Should I buy a house? What should my budget be?

New
blindbux

New

blindbux
Aug 2, 2021 213 Comments

Mid 20s single male, 300k TC, ~1.1m NW (250k retirement accounts, 800k tech stocks/ETFs, 70k cash, 20k crypto).

I don't mind continuing to rent because I like the low overhead and I'm making decent gains on investments. But it would be nice to have a permanent place, and to grab property in an attractive location before it's all gone/priced out. Ideally I'd be living in the house with friends as roommates/tenants.

Job is fully remote so I can move anywhere in the US, but targeting Seattle or Austin. Are these still good locations to buy right now? Feels bad not having bought a year or two ago. I don't foresee prices falling though.

Does $1m sound reasonable? That would mean I'd have to sell about $130k of stock to pay for the down payment, which feels bad (paying taxes). How do people normally liquidate for a down payment?

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TOP 213 Comments
  • Yelp
    Jst42x

    Go to company page Yelp

    Jst42x
    I would say keep renting until demand for real estate comes down as it is at an all time high.

    In terms of down payment, if you are comfortable with it you could take out margin from your tech stocks. This way you don’t pay capital gains, get to keep your stocks, and get a low interest on margin while at the same time increasing your net worth with the home purchase.

    If not, you could use this time to accumulate your stocks (sell when you get them so you don’t have cap gains) and store as cash in a money market. When you have enough for a down payment the housing market might be lower allowing you to buy at bargain prices.

    Truth is no one knows what will happen in markers. So make a decision that aligns with your values. If you’re ready to buy then don’t listen to me, just sell your stocks, buy your home and be happy.
    Aug 2, 2021 31
    • NVIDIA
      n0tj3n53n

      Go to company page NVIDIA

      n0tj3n53n
      Megarich don’t do this themselves, they outsource the task to pros ;)
      Aug 9, 2021
    • SAP
      rgHd41

      Go to company page SAP

      rgHd41
      To everyone’s point of over extending yourself, you may want to look in the 300-500k range. Can you and your friends be as comfortable in something that keeps your payments more manageable if one or both move out?
      Aug 9, 2021
  • Google
    cantafford

    Go to company page Google

    cantafford
    How did you accumulate so much NW in your mid 20s? I assume you only worked 3-4 years?
    Aug 2, 2021 11
    • Amazon
      Veep

      Go to company page Amazon

      Veep
      @OP no one answered you about the east side. Homeless is definitely less of a problem. Bellevue is very nice, Kirkland and Redmond are also good. There are still homeless on the east side, but I’ve only ever seen them in Bellevue and in the downtown area. And only like 2 or 3. They tend to congregate around the Safeway in downtown Bellevue. There’s one crazy guy who will constantly be yelling at an imaginary person in the ground, but I think he’s harmless. I’ve never seen him actually accost someone real. The others will tend to stick to themselves. No pan handling or asking for money. The cops do a pretty good job of keeping things clean over there.
      Aug 8, 2021
    • @itxo64 - u must not be aware of the public camping in ATX. yes. This was a liberal policy that passed and is now being overturned slowly but surely. Thank god
      Aug 8, 2021
  • Cisco
    shit_showo

    Go to company page Cisco

    shit_showo
    Seattle less income taxes to pay for.
    Aug 2, 2021 17
    • When the FLI tax was rolled out, Microsoft announced that no change in Washington state employee pay would be evident to employees. Since MSFT also employs people in Texas and there was no raise given to those employees, this was effectively a raise given to Washington state employees (state-created liability paid with no other changes elsewhere).

      My wife works for Google and they approached it the same way. No change to pay in WA state, and also no change to CA or TX or other state pay.

      So while it may have some technical impact on the amount all employees see, it had no impact on the amount for WA vs TX employees, which is the discussion here.

      Nothing similar happened with LTC, but the alternative insurance offered was like 0.05% of pay.
      Aug 8, 2021
    • Amazon / Eng
      wawY45

      Go to company page Amazon Eng

      PRE
      Apple
      BIO
      I'm a no-man.
      wawY45
      The 0.4% FLI seems to have an option for the employer to pay all of it; I guess that's what MS and Google may have been doing.

      LTC is already higher at 0.58%, and if you don't opt-out this year, you'll have to pay it forever on any job in WA.

      In December 2018, WA didn't have FLI or LTC. Now next year in 2022, the "not income tax" in WA will already be 0.98%; how long until 2% and then some? LTC already has provisions for automatic raises to keep the fund solvent.
      Aug 8, 2021
  • Google
    vick89

    Go to company page Google

    vick89
    Wait for prices to reduce, you are still young. Enjoy the freedom of renting and being able to move with no attachments.
    Aug 2, 2021 11
  • Google / Mgmt
    sfj

    Go to company page Google Mgmt

    sfj
    Buy where you want to live??

    Home ownership only is smart in a market where the price goes up by >12%/year, otherwise you'll make more money in other ways.

    Renting doesn't allow you to really invest in where you live, have a sense of community greater than your lease, stability for your children, etc.

    These things are actually worth a lot of money, and you should try living where you'd like to be.
    Aug 2, 2021 5
    • Amazon
      citronella

      Go to company page Amazon

      citronella
      Also the option to take a 2nd mortgage and reallocate to stocks if too much equity gets built up in the house over the long run.
      Aug 8, 2021
    • Carta
      Klart

      Go to company page Carta

      Klart
      @DoorDash, you can also say that about any asset—you don’t realize gains until you sell.

      Your other point is a better one: real estate is less liquid than stocks. One might subjectively value an asset higher or lower based on liquidity needs.

      But a smart move would be to refinance when possible to maintain your leverage, and cashing out the “increase” in home value to invest elsewhere
      Aug 8, 2021