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Hello all:

I am third year associate, interested in buying a home in a major Southern United States metropolitan market. I work at a firm that pays below market but still well (at least I am pleased with it) and as a third year will make around $215k (including bonuses) this year. I have about $170k saved ($30k as emergency fund, $90.5k in high interest (5% APR) savings account intended to be down payment, and $49.5k in marketable securities)), and owe $17k in student loans (which I will likely repay in full once interest begins accruing again).

The median house price in this area is $400k but to live in the city in a nice neighborhood with excellent public schools and a 15-20 minute commute to work, it costs between $550k to $750k to get into a 3 bed, 2 bath with less than 2,000 square feet. With current interest rates, that equates to around $3,000 to $5,000 a month in monthly housing payments. With my income, the percentage of my pay is commensurate with most financial advisors advice (liberal Money Guys - 30% of gross pay = $5,375; conversative Dave Ramsey - 25% of take home pay = $3,135.42).

I think I am financially ready to purchase a house, but I do not want to overpay. I also do not want to go and live out in deep suburbia on the outer edges of sprawl. That said, I could get way more house (and the firm offers work remote as an option). I do not want a condo either (tired of living on top of people)... Also, I am not handy and do not know if it would be the highest and best use of my time to hire contractors after buying a fixer-upper or foreclosure property. Finally, I am not super concerned about this factor due to the heavy migration to the MSA, limited supply of homes, and hot job market, but, given the fact that I grew up through the Great Recession and saw its impact on many family members and friends, I do wonder if we are in bubble and I do not want to lose my shirt. I am confident that my firm needs me and I like the people, so I can see myself in this market (my home state with family and friends, where the flagship law school is where I got both BA and JD from) for the foreseeable future, if not the rest of my life. I think when rates come back down, the market is just going to appreciate once monthly payments become more affordable for the average person again...

Anyways, I would love to hear anyone's thoughts on whether I should go ahead and buy a house or wait. Also, if you have time, so I can evaluate how others have approached, please disclose the following:

1. Associate Year home was purchased
2. Price of home
3. Metropolitan Area or at least reference to size (Mega - +10M population; i.e., NY, LA) (Big - 4M-10M; i.e. HOU, DAL, BOS, SEA) (Medium - 2M-4M; NASH, DEN, ORL) (Small City - <2M)
4. Income at that time
5. Assets/liabilities at that time
6. Any other relevant information to share

Thank you

Sure. I'll do the best I can. I'd recommend buying- merely because I'm an advocate of it. Sounds like you are in a Nashville type market at a Baker or Bass like firm (I could be wrong). If it's a Nashville type market, I'd certainly buy.
For the record, I only did regional BL 1 year (think Butler/Baker) in a Southern small city market (think Bham, Memphis, NOLA type). Houses are fairly cheap here and we paid 600ish for ours in a nice suburb. I now work fedgovt and my partner also works and makes a similar salary to me.

1. Associate Year home was purchased - first year.
2. Price of home- 600kish.
3. Metropolitan Area or at least reference to size (Mega - +10M population; i.e., NY, LA) (Big - 4M-10M; i.e. HOU, DAL, BOS, SEA) (Medium - 2M-4M; NASH, DEN, ORL) (Small City - <2M) 1-2 million metro area.
4. Income at that time - combined income 250k.
5. Assets/liabilities at that time - 60k debt from law school.
6. Any other relevant information to share - spouse works. I had around 50k in liquid and partner had around 90k. We put 120ish down on the house.

I'm from this city and came back after law school. I knew we'd be here at least for a little while. City isn't booming like a Nash/KC/Charlotte type city, but it has held steady since I was a kid.

It's been a few years now and we are quite happy. We have a few savings accounts as well as an investor (which hasn't been as good as we had hoped). I think a house is not a bad investment. Don't dump all your eggs into one basket, but it sounds like you are financially in a sound spot to purchase a 600k house.

I bought and my details are below, but will caveat this by saying we certainly RUSHED to buy a house sooner than we would have because it was 2021 and interest rates were crazy low.

1. 5th year associate when made purchase
2. $1,350,000
3. Major metro area (NY/LA/SF/DC)
4. Market comp ($345k salary plus $100k bonus and whatever special bonuses that year)
5. Basically spent all the cash we had for down payment
6. We were lucky and timed the interest rates well, because on our jumbo mortgage (we only put 10.01% down) we still got a rate of 2.75% with no PMI, so we only pay a total housing payment of ~$6000-$6500 per month. It also seems like we picked a decent area because I regularly check my Redfin estimate / Zillow Zestimate and it seems like based on other comps our house is worth at least $100-$200k more than we paid for it 2 years ago (which doesn't matter because we don't intend to move anytime soon, but I sleep better at night believing that fact). Spouse also works full time.

