The attractions to being a homeowner are ingrained in Americans. My younger brother has owned two homes, and I’m still renting at 36 years old. Owning a home is supposed to be a great investment, right? Not just financially, but there’s certainly security in knowing you have a place to live for the foreseeable future, without moving. Every year we are acutely aware of the possibility that our current lease won’t be renewed because the homeowners may decide to sell the house or increase the rent more than is reasonable. We’re holding our breaths now since our lease is up in a month and we still haven’t received the renewal paperwork.
Mr. PW’s lease wasn’t renewed in medical school when he lived in a hot rental in the heart of the downtown historic district just a block from campus. The landlord wanted to increase the rent more than was legally allowable for current tenants, so he declined to renew Mr. PW’s lease, and the rent almost doubled (in retrospect, this seems legally dubious, but it’s a true story). We have a perfectly comfortable rental house right now that is perfect for our family, but the specter of potentially not having our lease renewed on any given year and having to find another house makes us uncomfortable. Despite the discomfort and uncertainty of renewing our lease year-to-year, we continue to put off buying our first home.
Mr. PW is working on a post reviewing the technical reasons to buy a home later than sooner. Subscribe below to get that post, and others, in your inbox. I’d like to discuss some of the emotional and less tangible reasons why we haven’t bought a home.
We’re getting ready to party
White Coat Investor recommends keeping debt to income ratio at or below 2:1. With our massive student loan debt, we’re technically just below a 2:1 debt:income ratio. A mortgage on top of that would pull us well beyond the recommended 2:1 ratio.
I’ve calculated our net worth to reach zero in October 2020, at which time we will have a Zero Party. We’re starting to spread the news, inviting friends and family from across the country. Friends have been designated in charge of decorating and food. We’re discussing the menu and drink list. The playlist will have a “zero” theme. The dress code will NOT be zero; clothing will be required. It must be family friendly, afterall. We want the kids to remember the event. It will be a celebration on a budget, we don’t want the party to throw us back into debt.
If we buy a home we would be down another $400,000+, delaying our zero party several years. Sure, we could have a housewarming party, but my subconscious would be screaming about our massive negative net worth, making it less enjoyable. We also want to reach FI sooner than later so that work is elective, not required. If we wisely invest the money that would otherwise be spent on a down payment and repairs, we could very well reach FI years sooner than if we buy a home.
Our expectations are too high
In my early 20’s I learned that the longer one remains single, the pickier they are. Once you define who you are and know what you’re looking for, it’s harder to find the right partner who meets all the requirements. I think the same is true for homeownership. The house that would have made me happy ten years ago wouldn’t be fulfilling today. Truth is, we can’t afford what would check all our boxes. Despite being a dual physician couple, we can’t afford to buy a nice home where we want to live (at least not without making some financially dumb decisions).
Part of the reason we can’t afford to buy is our current rental is perfect for us and has raised our expectations significantly. We feel like we’ve won the game in renting this home. It’s the right size for our family of four and has an attached two-car garage, which is nearly unheard of in our neighborhood. The walkability score of our rental is 78! At least once a week we’re walking downtown to the market, library, a festival or for food. We’re saving money, and stress, not having to park downtown. We have access to quality public schools without paying the exorbitant property taxes. The yard doesn’t require much maintenance, and what is necessary is currently covered by the homeowner. We don’t have to pay for repairs nor be present when maintenance comes by. Friends and family agree that we have little incentive to leave this little slice of paradise just for the privilege of owning where we live.
We don’t pay for repairs
As a renter I’m always relieved when something goes wrong (burst pipe, leaking sink, hole in the roof, failed appliance) and it’s not on me to coordinate and pay for it. We’re not savvy with home repairs and don’t have much interest to learn. We’d much rather spend our weekends off camping with the girls than staying home catching up on home improvements. Now there’s some suspicious sawdust accumulating in our attic. The property manager is aware and we just need to monitor it. We don’t need the emergency fund to cover pest damage or a new roof.
Last year when our kitchen sink leaked causing the hardwood floor to warp, we were relieved we didn’t have to pay for the repairs or a new floor. We had an industrial dehydrating unit in our kitchen for a week. The electrical bill hit us hard (and maybe we could have argued our way out of that), but other than the noise it was relatively stress free (picture).
The only thing certain about the future, is the uncertainty
Perhaps the biggest reason for us to delay buying a house is the lesson we learned moving from Pittsburgh to North Carolina. We made the mistake of signing a two year lease and hated the place. It was a miserable six months before we moved out, and we were forced to pay rent on our new apartment and the old house. We lost over $10,000 in the next six months paying dual rent. The mistake was signing a two year lease on something that didn’t feel right because we felt pressured on a short timeline. It was a huge financial catastrophe. In terms of our massive quality of life improvement, the move was worth the $10,000 lost.
Now, after almost two years in our current jobs, which have been fulfilling, our future careers are suddenly uncertain due to large, structural changes involving our healthcare organization. When we started at our current positions, we were excited about the growth potential. A lot has changed in health care in the last two years, and our professional growth is suddenly less promising than when we started. I’m confident enough to say that the future of health care, insurance, and physician reimbursement is in flux and likely to continue undergoing transformation. There will always be some change in medicine, but we are feeling this more now than we ever have before. We’re breathing a sigh of relief that we aren’t brand new homeowners with little equity at a time when we’re not sure if we’ll be able to stay here.
Efforts to find “The One”
My interest in budgeting is still pretty new. Before tracking our budget and looking for easy money I was being pulled deep into the vortex of buying a home. Every night I would scope out nearby sales and almost resent Mr. PW for putting his foot down that we were not financially ready to buy a house yet. Without looking at our budget in depth it seemed we could “afford” almost anything. I use “afford” loosely meaning we have good credit scores and could probably be approved for a high mortgage. We could even use the physician mortgage and put nothing down. When it comes down to it, until recently, the real reason I haven’t committed to buying a house, it’s too much work. I think we’re the only people of all our friends that don’t own a home, so we’ve heard several versions of the stressful process of buying. Until recently, we didn’t talk to realtors or mortgage lenders. And when we did, we did it with as little contact and emotion as possible. It wasn’t too bad, but was still time consuming.
We love our life, jobs and family, but being in medicine we’ve learned from others’ experience, anything can change unexpectedly. We will buy a house some day, but for now, we’re happy renters.
Share below why you did or didn’t wait to buy a home. Would you make that choice again?