Since I got married people have been constantly asking me two questions. One is, "are you pregnant yet?", and the other is "are you going to buy a house?" If you are a reader of my personal blog you would know that I do not want to buy a house in the San Francisco Bay Area right now because the prices are still quite ridiculous. The hubby and I always tell people that we cannot afford a house, but that is not entirely true. We can afford to buy a house with a pretty nice margin of comfort, but we do not want to buy one just because we can afford it. One day I told someone that I do not want to afford a house right now and he asked me what I meant, and here is my explanation.

  1. We do not need to spend more - The cost to own a unit similar to what we live in is two to three times of what we pay in rent. The only purpose of a house is to provide shelter, and I do not see a need to upgrade just because we can afford it.
  2. Housing prices are dropping - This is an event that is being felt all throughout the country. In parts of the Bay Area prices have been dropping 10 to 20% and it is expected to drop even further. This means that if I bought a house now it would not be worth what I paid in just a few months.
  3. Owning a home would bring additional headaches - As renters, we do not deal with maintenance, and that is very pleasant when a roof or pipe needs repairs. Additionally, we are a young couple just beginning our careers, and we are not quite sure where we will end up. It is much easier for us to pack up and leave since we are renters.

Even though the example I used is a house, I think before you purchase anything you should ask yourself the following questions even if you could afford it.

  1. Do I really need to buy this?
  2. Does this purchase improve my life in a significant manner?
  3. Is this item worth my money?

Obviously, on the issue of purchasing a Bay Area home, I would answer no to all three of my questions and that is why I am not buying one even though we can afford it. Sometimes it is not that easy to answer all of these questions, but you may find that you can avoid a lot of frivolous purchases just by thinking about these questions. Unfortunately, I think a lot of people only ask themselves one question before a purchase: "can I afford this now?"