How to Buy a Home in a High Cost of Living City
Buy a house with family. We live in Seattle, which has the 9th highest cost of living in the United States, according to Axios (2023). Even though that report was from three years ago, I know it’s still mostly true because I checked out a more recent report. Seattle ranks 94 out of 2022 cities in the United States, according to LivingCost.org.
I know that living with family, especially multi-generational living isn’t a common thing in the United States (although some parents who have boomerang kids might disagree). And as a money coach, I’ve given presentations on how Gen X and even Baby Boomers can reduce living costs as we get older. And I’ve never listed living with your kids as an option.
But times change (and so will my future presentations) and if you want or need to stay in a high cost of living city, this is an option. And one my family is deciding to take.
I’m feeling scared and excited. I’ve written before about my experience about how I almost lost my home and how to prepare yourself financially for buying a home.And now I’m writing about the actual process of buying a home! It’s time to take my advice!
Four Steps To Get Started
First, some background. On May 28th, I received a letter from my landlords, letting me know that they’ve decided to sell the home we’ve been renting for the past six years. They offered me the first right of refusal and requested a response by July 1. If we decided not to buy, they asked us to vacate by July 15th. Not a lot of time to figure this out.
I called a family meeting to discuss options. This meeting involved the following cast of characters: my eldest, María, 26, who has lived outside the family home since 2021; my two sons, Giancarlo, 22, and Ryan, 20, both of whom live at home; my mother, 93, who said “yo voy donde me lleven,” (I’ll go wherever I’m taken). As if she has a choice!
I went into organizer mode and listed all the pros and cons of three options:
- Buy the house
- Buy a different house
- Find a house to rent
But first, I had to call Padraic.
Breakfast With Pádraic
When I sold my house in 2020 to avoid foreclosure, my friend Pádraic came to my rescue. He’s a Realtor in Seattle and held my hand throughout the process.
When I told him about the letter, he and his husband invited me to breakfast and through tears and anxiety, I told them I was stressed. They knew my mother had a stroke a few months before and my sister was showing signs of early dementia. How was I going to move? Where would I get the money? I was afraid to use my savings and I wasn’t going to touch my retirement. I didn’t want to separate my family.
At one point, when I told Pádraic that I was 56 and how was I going to get into a 30-year mortgage with the high cost of living? And he said something to me that I keep thinking about, and honestly, I should write it down somewhere as a reminder. He said something to the effect of, “You’re getting into your time to make money.”
That’s actually a really positive way to think about this entire situation.
It made me feel good because all the missed opportunities of my 20s, 30s and 40s don’t mean that I can never ever make money ever again because of age. This time that I’m in is an opportunity. Now. And I can take this opportunity by buying this house. It’s an investment that will grow (hopefully!) and something I can leave my kids.
1. The Family Meeting
Communication is key. I put together a chart with three options: buy this house, buy a different house or rent. The kids weren’t thrilled with the idea of renting. I defended renting. “I’ve lived here for six years I’ve saved more the past six years than I ever have in my life!”
But María said, “Yes, but if they HAD raised the rent, you wouldn’t have been able to do that, and any other landlord will raise the rent each year.”
And they’re right. And the rents for a family of our size is a lot. We’re looking at rents of about $3500 for a three- or four-bedroom house. And with an annual rent increase, it would be hard to save. I agreed with the kids and decided we’d look at the other two options: buying and buying.
For the purposes of stability, we landed on buying the house we’ve rented for the past six years. There are benefits to this because we know the house, it’s close to all major transportation routes, my mother’s and sister’s doctors, and we like the neighborhood. But buying a house in a high cost of living city is expensive.
And María pointed out, “Abue and Rebecca need stability. There’s always going to be an emotional cost in addition to the financial cost of moving.”
By the end of the meeting, Giancarlo enthusiastically said yes to going in on the purchase with me. BUT. I told Giancarlo to not answer right away. “I know you and Catherine (his girlfriend) want to move in together, so think about it and give me an answer by Wednesday.” María also said yes.