1. Just went in-house (year 4)
2. $500k (10 years ago)
3. Texas
4. Equivalent to biglaw 2nd year at the time
5. Spent all our cash, did an 80/10/10 mortgage (only 10% down)
6. Mortgage was in the 4% range, refinanced out the piggyback mortgage the following year and had one in the 3.5% range. Lived in the house for 7 years before upgrading to a new house. Current mortgage is 2.8% and early 2021 vintage.

The thing that's totally killer for buyers now is mortgage rates. Those who bought in 2021 or before are sitting on sub 3% mortgages. Mortgage payments can be nearly double what they would have been for the same house 3 years ago.

As to whether to buy now or wait, I can't really tell you what the future holds. Current mortgage rates are high relative to recent history, but they are closer to the long-term historical average. I wonder how many people out there can really afford both the elevated purchase prices and today's mortgage rates, and if we eventually run out of enough of buyers willing to do it.

Bought as a third year associate. Almost 5 years later, house has increased in value almost 50% (not sure we would get that in current market, but still been a good investment)

1. Associate Year home was purchased: 3rd year
2. Price of home: 650-700k
3. Metropolitan Area or at least reference to size Major Market (NY, LA, Chicago, DC)
4. Income at time: I think the market rate was like $220 for 3rd years.
5. Assets/liabilities at that time: Paid off loans, have a couple hundred thousand saved up
6. Any other relevant information to share: Spouse also in law making good money.

Anonymous User wrote: ↑

Tue Aug 15, 2023 2:39 pm

), and owe $17k in student loans (which I will likely repay in full once interest begins accruing again).

Had to respond because of this... Have you not heard of the new SAVE plan? Interest isn't a thing as long as you make your monthly payments now.

Anonymous User wrote: ↑

Thu Aug 17, 2023 10:30 pm

Anonymous User wrote: ↑

Tue Aug 15, 2023 2:39 pm

), and owe $17k in student loans (which I will likely repay in full once interest begins accruing again).

Had to respond because of this... Have you not heard of the new SAVE plan? Interest isn't a thing as long as you make your monthly payments now.

I don't think it does away with interest entirely. Your payment is determined by your income, and you no longer have to pay any interest remaining over the amount of your payment, which gets rid of the dramatic negative amortization. But that doesn't mean none of your payment goes to interest.

Also, $17k is tiny tiny debt, and for someone in biglaw, even if not market-paying, just paying it off and getting rid of it makes sense.

(OP, sorry I can't really help with your original question - not in biglaw, and in a relatively low COL part of the country, so my ability to buy a house doesn't provide much insight. But I will add that I think people can get a little too caught up in financial optimization. No, don't buy more than you feel comfortable paying monthly, and yes, think about how easily you could sell it if you needed to (assuming a reasonably normal market, rather than some apocalypse where every currently desirable neighborhood tanks for some reason). I like the advice not to buy the cheapest/smallest nor the most expensive/biggest house in the neighborhood. But if you want to live in a house and stop paying rent, just buy a house.)

1. Associate Year home was purchased: Beginning of 4th Year
2. Price of home: 570k
3. Metropolitan Area: Atlanta suburbs (about 45 minutes to downtown)
4. Income at that time: 250k base + bonus (30-60k); sole income earner; spouse is SAHP
5. Assets/liabilities at that time: 240k in student loans; have never made a payment because of COVID; riding PAYE train for a while.
6. Any other relevant information to share: 5% down on house; went with 15 year mortgage at 5.0% interest; total payment is $5,400 ($4,250 P&I, $600 taxes, $200 insurance, $350 PMI for first 3 years only).

Monthly payment is a bit more than I wanted, but honestly I love the idea of having my home paid off in 15 years (hopefully less; and at the time of purchase, rates for 30 year mortgage were nearly 2% more than what I got my 15 year mortgage for (I.e., 7% vs 5% in early 2023 — rates have since gone up even higher).

The home is also a bit further from the city than I initially planned…. But it’s located in a beautiful golf course/country club community, newish home (about 15 years old) with 5500 square feet including basement, and public schools all 10/10, among best in state. With the benefit of hybrid remote work, I couldn’t pass up this massive lifestyle upgrade for my family (especially not in exchange for saving a mere 20 minutes on my commute 1-2 per week).