Should I Buy a Smaller House Now or Save for a Bigger One?

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The question you can read in the title is really keeping me awake at night for the past few days. I want to need to buy a house for my wife, newborn and I and this is actually part of my five year plan. But the real question is: should I buy a smaller house now or wait and save for a bigger one?

Before you come with an answer (which will be greatly appreciated since I really have a huge dilemma here), let me tell you a little about our situation:

We are currently living in my mom’s house (living with parents is not so uncommon here in Romania). Our house is built in such a way that a common hallway divides the two areas of the house: the rooms where my mom lives are on the left and the rooms where we live are on the right so we do have some sort of privacy, even though it clearly is not like living alone.

We do share the same kitchen, fridge and washing machine and, of course, the small front yard. We only have two rooms (not bedrooms – rooms as our living space is now the nursery) to live in and they have their fair share of inconveniences: heating them up will be the main one because each room has a fireplace and it will be me who will be carrying the fire wood inside, set up the fires and take care of them which is not really nice because winters in Romania can be pretty long.

Also, the bathroom has a problem that prevents it from being properly heated – there is nothing I hate more than having to take a shower during the winter then the temperature there is below my comfort zone.

So this (and what I said is just a summary of the cons as there are a lot more) is the reason why my wife and I decided it’s time to get our own house.

The problem is that right now we can only afford a small one: either something similar to what we have now (which is two rooms) in the city center or an extra room if we go away from the city center. What should we do?

Probably many would consider that buying a house (or apartment) with the same number of rooms would make little sense. But I still think that it would be better than what we have now because we won’t be living with my mother, we would have our own place and the heating problems would be solved. These three reasons alone make me get ready to shout: “Shut up and take my money!”

Although I am not particularly fond by the idea of going too far away from the city center, that one extra room that we would get for the same price does sound nice. We could still find something within 15 minutes of walking distance to the city center so it wouldn’t be that bad either. Still, it would not be the city center either and it would be an apartment as houses can only be found in the city center.

The idea of saving until 2015, as I had initially planned, might not work as expected and this is the greatest risk when it comes to delaying the purchase: although I doubt it, we might still not save enough to get us a bigger or better place.

The Romanian market is slowly recovering and real estate prices might also go up (at this moment they are at an all time low – just yesterday we have visited a tiny 3 room house in the center that was available for $34,665 fully furnished, but it was not what we were looking for).

So even if we are to save enough (we would need at least $14,000 more saved in one and a half years which with a bit of luck and a lot of budgeting could be doable) we might still end up getting something similar to what’s available now. AND we would have to live with my mom until then.

My idea is the following regarding this little problem that we have: it would be better if we bought a smaller house right now as we afford it and move there as soon as possible, hopefully by the end of the year (so we’re not really in a huge hurry, which gives us some extra options).

We would have our own place, be away from my mom and continue to save at the same rate, possibly increasing the time frame. Then, after a couple of years we could sell the house, hopefully at a better price in a recovered or at least partially recovered market and get our dream house or something very close to it. But I am still not sure that this is the best route to choose…

So what would you do in this situation? Would you buy a smaller house that you afford right now or wait and save and hope that you’ll be able to get a bigger one in a couple of years?

19 COMMENTS

  1. We’re facing a somewhat similar decision (minus living with my mom). Stay in the city or get a bigger place in the suburbs. We know that we won’t have enough space in our current condo if/when we start to have kids, but should we move now to the suburbs while prices are still “low” or stay where we are? It’s a hard decision to make. Like you said the hardest part (or one of them) is not knowing what the market will do. If you wait a few years and save up the money you might need more than what you can save if prices go up. But if you don’t wait you might get the same amount of space you currently have, which sounds like it might not be enough. I’m not sure what I’d do in your situation. What does you wife want to do? Is it difficult for her to stay with your mom?

    • There are many disadvantages where we live right now and one of them is indeed the fact that my wife is having trouble living with my mom and my mom has a difficult time adjusting to living with my wife. My mom also has problems with her thyroid gland which makes her extremely moody and even though we live as separate as possible, we’re still in the same house…

      Regarding what my wife wants, she is up for moving as soon as possible. The mom problem and some other issues that we have here (about which I should clearly write more to paint a better picture) make her and me actually think that it might be a good idea to go even for the same space but for us to be on our own.

  2. C., I am in a similar situtation and have some experience with what you’re going through. After getting married, my wife and I lived for a year with my parents. It was a 2 family house so it was separate. We paid rent. It was okay but I think the wife/ mother-in-law dynamic is always problematic and it is not good when you are that close. (Watch Everybody Loves Raymond…but don’t know if they have that in Romania). We thought about buying a co-op (apartment) but that fell through and we just rented. Of course everyone was saying we were wasting money, but we just weren’t ready to buy. Is renting an option? I’m still in a similar predicament…still want to buy but housing is STILL expensive in NYC. Might end up buying a 2 bedroom place…that should be okay for 5-7 years.

