# Dilemma - Buying first house!



## TK.61 (Mar 27, 2012)

Hi there, looking for opinions on my first house purchase. I am buying with the girlfriend and we are sort of at a crossroads. I am looking for opinions as many people on here may have gone through the same dilemma. 

About us:
DINK - no plans for kids 
Above average household income - stable jobs.

First option - More expensive house (5% more) that has no garage and an unfinished basement. The main floor and upper floor have a huge wow factor - amazing kitchen, beautiful master suite, great fire place. Garage is top of my wishlist so this house is a compromise for me, but there is room for it to be built. Two decks - one west facing, one south facing, both pretty big. Overall house has big WOW factor.
Pros: Amazing house, can live here for 10+ years, can (will) add value by building garage (within first year) and developing basement eventually.
Cons: Cash outlay for garage and basement. monthly costs will be +$150 versus cheaper option.

Second option: 5% Cheaper. Nice house overall, fully finished with basement and garage. Nothing will wow you but nice in general. Basically how I'd describe it is that it meets our needs but nothing special. It has a master suite, but not a great master suite, it has a garage, but a small one etc. It meets our expectations but doesn't exceed it in any category.
Pros: Fully finished, won't need to put any money into it. Can support us for 3-5 years. We can save all that cash we would be putting into other house.
Cons: Will need to upgrade in 3-5 years. 

We are stuck, how I see it is option one is a bigger risk, option two is safe. We see the benefits and drawbacks in each. Neither house will make us house poor, although option one we will be saving for developing our house, option two savings will go to savings.

So I am asking CMF for all your wise opinions.


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## OnlyMyOpinion (Sep 1, 2013)

Are they beside each other? 
Probably not, they are are in different locations. You have not mentioned location, that can be more important than the house itself.


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## heyjude (May 16, 2009)

Location, location, location!


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## Just a Guy (Mar 27, 2012)

Who are you trying to impress?

Buying to impress others rarely works out well.


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## mordko (Jan 23, 2016)

Went to the market. One guy was selling big water melons for 5 dollars. Another guy was selling a small water melon for 3 dollars. Should I buy the big one? But for $5! Or a small one? But for $3! I like the big one. But expensive! The other one is small. But cheaper! Which one should I buy? 

Not sure how anyone can help here.


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## carverman (Nov 8, 2010)

TK.61 said:


> Hi there, looking for opinions on my first house purchase. I am buying with the girlfriend and we are sort of at a crossroads. I am looking for opinions as many people on here may have gone through the same dilemma.
> 
> About us:
> DINK - no plans for kids
> ...


In spite of the "wow factor", having no garage and having to deal with scraping ice off cars in winter,
and not having to be able to store things in the garage..CON!

Pros: Amazing house, can live here for 10+ years, can (will) add value by building garage (within first year) and developing basement eventually.
Building a garage costs more than you think. Cost of construction, NEW SURVEY, additional assessment
if it is more than 100 sq ft, permits, electrical hookup...a 10 x 20 ft single car will run about up to]
$20K to build..then there is the increased assessment to your municipal taxes on top of that because orf the new garage.


> Cons: Cash outlay for garage and basement. monthly costs will be +$150 versus cheaper option.


Plus the upfront costs...getting a building permit on the existing survey. 
--------------------------------------------------------------------------------------------------


> Second option: 5% Cheaper. Nice house overall, fully finished with basement and garage. Nothing will wow you but nice in general. Basically how I'd describe it is that it meets our needs but nothing special. It has a master suite, but not a great master suite, it has a garage, but a small one etc. It meets our expectations but doesn't exceed it in any category.
> 
> Pros: Fully finished, won't need to put any money into it. Can support us for 3-5 years. We can save all that cash we would be putting into other house.
> Cons: Will need to upgrade in 3-5 years.


*You are not going to build enough equity in 3-5 years to uPGRADE to better houise that suits your needs.*

Besides the purchase price, you have to consider, CLOSING COSTS (legal fees), real estate commission, with HST on the real estate commission, moving costs, new cost associated with the new house that you would be moving to etc etc etc.

Trying to "flip" a property within a short period of time takes timing and a lot of luck.
Besides, having a girlfriend is not the same committment as being married. A lot of things can change in 3- years and hopefully not, but if you don't get along and have to split up, with the GF living with you at least a year, she can go to court and ask for 50% of the "cohabitation assets", which includes an equity in your shared property.



> We are stuck, how I see it is option one is a bigger risk, option two is safe. We see the benefits and drawbacks in each. Neither house will make us house poor, although option one we will be saving for developing our house, option two savings will go to savings.
> 
> So I am asking CMF for all your wise opinions.


I've been there before and gone through a bitter costly divorce after a marriage of 22.5 years and $50k in legal costs fighting over support and MONEY. It was an expensive lesson. The ex took me to court to *kick me out of my own home,* (I was paying the mortgage and taxes), occupied the house for 2 months and then rented out my "marital home" to profit from it. 

I never got a cent from that, even though I was paying her monthly support by that time.
Divorce was dragged out by her lawyers for 3 years. The female judge threw the book at me and I had to pay my ex my remaining share of what was supposed to be MY HALF of the proceeds from the sale. 

In the end, the c*ourt assigned ME a 5% interest penalty on everything* I had to
pay her immediately, (equalization of my company pension, her half of the sale of the house held in escrow by the closing real estate lawyer from `1995 to April 1998.

Nearly $9K in pre-judgement interest added and $1500 in post judgement interest after the final divorce papers were processed.

*TREAD CAREFULLY my forum friend..*.things can change unexpectedly in the process of living and especially in a relationship.


