Yes and no. This is a long answer explaining how/why we got the house we did and why I think selling won't be a problem.
I have a really good credit score, and I probably won't take out student loans (NCSU is relatively cheap for IS) or if I do, they will be limited and mostly to keep liquidity in our current assets.
I intentionally searched in very strict parameters: I wanted a house in a nice neighborhood near nice ammenities and close to employment and school options. The statements about location are very true. It was also important for me to live close enough to have less than a 15 minute vehicle commute during rush hour. So, my house is close to 3 post-secondary schools and near the research triangle (a major employer), and not far from several other schools and large employers.
If I applied the same parameters to rental houses and apartments. The cheapest I found was $650/mo in a not so safe area. The cheapest I would be willing to live in was $955/mo, and I would need to provide pet rent and there wasn't a suitable fence (I don't mind walking my dogs, but secure yard is a huge benefit if life gets too busy.) That didn't include utilities or renter's insurance. We have a great insurer (hubby is former military) so the different in renters and home-owners isn't much.
So, I took a look at homes in those parameters and found I could get a much larger house with a larger yard in a better location for a similar cost. So, 4 bedroom with 3 bath vs 2 bedroom 2 bath, with 0.5 acres vs 0.25 acres (or less.) Better location.
Once I did all that, I narrowed down where I would search (method mentioned in another post, but basicly used a map, put in paramter 'circles' and marked out unacceptable areas.) We then worked with a realtor. The objective was to look at houses in general, but with an eye towards short sales, REO, handman specials, as is, and motivated sellers. Our realtor pulled up comps for the neighborhoods we were most intersted in (so we had some basic idea whether the price was reasonable.) We also put additional emphasis on low-turnover neighborhoods (meaning that houses rarely come available and often have increased demand.)
We typically considered a house the day it came on market. We decided whether or not to see it, and arranged to do so within 7 days. We put bids on 3 houses and stuck to our guns on price (we negotiated but had a max price in mind with certain conditions.) We looked for 'ugly' houses with good bones. In other words horrible paint jobs, dated kitchens and bathrooms, etc.
We found a motivated seller whose house was reasonably listed on the day it listed, looked at it on day 3 on market and made an offer. The house is adorable structure wise with great bones. Split level ranch with great natural light on all levels, new-ish windows (3yo) and floors with a once nicely landscaped yard and an inground pool and a fence. The yard hasn't been maintained but can be recovered. The painting/wallpaper throughout the house is attrocious. Carribean colors, including electric pink in the kitchen and neon blue in one bedroom, candy wall paper in another, and torn wallpaper in several (torn in chunks then pasted to the wall.) So, just what we were looking for!
We offered a decent price (but not asking) and we covered all of closing costs. It was accepted immediatly...the only caveats that she wanted us to close earlier (which was fine.) Our final price was 2004 pricing in the area. Comps out at 25k more than we paid...will sell much better with paint and updating (all of which I can do over this summer and next...we have all the tools and skills.)
I think, with less than $500, I can do some major cosmetic fixes. Major ammenities (grocery, mall, fitness center, etc) are a 5 minute walk, but seperated from the house by a green belt. Our back fence is on the green belt with a gate to the paths. No HOA. Older neighborhood with wide roads, ample parking.
So, my answer comes down to this; if I can buy a house at or around the same total output over 3-4 years as I would have renting for 3-4 years (including potential reasonable rent increases) and I can find a good deal, it makes sense to buy, especially if the ammentities are better. If I can sell the house in 4 years at the comp price (or close to the comp price) I will break even at worst. I will more than likely make a profit (sell price -depreciation -repairs/improvements -closing costs.) If we can't sell, we will rent it out. Just in case, we did go with a fixed rate mortgage. I also plan on renting out rooms. My cost each month is about a hundred more than the lowest rent at an acceptable place. Normally, if I was in a seller's market and thought the market would keep cooking for 5 more years, I would have gone for a low interestest 5/25 mortgage (the ones that are getting a lot of people in trouble now) and be more motivated to sell in 4 years (or refinance.)
So, because we found a great deal in a great location, I honestly think we will be ok selling. We also have a back up plan. Rents in the area for smaller houses are higher than our mortgage. I really think the numbers need to make sense to justify the investment. Houses can be huge $ pits, especially if you have to hire out work. Also, the housing situation in the area is important. Major cities can be more problematic to buy in. Small cities can be harder to sell in (especially if a major employer leaves.) If my money (even loan money) has to go somewhere, I owuld like to have an invsetment. I also hope to find 1-3 housemates. The house is configured with a second master suite that is seperated from all the other bedrooms, which makes housemates more attractive. We did look at nicer houses that were more to our style and tastes but not as good for housemates and/or as good of deals. We really looked at this as an investement, not a home. Also, we will do some work to make the place even more attractive to future home owners (like making the back yard even more of a pool side oasis) which will hopefully attract housemates as well.
A lot of people in my class are buying condos near our school. I can't do the condo thing, but it can be a really good option for first time home buyers that don't want some of the headaches. In some areas they are going really cheap right now. Sorry for such a long response.
