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?