    • Yes, and we both say that it’s time for us to live on our own and be alone at our own place 🙂 The situation in the city where we’re living in right now, like in many smaller cities in Romania, is that a 2 bedroom apartment or house for rent is something VERY difficult to come by as there is almost no demand for that (probably we’d be the only family in the city interested in renting a 2 bedroom) as it’s not something uncommon for families to live with his or her parents… Buying is not that expensive if you think about it, but if you don’t have the money, it becomes expensive :))

  3. I think space is overrated. It’s often just more space for possessions. Once sufficient bedrooms are there, I’d go with as little house as you would feel comfortable in. Try to find a layout that’s efficient & comfortable, and less space is required.

    Anyway, that’s just my $0.02. We don’t have children yet so we don’t have a full appreciation for what additional space might mean in that case.

    • People don’t really need extra bedrooms here in Romania as we’re not visiting that often since people tend to live their entire lives in the same city and rarely move. But I do agree that sq. feet should not be the biggest issue when choosing a house – instead, we should focus on getting exactly what we need.

    • I agree about efficiency. I’ve been in large homes that are laid out poorly and small homes that are laid out in a way that makes sense. I go back and forth between wanting a larger or smaller home for different reasons. I cannot decide either!

  4. There is another way to look at this as well, which is thinking about it in multiple steps. Say what you really want is the larger place closer to the city center, but that’s currently out of reach. If you want to get there, you may need to buy the first place, improve it, or just wait for the market to rise, then jump to the place you really want.
    So if you were going that route, which place should you buy? Hard to say without knowing the market, but here’s how to decide: What will be most sellable? If the small homes are hard to unload, I’d stay away from those. If they are always in demand, then they could be a good buy. Basically before you buy, think about what it’ll be like to sell it.

    • Great way to put it, Nick! I always said that I would sell to get a better place after a few years, but never thought about how sellable the new house must be. This is indeed something extremely important to have in mind, thanks for the input!

  5. My wife and I settled for a house somewhat away from the hustle and bustle of the city. However we are only 10 minutes away from two semi-large city’s so we still have access to quite a bit. As for living with family that can be tough. I don’t think I could ever live with any of my in-laws and my wife probably has the same mutual feelings. The dynamic just isn’t designed for it as far as I’m concerned. I agree with Nick regarding space wise and resale value. If you want a house that you know probably won’t be your forever home then you will want to be able to offload it easily in the future. If your wife and mom aren’t getting a long it may continue to drive a wedge between all 3 of you that may become problematic down the road. Remember – A happy wife = a happy life. =) Either way I hope you guys find a happy ground in the near future.

    • Thanks, Adam! We have already visited a few apartments and houses and there is one I particularly liked, even though the asking price was a bit too high. It’s very small by US standards (650 sq. feet) but here, it’s a pretty decent size for a two bedroom.

  6. That’s a tough decision. I guess it depends on if you can sell the smaller house quickly if you want to upgrade later. I personally love the independence of living without parents so I’d pick the smaller space to live in sooner 🙂

    • Yup, we’re close to the point of “anywhere is better than here” :)) It’s actually the bigger houses that don’t sell well here in Romania as smaller ones are, just as in our situation, more affordable so I don’t think that it would be a problem selling in the future. I am also naive enough to be sure that whatever we choose will sell for a better price :))

    • Thanks for the advice! I just saw yesterday some listings of 1 room appartments for 5000 EUR (about $6,700) Great price, too bad that that’s too small for us though – but the prices are pretty sweet compared to other places.

  7. I think it’s great that you’re being so thoughtful about this process. I would probably lean toward buying now, since the prices are still reasonable and you can get something that certainly has what you need. A larger house would be nice, but like DB40 said, it’s often just more place to put your stuff. Best of luck with your decision!

    • I’m just starting to learn that you have to be really thoughtful when it comes to spending your money 🙂 I am too leaning towards what everybody seems to suggest: buy now what I can afford. Hopefully it’ll be a good find!

  8. I would buy in a house farther away, and invest in a better transport method. Something like an electic bike or scooter. This will cut your extra 15 minutes to 3 or so, and they are cheap (compared to realeste price difference center vs away) and cost around one thenth of a car per kilometer. So you could also save on car expenses by having one.

    You can get them for around 300 euro to 1000 euro I think. So even if one would get stolen… you will have won the amount back just buy already owning a house and it value increasing.

    I think investing in (think about)smarter transport is the way to go 🙂

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