How long should you plan to live in your first home?

StGriffen

FTB here and would be interested in hearing others opinions on what your anticipated time horizon should be for owning your first house before moving on.

Initially we thought we'd like to buy a "forever" home but now thinking that we don't want to stretch ourselves to the maximum for a bigger house. I kind of feel something that would be suitable for your family for the next 7-10 years is probably an appropriate compromise.

My reasoning is that is a suitably long horizon for the fixed costs of buying to not be excessive and the equity you build over that time should help even put any "wobbles" in the housing market (absent 2008 style crash) when it comes to trading up. Not stretching oneself and having such a horizon would hopefully minimise being stuck in 2008 style negative equity in an unsuitable house.

Similarly by keeping some powder dry we should be able to live life a bit more and save over the period due to lower mortgage.

Be interested to hear what others have to say on the matter and what has worked for them.

NIMAN

IT'll be totally different for each person or couple.

Obviously most will only be able to buy within a defined budget on their 1st, and they may be heading into the deal with the minimum deposit saved. That will limit your choices, and may mean you find yourself constrained in the future (for example, own a 2 bed but have 5 in the family).

Thats not to say many might buy a house which will be their 1st and perfectly adequate for the rest of their days.

But so much can change. Kids may or may not come along and mean you need somewhere bigger....but then again that can mean in the future you may also need something smaller as they reach adulthood and move on.

Your job may move, and you may have to move with it.

You may separate from your partner, and be forced to either move out or sell.

Lots of factors, so can't really put a time limit on a purchase.

As an example, my 1st house was a 3 bed semi, bought in 2000. At the time I was single. When we got married we were still in that house, but had planned someday to build on my OHs parents land. Then 1st child came along and we planned the move then, as we wanted them to grow up/go to school where they would ultimately be based. It so happened to tie in with the crash, so we ended up buying a house for less than we could have built one for. Plus it was larger, a 4 bed. Other kids were planned so we knew we would need more bedrooms in the future. And those bedrooms are all accounted for now!

PhoenixParker

It should be something that you could live in permanently even if that wouldn't be your ideal.

Minimum time horizon ten years.

NIMAN

Having a "sure I'll buy this place now and move on in 5 years time" is a dangerous attitude to go into it with, as many people thought that in 2005-2008, and then got stuck with something they couldn't sell, and which lost 50% of its value as well.

I would say if you don't see yourself in a property in 5 years time, don't buy it now.

drunkmonkey

Buy the forever one now as the price of the starter home could have dropped substantially in 10yrs time and your stuck in a 100k of negative equity. You can also only borrow less as you get older so the repayments on the forever home now may be cheaper than if you decide to buy it in 10yrs.
Supply will catch up with demand in your time frame so don't look at it as investment you can flip in 10yrs and walk away with some profit. That won't happen, history has proven it many times over.

Deviso

If something is good value with low repayments buy it. I'm looking to buy a 2 bed in a few years. Repayments will be around 700 a month.

Rent currently is 1500 for the same apartment.

drunkmonkey

Wheres this 2 bed apartment, that seems like a huge gap if you can buy it now and rent it for more than double. That's well over a 8% yield.

Deviso

It's around 10% yield. None for sale at the moment, it sold during the summer. I'm not in a position to purchase it now, as I'm only 4 months into my first post college job.

riclad

I,d agree you don,t need to buy a forever home,
You should think could i buy this and live here for 10 years .
Buy a 3 bed house if you can with a garden thats of average size.
Maybe with a front garden that has maybe one parking space in it.
Many people buy one or 2 bed apartments then discover , thats its very difficult to buy even a 2 bed house due to rising prices.
i Think you should plan that prices will rise or maybe stay as they are now,
planning based on a large drop in house prices makes no sense .

