Building Wealth Requires the Courage to Make Unpopular Decisions
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Should you buy an affordable condo now or wait to save for a better home?
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Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm George Campbell here with Jay Warshaw. Taking your calls at 888-825-5225. Jump in. We'll have a conversation about your life and your money. Annika kicks us off in Toronto. What's going on, Annika?
Hi, um, so we're a little family of three, my husband and I and my ten month old son, and we're hoping to buy a place in the next six months to a year. Um, we're just not sure if now is the right time. Um I'll give you a little bit of background. So we have saved up a one hundred and seventy five thousand dollar down payment. Um our household income is seventy thousand dollars a year. Um and in our city we could buy a place and have all of our monthly payments under twenty five percent of our income with a fifteen year amortization period, but it would be a condo or a town home. Um and we've been advised by realtors that they're not likely to hold their value as well. Um and since we'd kind of want to use it as a stepping stone, only live there for three to five years, um, we just we don't want to lose money on it.
So we're wondering if it makes more sense to wait, save up a little bit more, um, and buy a better place from the start.
Did your realtor give you a reason why uh they believe that condos or townhomes don't hold their value? Yeah.
So it's particularly in our city, um, apparently they like overbuilt condos and so there's kind of um excess supply at the moment and just in recent years um they've s has haven't seen the same appreciation as other properties.
So I think there's a difference between not seeing the same appreciation and it going down in value. If I heard that information, my first thought, George, would be, okay, I need to be sure that I don't overspend on this, that that what I'm buying is truly market value, that I'm not getting emotionally attached and accidentally, you know, uh paying more than I should for that particular condo or townhouse. That would be my first thought. Um And then I'd want to pull some hard facts and see, okay, what are what is the appreciation rate? Is it appreciating? Because as long as it's going up, I'm I'm fine with that as if I can get something that I can actually afford. versus taking someone's word for it and it sounding more anecdotal, you know, the well, these things, you know, they lose value because it's those are two very different statements, a loss of value versus a slower appreciation rate.
Mm-hmm. Okay. Now are there other neighborhoods that maybe are more desirable that you guys could look at for a condo or town home?
Not within our price range.
Okay. So give me a a price point that you're currently looking at and what would sort of the next step up be?
Yeah, so um we're kind of looking in the two hundred and fifty thousand to three hundred thousand range and that just depends on the HOACs. Um so yeah, within that range.
How f quickly can you guys save up? I'm impressed you guys saved up a hundred and seventy five grand making seventy.
Agree.
How'd you do that?
Uh well we m saved most of that before we were married, um and uh we kind of both like we're living at home but working. Um we can save about Um twenty five thousand dollars a year.
Okay.
That's great. So it would take us it would take us two years to kind of save up enough enough for the the next level, if that makes sense.
Yeah. The the issue I see is just the goalpost keeps moving and the home prices could change dramatically in the next two years. We just don't know what the future holds. So I would hate for you guys to save up fifty grand over two years and then that same house is now fifty grand more. And it was a wall.
Yeah. And another thing another thing I should have actually mentioned is our current rent is actually thirty one percent of our um income and it's almost impossible to find something cheaper than we're already paying.
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Chapters
8 chapters
1
Should you buy an affordable condo now or wait to save for a better home?
0:00–10:25
2
Can you still build a retirement nest egg if you start saving at 50?
10:25–20:46
3
How can parents help pay for college without taking on student loan debt?
20:46–32:07
4
What should you do when debt collectors threaten to sue?
32:07–1:04:36
5
Which retirement accounts should you prioritize: a 401(k), Roth IRA, or traditional IRA?
1:04:36–1:08:04
6
How much should a newly married couple save for a house down payment?
1:08:04–1:17:34
7
Should you cancel indexed universal life insurance and annuities sold as investments?
1:17:34–1:56:21
8
Should parents leave an inheritance to their children or divide it among grandchildren too?
1:56:21–2:06:33