Life can be unpredictable sometimes, which can impact your home buying plans. While plenty of people find a forever home in a great location and decide to stay there for decades, others consider relocation.
Relocation is a lot more common than you might think. According to a study from Harvard, about 13% of Americans move each year. Most of those are within the same county. However, of those who do move, 14% move to a different state. The same study found the most common driver for long-distance moves is job-related.
For many military members, relocation every few years is a way of life. A promotion or new posting often means moving to a different base. Higher education programs are also common reasons for relocations. Entering or graduating from a program, especially medical school, means moving to a new location after a few years. Plenty of job seekers are open to relocation too. Working remotely is becoming more popular. So exploring new areas of the country without the constraints of an office could mean checking out new spots every few years. It also means you could move to a new area, knowing you’re only going to be there for a limited time.
All that is to say, lots of people are relocating at any given time; you might be one of them. You’re also curious if you should buy a home if you know you’re in a position where you are potentially moving in a few years.
Here are some big things to consider before you buy.
One of the first things you to try and estimate is how long you think you’ll be in your new location. When it comes to buying, there’s often a big difference between owning a home for two years and five or six years.
Part of this difference is based on the upfront costs of homeownership. When you buy a home, you put down funds for fees, and closing costs, among other expenses, which usually amounts to a few thousand dollars. Typically, the longer you stay in your home, there’s the potential to gain some value in it and recoup part of those upfront costs.
A potential con of buying when you know you will relocate is that you might not make up those costs, especially if you plan to move in a year or two.
Another reason to consider buying a home when you know you’re relocating is to keep the home as an investment property. If you’ve been thinking about getting into real estate investing, this type of situation can be the opportunity you need to get started.
For instance, let’s say you got an excellent deal on a beachfront home near your medical school. Now that you’ve graduated, you’re moving to a new state to complete your residency. Instead of selling, an option is to rent it out to tenants or turn it into an Airbnb. As of late 2020, over 4 million people have hosted through their homes or investment properties.
This approach gives you the ability to use the home when you need it but retain it — and get potential investment value as a landlord.
Something else to think about is your current lifestyle. Buying a new home can give you the opportunity to upsize or downsize from your current situation, which better fits your needs.
For instance, there could be instances where your family is more comfortable with extra space. A rental with four or five bedrooms may be challenging to find. So buying a home could give you the space you need for a few years.
Having a home that fits your needs is a positive, especially if you can’t find it in your new location. However, you run the risk with much more or not enough space if your situation changes in a year or two.
Finally, think about your financial situation too. Depending on your location and your needs, it may be more affordable for you to rent versus buy in your new location.
You’ll also want to take a look at the overall housing market. A real estate agent can help. They have lots of expertise in home values in the area and can share insights on if home values tend to fluctuate or are more stable.
That can help you decide if buying a home in the area is worth it for you. Fears of a turbulent market mean it’s not the best location to buy a home, especially for a short time.
It’s important to consider all of your options at the end of the day — both pros and cons. From there, you can determine the best choice for your needs.
If you have questions or need help, OVM is here to help throughout the loan process. If you’re a first-time buyer, a seasoned relocator, or interested in an investment opportunity, we can work with you. Click here to get started today.
HOW DOES YOUR RENT COMPARE TO A MORTGAGE PAYMENT?
Use our easy rent-to-mortgage calculator to estimate how much house you can afford!