drunkmonkey

They can't stay this high, it's due to a shortage that won't last. People are paying way over the odds at the moment. We'll be listening to people crying in 5/10yrs time as they can't afford to move to a bigger house with their 3 kids as their stuck in negative equity. I wouldn't look at buying a house right at the moment as an investment. Buy because you need/want it, go in with your eyes open that you might not get back want you paid for not even taking the interest you've paid into account in 10yrs time.
If your under 30 and single go enjoy yourself and see how it all plays out as the market is now fueled again with FOMO.

riclad

I,ll think that house prices will stay this high in dublin and other city,s
where there are lots of jobs avaidable.
The last crash was due to bad and risky lending.In 2005
Someone on 20k pa could borrow 250k to buy a house in tallaght.
Banks will maybe lend you 3 times your salary and you need a large deposit saved .
We have the central bank and dept of finance who actually have rules on lending for house loans etc and are actually enforcing them.
Theres probably young people working now who dont remember
the boom ,the celtic tiger and how easy it was to borrow money .
Crash,s usually follow excess lending and house prices rising
due to easy credit .At some point most working people have a choice
buy a property or pay rent for 20 plus years .
Even if prices go down by 10-15 per cent if you are on a 25 year loan ,it does not effect you much.

Interested Observer

riclad wrote: »

I,ll think that house prices will stay this high in dublin and other city,s
where there are lots of jobs avaidable.
The last crash was due to bad and risky lending.In 2005
Someone on 20k pa could borrow 250k to buy a house in tallaght.
Banks will maybe lend you 3 times your salary and you need a large deposit saved .
We have the central bank and dept of finance who actually have rules on lending for house loans etc and are actually enforcing them.
Theres probably young people working now who dont remember
the boom ,the celtic tiger and how easy it was to borrow money .
Crash,s usually follow excess lending and house prices rising
due to easy credit .At some point most working people have a choice
buy a property or pay rent for 20 plus years .
Even if prices go down by 10-15 per cent if you are on a 25 year loan ,it does not effect you much.

I think there's always an element of crystal ball gazing in this stuff but I personally think the next 'crash' will be from a general downturn in economic conditions, so basically I agree that if the jobs market in Dublin stays strong then the house prices probably aren't going anywhere but up. Credit is controlled far more tightly but I think I read recently about half the market is still cash at the moment.

I went into college at peak boomtime and left college into the worst of the recession. I can remember my parents being sent, totally unprompted, credit cards with insane limits along with a letter basically saying off you go, enjoy.

0lddog

Meanwhile, in Tokyo a house is reckoned to have no value once its 30 years old. Its considered a depreciating asset.

Having lived in a number of old houses I think its a good point

https://www.youtube.com/watch?v=iGbC5j4pG9w

Rothmans

0lddog wrote: »

Meanwhile, in Tokyo a house is reckoned to have no value once its 30 years old. Its considered a depreciating asset.

Having lived in a number of old houses I think its a good point

https://www.youtube.com/watch?v=iGbC5j4pG9w

I don't agree with that. I've been in plenty of fantastic houses more than 30 years old. Also, from looking at that video, the majority of those houses appear to be built of much cheaper materials than the solid concrete builds over here. So probably not all that applicable to things here.

riclad

Once you go over 150k, you are paying to live in the area ,
near shops, bus stops,luas etc
People want to to live in certain area,s .So a 50
year old house in rathmines is worth more than a brand new house in lucan.
IF theres any new site left in rathmines ,they,ll build an apartment block there , it would be very expensive to buy a site in rathmines ,
just to build one house on it .
IF you could even find one .
I understand if someone is paying 1000 euro rent and finding it hard to
get a mortgage,
they might be very happy if prices were to fall by 30 per cent.
5 years ago people were complaining about being trapped in negative equity.
Now people are complaining they cant afford to buy a house
and rents are too high.

Cookie_Monster

PhoenixParker wrote: »

It should be something that you could live in permanently even if that wouldn't be your ideal.

Minimum time horizon ten years.

:pac: what?

we built our first house, sold it two years later. Probably a year or two sooner than we imagined but it was designed in the first place to be sold on in the short term. What exactly is wrong with doing something like that?

can't see us having our current place for more than 10 years either...

