake, kissing under the stars and watching fireworks sitting on the back.

So that is my point. Take advantage now. You might not have "someday"

This post by FMF and some of the comments make me wonder if the concept of "saving" or frugality in general can become a negative addiction just like anything else. Not saying this applies to FMF at all but it did make me start to realize if some people save for so long that they become physically and emotionally incapable of spending money and enjoying life.

This was a great analysis from a financial perspective, but I agree with some of the other commenters that you need to explicitly weigh the costs against the "intangible" benefits. If you're looking at it from the spreadsheet perspective alone, maybe you should sell, downsize, and invest the difference. ;)

FMF
I am in a boat somewhat simlar to yours. My wife and I live in a good house on great street in an awsome location. The problem is the school system is terrible. We just had our first and possibly only child (daughter). There is no way we will send her to public school in this area. If we were to move into a neighborhood like we have now ,in the areas we are looking with good public schools it would cost about 150k more than our house. The cost of 12 years of catholic school will be close to 100k when my daughter is done. We have no debt except a small mortage so we could probably afford either. The new place we are looking at are closer 2 her family( I am OK with that cause I get along with them as tough as that might be to belive.) One of the cons about moving is bolth of our commutes would increase by about 20-25 mins.

Any thoughts would be great

I'm not sure where this post went wrong. It was meant to be a look at the total cost of buying a home (including the long-term, generally unseen costs and their total value). Somehow it turned into me not valuing the "intangibles" and being unwilling/unable to spend money despite my desperation in my current home and the pure happiness I'd get in a new one.

Not 100% sure how that happened, but I can only blame it on poor writing. I should have been clearer up front. Yes, I think there were some assumptions made by readers as well, but it's hard to tell sometimes what someone is saying in writing.

So, let me clarify a few points:

1. Of course I'm looking at the intangibles. It would be silly not to. If I was only looking at costs, I'd sell my current home and buy a shack, investing the difference (as Nickel suggested.)

2. As I look at the intangibles, I'm finding them lacking. Time after time, my wife and I have asked "would we move here if there was zero extra cost?" In every case the answer is "no". So if we wouldn't move if the cost was zero, we certainly wouldn't move if the cost was $200k more.

3. Part of the issue is that what we thought we might like and what we're coming to believe we now like are two different things. In particular, one concern is exactly what Mike pointed out above. Do we want to spend every weekend working our land or do we want to be free to pursue our other interests? I think we're leaning to the latter.

4. Even if we found a place we liked, I don't buy the "if you can afford it simply move, regardless of the price" argument a few people have hinted at. Every purchase, from homes to electronics to services to cars and on and on, weighs cost versus value. Home shopping is no different. There are too many issues associated with cost/price/value to go into in a comment, but I think you are all savvy enough to know what I mean.

5. For the record, did anyone notice how I said we liked our home, that our neighborhood was fine, and that we went into this effort knowing we were going to be picky? Again, that somehow that morphed into being unable to spend on a new home because either we weren't looking at the intangibles or simply were unable to spend money. This seems like a stretch to me.

6. I actually like looking at homes, so the "three years" of looking has been fun for me. I understand that some people (most perhaps) would hate this, but I like it. We've seen a tons of places and gotten to know a certain part of our larger metro area very well.

I could probably ramble on for a bit longer, but I'll let it rest for now. Just wanted to try and clear up a few things -- not sure I have, maybe I've just made them muddier. If so, oh well, there's always a new, hopefully better, post around the bend. :-)

Paul --

I'm not sure you want advice from me! :-)

How about this -- I'll post your question as a "Help a Reader" question and let others give their thoughts? It will be up sometime the week of July 27. Good luck!

FMF,
Great post. Lots to think about that most people don't think about when they move. I think point #2 above hits the nail on the head. If you wouldn't move at no cost to you, then why bother?

Like you, I actually enjoy going to look at houses. I lost count at how many houses I looked at when we bought our current home.

I wouldn't hesitate to be a ridiculously low bid on a house if you really like it. You never know in this market!!!

FMF
Posting my question on help a reader
would be great. If you need more detailed
info please feel free to email me.

Thanks Paul

Hey just want to echo Paul's comment. I'm in a similar situation and would really like some advice from the FMF readers (and you too).

One thing I have noticed is that people often think that the new house/car/TV/dress/shoes/whatever will make them happy. In my case, I always convince myself that the new computer will make me better-organized. Somehow it never has!

I think FMF has come to the conclusion that the new house WON'T make him happier (and may even force him to spend more time mowing!), so he is having second thoughts.

I am currently looking for a place, and got some great advice: Before you make an offer, ask yourself: Would I be heartbroken if this one sold to someone else? If not, move on.

Honestly, FMF, it doesn't seem like you really want to move. All of your reasons stated here seem to circulate around how you would move it is a huge financial win. I realize you are simplifying things in your posts, but the comment that you wouldn't move even if there is zero cost difference sticks out like a sore thumb.

Maybe you haven't found things that met the other criteria too or have identified the true criteria. And you seem to allude to that. But then that's the real task: determining the criterion for this decision.

Obviously one shouldn't ignore the financial questions, but it seems premature to go on about them. I mean, if that really is the criterion ("the house must be an awesome Buffet-like financial investment"), then it makes perfect sense to me why you might be still looking for the right opportunity after 3 years. But if it is for the quality of life items you mentioned initially, it honestly seems unreasonable that it would take 3 years.

It sounds like the real issue is that you haven't figured out the criterion and in part that's because you are reasonably happy with your current place. My guess is that just looking at homes for another 3 years isn't going to get you any closer to the criterion, though. It's hard for me to believe that in 3 years you haven't already covered most of what is out there. Maybe a new method is in order.

My unsolicited 2 cents. (Part of the price you pay for looking at such things publicly on a blog. ;) )

Jack --

The comment about not moving even if the cost is zero is based on what we've seen so far. We do have criteria, and so far they haven't been met. That's why we wouldn't move even if there was no cost. Why move to a place that you like less than where you currently live?

Will we ever find a place that meets our wishes? That's TBD.

At some point of view housing prices are eventually going to increase.New home has more demand and priority than the old.Thanks for sharing such a excellent stuff.Keep in touch.

____________________

personal finance

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