Expert: Dick Dennis - 12/20/2010

Question
So here is my dilemma.  My husband stays home with our two young children while he works on his dissertation for his Ph.D program.  I work outside the home and my job is the only source of income.  We are in an apartment right now and need to renew our lease within the next few weeks.  We are wondering if it is best to keep throwing away $1000 a month on rent or if it would be a good idea to buy a house. We can afford to buy a house (I think- I don’t know much about the process), but am wondering if it is a good idea when we don’t know how long we will be living in this area.  Once my husband finishes his dissertation, he will start looking for a teaching job and we could end of up anywhere in the country.  The problem is we don’t know how long this will take.  He could finish up in the next 3-4 years or it could be 10 years (he is progressing very slowly since he has to watch the children).  I would like to have a house for the kids and our money in an investment like a house.  I hate the idea of wasting money on rent for the next few years, but a few people have told me that buying a house would not be a good investment if you are going to turn around and sell within a few years.  Is this correct?  Money is very tight and we don’t want to get into a situation where we are going to be losing money.  Would you buy a house knowing that you may have to move in a few years, or is it best to keep paying rent.

Answer
Your key phrase is, ". . . when we don't know how long we will be living in this area," Lisa. And then you say it'll take 3-4 years — minimum — before his education credentials will allow him to find a job. You don't say in what location you live, so there is no way to know if indeed you would be wasting your house-investing money. In some places it is indeed a waste. But most of all, you do not have anybody searching to see what the market is in your present location.

The way you present your dilemma, you don't have much choice, Lisa. You don't know in what state or town you should be living. You are not getting familiar with the market because you don't know where you will be living. To use your present location as an idea of a real estate market is a bad idea. Some locations are doing well (like in the middle of the country-the Dakotas, Maine, Texas and a few other spots). And some locations are still losing values. So, that is out.

I like your attitude about using your money to buy a home/investment. But your hands are tied. And until you have a better image of your future, you will have to stay near where your job is. Real estate is a different investment these days. Today, committing yourself for less than five years to a house location is a mistake. Ten years is better.

In your present situation, paying rent is best. In five years you will have more money in your savings account which allow you to be more choosey on the house you're going to live in. When it does come time to renew your lease, shop around and see what comparable rentals are going for. If it turns out that you are living in an apartment that is not much different than a house rental, then renew your lease and be patient. This is going to take time. I do wish you well.

Dick Dennis
CA Broker Lic. #00349415
dixiedee13@aol.com