Dear For Love & Money,
My partner is our family breadwinner. We live in the Bay Area where housing prices are astronomically high. We have two young kids, are upper-middle class, and are doing just fine.
After years of making no money as a writer, I finally got a book deal and will be bringing in an additional $85,000 over the next two years. My partner wants to put that money towards our kids’ college funds. I want to try to buy a house with it (we have other house-buying money put aside). He thinks it’s a smarter financial decision to put it in a college fund than to buy a million-dollar house (which is more like $1.2 or $1.4 million where we’d like to buy).
I feel like housing prices will only grow and a house is a good investment. He thinks the market will crash eventually. Who’s right? How do we decide what to do with this extra influx of money?
Worried About Getting It Wrong
Dear Worried About Getting It Wrong,
I have a theory that underneath the straightforward decision “to buy a house or not to buy a house in this market” lies a difference between how you and your partner view this influx of cash.
I say this because I notice the very first thing you told me in your letter is “my partner is our family breadwinner.” I also notice your use of the word “finally” in reference to this new contribution you’ll be making to your family finances, but perhaps the most important clue in your letter that supports my theory is in the difference between how both of you want to spend the money.
He wants to put your new financial contribution in a savings account marked for a future concern while he continues to cover the family’s more immediate needs with his income. You, on the other hand, want to put the money towards a new house — a far-off financial goal that you now have the power to achieve sooner.
The difference I see is that your partner’s plan delays the impact of your financial contribution while your plan could change your family’s lives as early as next month. If I’m right about this being the true source of contention, I don’t think either of you are right or wrong, but I do think if you communicate why you want to spend the money on a house right now rather than throwing it in a savings account for later, your partner will likely understand.
I know that having an honest conversation about money and life goals is easier said than done because it always comes down to vulnerability and showing your partner your insecurities and dreams, but if your partner understands why you want to spend the money on your family’s immediate needs, together you can come up with a solution that achieves this goal — even if it isn’t buying a house.
That said, maybe I’m wrong and your urgency to buy a house is based entirely on your fear that if you wait the prices will only go up. Your fear and your partner’s hesitancy to buy at the top of a market he thinks is about to crash encapsulates a question on nearly everyone’s minds as we head into the 2022 home-buying season: buy before prices climb even higher, or wait for the crash? Unfortunately, despite a thousand podcasts, think pieces, and economic forecasts, there are no crystal balls.
It’s unlikely that the housing market will crash this year
Despite the annoying limitations of accurate prediction, I still wanted to answer your question to whatever degree is possible. To this end, I spoke with Ralph DiBugnara, the President of Home Qualified, a digital resource for people who want to participate in today’s housing market.
DiBugnara explained the current real-estate landscape like this: What we’re experiencing is a shortage of 2 million to 4 million homes. In his view, even if we manage to cut this number in half over the next 18 months, costs will continue to rise because there will still be a shortage. The shortage is causing the bidding wars, and the bidding wars are driving up prices.
Since you are in the Bay Area, I asked DiBugnara to share his thoughts on your situation in particular. His observations made a lot of sense: Millennials and Gen Zers are increasingly migrating to urban centers, so the prices in the area surrounding San Francisco are more likely to climb than fall for the foreseeable future.
In other words, while nothing in life is certain, there’s little reason to believe this market is going to crash any time in the next year.
The more specific you can be about your goals, the better
If there is one thing I could implement in the financial dynamics of every relationship, it would be specifics: specific goals, specific dates, specific numbers. For many couples, getting lost in the utter unknowability of the future can make these specifics hard to outline, but having a clear idea of what your partner wants and vice versa is empowering information to have.
Because “someday, when the market crashes” is open-ended, it’s hard to make any real decisions on ground that could shift at any moment, or never at all.
Not only will specifics help you make clear choices, but it will also help ease the anxiety that accompanies sharing finances with a whole other person. And as long as you are both flexible when reality charges in and demands it, you don’t have to know what the future holds to plan it according to your highest hopes and wildest dreams.
No matter what you and your partner decide to do with the money, make sure you take a minute to celebrate your achievement. Seriously, from one writer to another, this is huge. Congratulations!
Rooting for you both,
For Love & Money