We moved states right before the pandemic and originally planned to buy a “starter” home. We are pretty set on buying a home that we could buy outright if need be so we were looking to spend under 700k. Of course the neighborhood we are looking to buy in (Phoenix) homes have gone up over 30% in the past year. While under 700k could get you a super nice house last summer, this summer homes I wouldn’t even have looked twice at are going for 750k.
We can easily save up another 300k in the next two years which means we could easily cover a million dollar home (which we planned to buy 5 years from now anyways). Hopefully in two years inventory won’t be as bad either so we will actually have options rather than settling for 1 of 5 houses that fit our needs. Although home prices do seem to be “leveling out” I’m worried that these homes selling for 750k now will be a million in two years. Looking at historical data it seems very unlikely half a million dollar homes will appreciate 50% in a course of three years, but after the rapid appreciation this past year I wouldn’t be shocked. We will obviously keep our eyes peeled if anything truly special comes on the market, but I’m wondering if this is truly a better strategy than paying for a house that I’m not crazy about just because we can afford to buy now.