Interested Observer

Cookie_Monster wrote: »

:pac: what?

we built our first house, sold it two years later. Probably a year or two sooner than we imagined but it was designed in the first place to be sold on in the short term. What exactly is wrong with doing something like that?

can't see us having our current place for more than 10 years either...

It has worked out for you and that's fine but if you buy with the intent to sell (having taken a mortgage) you are obviously reliant on the house being worth as much or more in 5 years as it is now. That's something totally out of your own control.

And why would you build something and then sell in 2 years? I can't understand that at all. I would imagine it's highly unusual.

screamer

This first house stuff is a load of BS. Learn from the generation before you, and buy something that you can live in forever, when you do buy.
Don't get stuck with something that is too small for your needs, that you can't sell and become an accidental landlord whilst you have to rent a bigger place.......learn from those who made those mistakes before. A starter home is BS pedalled by banks and estate agents who want you to sign on the dotted line, after that you're on your own, so make sure you make a wise choice. A starter home has a full price and length mortgage that you have to pay, just the same.

OldMrBrennan83

The whole "first" home mindset is what landed everyone in the soup.

The J Stands for Jay

Patww79 wrote: »

The whole "first" home mindset is what landed everyone in the soup.

Remember, it's not a property ladder you'll be getting on, it's a property snake.

L1011

Once you're prepared that it could be forever if circumstances change; planning for maybe 5 years is OK - allows time for savings to recover and so on.

But it has never been safe to buy somewhere only suitable for the short term - nationwide price crashes are only one of many reasons you could find yourself unable to afford to move.

seamus

The "first" house concept is sound. A younger person is simply not going to have the bedrock of savings behind them, or the income to support, buying the house that will suit them in 20 years time.

Ideally, it would, but practically it can't. It's like saying that buying a 3-door hatchback for your first car is ridiculous, young people should be trying to buy an SUV or an executive saloon to maximise their use of the vehicle. It's just not practical for them to do so, on many levels.

As said above though, if you're buying with the idea of selling in five year's time, you're going about it all wrong. This is what you can do when you're buying investments. When it's the roof over your head, your personal circumstances will dictate your plan more than your financial goals. You don't have to buy something that you will stay in forever, but you should be capable of living in it for at least a decade. So don't buy something exceptionally small or in a dodgy area, or 20 minutes from the nearest civilisation on the basis that, "I'll put up with it for a few years and then move on".

So if you're 25 and single, a one-bed apartment is a bad, bad buy. In ten years' time you could married with one child and another on the way. If you're 45 and single, then even if you meet someone you're not going to need more bedrooms, your child-rearing days are gone. So a one-bed might suit you down to the ground.

drunkmonkey

I know lads have started down the baby road over 45, I'd be one of the younger dads at the creche drop off and I'm over 40.
If your 25 you should be thinking of spring break in Cancun not buying into a boxty apartment in a housing bubble.

catrionanic

drunkmonkey wrote: »

I know lads have started down the baby road over 45, I'd be one of the younger dads at the creche drop off and I'm over 40.
If your 25 you should be thinking of spring break in Cancun not buying into a boxty apartment in a housing bubble.

That has to be unusual though. Unless they're all finding much younger partners.

At 25, I was planning my wedding and applying for a mortgage. Now, at 30, I'm married and due to have our second child next week. Our first house is sold and we are moving into our second home within the next few weeks. I'm glad I didn't spend all my wages on spring break in Cancun!

Different strokes for different folks. I think it's all about trying to envisage how life will probably be in 5-10 years time and buying a home accordingly. And for most single people over 40, that doesn't involve a rake of children requiring a rake of bedrooms.

eviltwin

I bought my house as my forever home, it's big enough and I love where I am so we are happy to stay. My kids are settled here to do I wouldn't move them. I have the mortgage almost paid so I'm looking forward to having extra money in my pocket.

