Guess what, I will let you in on a dirty little secret. You don't need to own a house before you start having kids. Renting works just fine.
May sound obvious to some, but the idea that somehow you should have a mortgage in place before junior arrives is still powerful - and completely nonsensical.
My wife Karen and I fell for it, moving out of our perfectly nice Quincy apartment and buying our Natick fixer-upper.
We were planning to start a family - somehow it seemed like the right order to things.
If one is in a lower cost market, say anywhere in the Midwest or most of the Sunbelt, such fuzzy thinking is fairly harmless.
But here in hyper-inflated Greater Boston, failing to think out the financial implications of trying to both shoulder a mortgage and pay for daycare can be a recipe for big problems down the line.
At one point, most of my salary at the Boston Herald was going to pay for daycare for our three little ones, with Uncle Sam taking the rest.
We survived because we stayed under $300,000 when we bought, and, of course, because we are a two-income family.
But simply renting for a couple more years and then housing hunting might have helped a bit.
I thought this exchange on the comment board of this blog is right on the mark - have your kids and then buy after they reach school age. Thanks to sevv and thirtysometing for the insightful comments - you can read the full exchange here.
Here's an outtake.
02/19/2013 11:04 AM
I think the biggest mistake is buying the wrong house for the future you! (i.e. too small, wrong location, condo vs. sfh, etc.) Since the transaction costs of selling (and to a lesser extent buying) are huge, you are far better buying a house you can live in for a long time and being cash poor for part of that time. Think about if you plan to have kids and don't buy a place that will be too small when the time comes.
02/19/2013 11:10 AM
Good advice! Young couples often buy a house before they start a family. The latter is even more expensive than the former -- either one person quits their job to raise the kids or you pay $15k-$20k/year to put them in day care. Either way your cash flow is scrooged until they enter school.
Ironic... If your family is large enough to need one of those big modern $600k houses, then you probably can't afford it. At least not until the kids are older. I do wonder if homebuyers aren't stretching themselves too thin?
The author is solely responsible for the content.