“Should we buy a house now, or wait?”

New clients of mine recently asked me this.

David had lived in his rented condo for two years. When he got married, his husband moved in with him. What had worked for a bachelor on his own was cramped with two people. It was an awkward layout with very little storage. The yard didn’t have any space for his husband’s love of gardening to flourish. There was no dedicated office space, and they both now worked from home.

In a year of uncertainty and turbulence, they both craved the stability and relative safety of owning their own home. The fear of their landlord selling the home and being forced to move loomed over them.

But the real estate market in their area was going haywire. Houses regularly sold for $100k+ over asking in a matter of days. Bidding wars were the norm. Offers were being put in with no conditions.

Was it smart to buy a house now?

They had enough saved up for a 20% down payment on a typical house in their area, even with house prices skyrocketing. They had very little other debt. They both made good incomes.

They could buy a house now.

But should they?

That down payment could be strategically invested. Instead of paying interest on a mortgage, their money could be earning interest. The growth potential was substantial, especially considering the power of compounding interest.

If they stayed in their rental for a few more years, they could end up with a much higher down payment (and therefore a much lower mortgage). Even considering the money they would pay out in rent, they would end up ahead: paying less interest, and having more equity in their home. Their rent was less than 5% of the total unrecoverable cost of owning a comparable home. Investing the difference back in the market would increase their growth potential even further.

The numbers were clear in all the scenarios I ran for them.

The numbers said they should continue to rent for the next few years.

But financial planning is about more than numbers.

Financial planning is about creating the life you want to live now, not just the one you want to live in the future.

And right now, they were unhappy.

Their current rental was clearly not working for them - David’s husband was storing out of season clothes in the tub of the downstairs bathroom!  But the prospect of finding another rental and being at the mercy of yet another landlord was giving them anxiety. Their relationship was suffering. Their work was suffering.

It was important to them as a family to own a home.

So they bought a house.

We worked their financial plan around this goal. It meant that they would end up paying more interest on their mortgage long term. But, for them, that was well worth it. We tweaked their financial plan to account for the lost growth on their projected down payment funds, and they are still on track to achieve their other financial goals.

Another client of mine made the opposite decision. She was happy in her rental and liked the ease and flexibility renting provided. So even though she was paying more than 5% of the price of a comparable home in rent – which meant that financially speaking, buying a home would net her more wealth - she continued to rent.

A great financial planner can lay out all your possible options – the costs, opportunities, and results – so you can make a decision that aligns with what is most important to you.

There may be options you don’t know about or have not considered that make more sense with your individual lifestyle and values.

You don’t have to give up something that is important to you in the interest of “getting ahead”.

Book a call to discuss how your financial plan is working to achieve goals that align with your values, not just the numbers.