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## Spudd (Oct 11, 2011)

I don't understand why you would need to upgrade house #2 in 3-5 years. If you're DINKs it's not because kids will come along. If it's because you really, really want a nicer house with "wow factor", I would suggest waiting until you find the right house, with "wow factor" and a garage. The Calgary market is a buyer's market. Be patient and keep looking.


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## carverman (Nov 8, 2010)

+1 to Spudd's comment. ^^^^^^^^

Calgary right now can be considered a "depressed market" based on what has happened to the oil market, oil sands and anything related to supporting the oil industry. 
My brother, who lives closer to Grande Prairie (Alta) in our weekly conversations mentions that the economy is not really improving that much and whether it will improve in the next 3-5 years is anybody's guess.

The real estate market bubble in Calgary/Edmonton has burst, anyone that had jobs or depended on the oil industry for their income is feeling the pinch.

Lots of people have lost their homes to foreclosure after losing their jobs in the "oil patch", and not being able to find jobs in the area that they are qualified for. 
More houses will come up for sale from foreclosures and even some perhaps at (firesale - no pun intendedhere) listing prices.

My brother, who has been teaching at Grande Prarie college has mentioned that even teachers there have been cut from the college staff or handed forced retirement,because
enrollment has declined drastically in many faculties forcing drastic measures by
NAIT to avoid serious financial problems. The Alberta gov't is no longer in good financial
shape to bail them out for any shortfalls, so to avoid closing the schools entirely or
relocating to a major urban centre, there isn't much choice. 

Many businesses that were doing well before the oil patch collapsed are now shut down or running on minimum staff reconsolidation of premises/locations.

To buy a property now, and then expect the same inflated resale returns as in Toronto or Vancouver in 3-5 years in Alberta, down the road.... is wishful thinking at it's best.


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## Just a Guy (Mar 27, 2012)

I disagree with carverman that the bubble has burst in Alberta. I think some of the air has rapidly been let out, but prices have a lot further to fall.real estate doesn't tend to tumble overnight, people generally do everything they can to hold onto their houses, selling other things to make the payments...people selling in Alberta seem to be trying to hold firm on the prices. While there aren't a lot of buyers currently, people aren't willing to sell at the lower prices yet either...it's a standoff right now.

From what I've seen prices are somewhat "steady" right now in Alberta, but that's because only a few houses are actually changing hands...buyers don't want to pay what sellers are asking and sellers are not willing to drop their prices so nothing moves and the data says house prices haven't really dropped...even the foreclose listing are highly priced (banks are required to try and get "fair market value", so the first few times they list they tend to list high and don't sell). Take a look at the number of expired listing, or days on the market...both numbers are unusually large. 

I think the burst hasn't happened yet. It should start soon as people get to the point where they are forced to sell. Of course, if the oil market recovers before that happens, Alberta will avoid a real crash. Even if it crashes, and the economy recovers a bit later, as long as interest rates remain low, people will quickly bid the prices back up within a few years.


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## mj.thompson (Feb 22, 2017)

Buying your first home can be a little bit tricky, I would suggest that you find a real estate agent. Though it's not necessary when buying a home, it is recommended — especially if it’s your first time going through the process. Having someone who is knowledgeable about the market leading you through the process could take a big weight off your shoulders.


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## OhGreatGuru (May 24, 2009)

Ordinarily I would recommend Option2, as I see too many couples buying more house than they need. But if you can afford it, maybe No. 1 is the better choice.

My guess would be the GF wants Option1, partly because she doesn't want to live through 10 years of renovations to get the house she wants. How much time do you really have to work on renovations?

Have you checked with city to make sure you really can add the garage?
For the time being, the unfinished basement gives you room for workshop and storage, unless you want to work on restoring cars.

OTOH a garage may make sense in your climatic zone. Would zoning allow you to put up a portable structure as a temporary measure?


In option 2, kitchen and bathroom renovations are expensive (and disruptive), though they increase home value.


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## nobleea (Oct 11, 2013)

If you ever have kids, having a fancy master suite is like having a fancy formal dining room. It will never get fully used. I've seen so many homes of friends that have beautiful master spa like ensuites that have toys and laundry filling up the free standing tub. And only one of those multi-head fully body shower heads ever gets used because they don't have time to enjoy it and it uses so much water.

From what you are describing, I would expect a hell of a lot bigger difference in price. Like 20% difference. Either the cheaper one is overpriced, or is in a much nicer neighbourhood. Location location location, as has been said before.

Having a new double garage built for you will run 20-40K or more depending on how fancy you want it. If you DIY and get a small apron (driveway), you could do it under 10K.

Either way, it sounds like you've already made up your mind. If its your first house, you are probably underestimating ongoing costs and maintenance, so if you were to buy the cheaper one, chances are you wouldn't be able to afford and upgrade in 5 years anyways.

I'd stay away from anything 800K plus in calgary. A lot of bonuses paid those mortgages and those are gone now even if some high paying jobs are returning.


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## Mookie (Feb 29, 2012)

Always consider resale value when buying a home. Don't just think about what you and your GF like about the house, think about how easy or difficult it may be to sell later, because that day will come sooner or later. As mentioned by others, location is a huge factor. 

Assuming location is about the same for both, you say that house #1 is only 5% more money than house #2, but if you buy house #2, you will need to upgrade in 3-5 years. If "upgrade" means buy a bigger/better house, then I think the cost of buying and selling twice is going to eat up that 5%, in which case you might as well buy a house now that you'll be happy with for at least the next 10 years, assuming you can afford it without having to get a high ratio mortgage.


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