2. Waiting For An Answer
We met on a Sunday and I asked Giancarlo to give me an answer by Thursday. He talked to his dad and a few other people, who all encouraged him that it was a good plan. I kept quiet because I knew that I could persuade him either way. He’s a good listener and I know he’d respect what I encouraged him to do.
On Thursday evening, we had a long talk and he said he wanted in. I asked him to explain why. I wanted to make sure because I had asked him to commit to two years. He came back with a minimum three-year commitment.
His reasons were simple: he wasn’t ready to move out, he wanted to be around to help me with my mother and sister, he wanted to invest in property to give him a launching pad for the future. I was touched and I cried and even writing this, I just want to squeeze him so hard. That kid is one of the kindest, smartest, most compassionate people I know. And he’s mine!
3. Organize The Paperwork
I’d be receiving all the paperwork so I could upload it as we moved through the application process. I created a Home Buying folder and it lives on my computer desktop. Inside that folder, I created three folders, one for each of us:
Inside each folder are the following:
- Government IDs
- 2024 and 2025 IRS returns and W-2s
- Homebuyer Education Class Certificates
- 30 days of pay stubs
- 30 days of bank and credit union statements
- Homebuyer Education Class certificates
In the Home Buying folder, I also keep a Word document of questions to ask my lender and real estate agent, along with worksheets and any other random things that come up that I want to save. I also scanned a copy of my landlord’s letter and stuck it in there.
4. Apply for DPAs
What are DPAs? These are programs (grants and loans) that help people buy homes. DPAs exist for first-time homebuyers, people with disabilities, veterans, nurses, teachers and firefighters. Some high cost of living cities have their own programs that can be stacked with state programs. There are programs to help Black and brown folks where there’s a history of housing and lending discrimination. Grants don’t need to be paid back. Loans are often as low as 0% interest and tacked on as a second mortgage. There are rules that govern how DPAs work and how they get paid off, so you’d need to speak to a housing counselor to see if you qualify.
Out of all the things you need to do to apply for a DPA, probably the most common is to take a homebuyer education class. (I think that for one of the DPAs we’ll be applying for requires meeting with a financial counselor.)
How do you apply for a DPA? Usually through your lender. Start by looking for your state’s housing commission or department of housing first. Search “Maryland housing commission” or “Nebraska department of housing” and look on the menu for words like “Programs,” “Services” or “Buying a Home.”
Another way to find DPAs is to start with the U.S. Housing & Urban Development website Buying a Home section. You’ll find resources for homebuying programs in your state. (And if you’re a member of an underrepresented community, be sure to read the Know Your Rights Section. The United States has a long and documented history of discriminating in housing, particularly against Black folks.)
5. Communication Works Both Ways
Make sure your loan officer communicates. The first guy I reached out to was someone listed on the homebuying website as someone who helped people get into a home. We talked on the phone and he sent me a text with the documents he’d need. I started my application, submitted some of the documents and had some questions about the process. No reply. I waited a few days and texted him again. No reply. I waited a week and still no reply.
After about 10 days, I called him to see if he’d been able to review my questions. He said he’d been out of town (there was no out-of-office email reply) and hadn’t seen them. He said he’d review the questions and get back to me later in the day. That was two weeks ago and I’m still waiting.
Well, not really. I ditched him and found another lender. The new guy is quick to reply and doesn’t waste time. These people work for YOU. They earn a commission by following through. I sent the previous guy an email telling him I was going in a different direction. Never heard a word back.
Take Your Time
I didn’t expect to be buying a house this year. Honestly, buying in a high cost of living city didn’t figure on my radar, and I was content to continue renting. I did go see a house in January, but when my mother had a stroke in February, I put off any thoughts of buying a house. At the time I didn’t know that I’d long been taking steps to be in this position, which is a solid one.
Over the past six years as I’ve started this financial journey, I’ve taken things day by day, not an easy feat for someone with ADHD with executive dysfunction and time blindness. I’m impatient, an overthinker, a drama queen and sometimes have a hard time thinking positively.
It took me a long time get to this place. Buying a house is the largest purchase most of us will make and it’s not something you want to do con locura. You want to do it con calma and with care, so that you’re prepared.
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