StereoSound

Depends on who your neighbors are...... You might 20 years of peace before a pr!ck moves in next door to you, then your done.

eviltwin

drunkmonkey wrote: »

I know lads have started down the baby road over 45, I'd be one of the younger dads at the creche drop off and I'm over 40.
If your 25 you should be thinking of spring break in Cancun not buying into a boxty apartment in a housing bubble.

I bought my house at 25. I had my friends tell me I was too young to be tied down to a mortgage. I'm 41 now and the house is nearly paid, my mates are stuck at home with parents or doing a crazy commute. I'm glad I bought when I did.

James Bond Junior

catrionanic wrote: »

That has to be unusual though. Unless they're all finding much younger partners.

At 25, I was planning my wedding and applying for a mortgage. Now, at 30, I'm married and due to have our second child next week. Our first house is sold and we are moving into our second home within the next few weeks. I'm glad I didn't spend all my wages on spring break in Cancun!

Different strokes for different folks. I think it's all about trying to envisage how life will probably be in 5-10 years time and buying a home accordingly. And for most single people over 40, that doesn't involve a rake of children requiring a rake of bedrooms.

I bought my first house at 27, by myself. I bought at just over twice my single annual income and it is very much a starter home although a decent sized 3 bed. My fiance and I are now able to enjoy "spring break in Cancun" types of holidays because of that and will save towards the forever home at the same time. Granted I bought at the bottom of the curve but there is wrong with buying a "starter home" once it isn't costing you a huge amount of your take home pay. Even if there was a dip in the market, by buying well below my means I am insulated to a degree.

M.Cribben

0lddog wrote: »

Meanwhile, in Tokyo a house is reckoned to have no value once its 30 years old. Its considered a depreciating asset.

Having lived in a number of old houses I think its a good point

https://www.youtube.com/watch?v=iGbC5j4pG9w

I'm looking forward to receiving nearly half the housing stock in Ireland (over a million homes) for free as they have no value. Where do I sign up?


Never heard such rubbish in all my life.

StGriffen

seamus wrote: »

The "first" house concept is sound. A younger person is simply not going to have the bedrock of savings behind them, or the income to support, buying the house that will suit them in 20 years time.

Ideally, it would, but practically it can't. It's like saying that buying a 3-door hatchback for your first car is ridiculous, young people should be trying to buy an SUV or an executive saloon to maximise their use of the vehicle. It's just not practical for them to do so, on many levels.

As said above though, if you're buying with the idea of selling in five year's time, you're going about it all wrong. This is what you can do when you're buying investments. When it's the roof over your head, your personal circumstances will dictate your plan more than your financial goals. You don't have to buy something that you will stay in forever, but you should be capable of living in it for at least a decade. So don't buy something exceptionally small or in a dodgy area, or 20 minutes from the nearest civilisation on the basis that, "I'll put up with it for a few years and then move on".

So if you're 25 and single, a one-bed apartment is a bad, bad buy. In ten years' time you could married with one child and another on the way. If you're 45 and single, then even if you meet someone you're not going to need more bedrooms, your child-rearing days are gone. So a one-bed might suit you down to the ground.

I think that chimes closely with my thoughts - obviously if you could buy a "future proof" home that would be ideal but given financial constraints that either necessitates being up to one's eyes in debt or moving out and having a long commute/being away from amenities you like.

I'm thinking if you can get a 3 bed in an area you like that'd be acceptable for guts a decade if up to 3 little people arrive. No guarantees kids or more than one kid will arrive in any event either.

Staph

Whether you're buying a forever home or a home for the next 5-10 years, it's important that you consider important amenities/features that you must have in your home. I feel that you would be more inclined to buy a short-term place and not factor in certain aspects or inconveniences due to it being a 'temporary situation'. Like would you consider off-street parking/transport links/etc a deal breaker in a forever home, but feel you could live without it for 5 years? But circumstances change and you may end up with something not suitable for a future stage in your life.
If you're buying something for the short-term, get something that could work for longer than you anticipate.