I can afford to buy a luxury townhome across the street in a neighborhood I love, but I won’t for 4 reasons

I rent in an artsy neighborhood in Baltimore, and construction is currently underway on $399,000 townhomes across the street from my apartment.
Even though I can afford to buy one, I won’t — property values won’t rise much more in this area, so it’s not worth the investment.
My income is also variable right now because of my side hustle, so I’m better off keeping my expenses predictable by paying the same in rent every month.
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I lived in my current apartment for only a few days before construction began on seven new luxury townhomes across the street.

The new townhomes will likely have a contemporary style sure to stand out among the historic, early-20th century row homes Baltimore is known for. I’ve been told by someone who works in housing and development that two of the units will be subsidized with tax credits to lower the $399,000 price tag. Like most of my friends in Baltimore, this particular friend suggested that I look into buying one, and I did.

I missed the window of opportunity

While I love my neighborhood’s artsy appeal and think living here permanently would be great, I’m not going to buy one of these homes. For one thing, I prefer historic homes with charming touches, like vintage light fixtures, built-in shelving, and stained glass windows. But, more importantly — I missed the moment of opportunity to buy on my street, and that’s okay.

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Buying a home valued at $399,000 when the market is unlikely to go up much more doesn’t make sense for me right now. If I had purchased in this neighborhood years ago, I would have been enjoying a nice increase in net worth over the past few years as it’s grown in popularity. But I didn’t.

I’d rather buy a fixer-upper and build equity

Instead of letting FOMO rule my life, I would rather hit pause, do some research, and buy something at a lower price point, even if it means moving to another neighborhood. I’d rather use the wiggle room from buying a home for, say, $100,000 less to factor renovation costs into my loan and customize the home according to my preferences.

Buying at the high end of what I could manage would do nothing but freeze my cash flow while restricting me to what the architect envisioned. Not only would buying a cheaper house help me customize the home to my specifications, but I could also potentially build equity through renovations.

I don’t know if I’d qualify for an income-based tax credit

Secondly, though an income-based tax credit is a convenient and sometimes necessary way to afford a new home, the awards for programs like this are based on what percentage of the Area Median Income a buyer earns.

My income is variable and growing right now due to my side hustle. I know there is a chance I might not qualify if my income is too high, and there are other incentives, like first-time homeowner grants and Baltimore’s Live Near Your Work program, that could potentially be more appropriate.

I’m not sure I want to do the extra paperwork to apply for a tax credit based on an income that is changing, only to buy a house at what feels like a too-high price point anyway. Even if I were to double my income tomorrow, I would still be more interested in buying a lower-priced home and saving the difference.

Renting is more strategic

Last, as my income continues to grow due to my side hustle, I want to take advantage of what is consistent — my current spending. Knowing I can rent comfortably where I’m living now means that I have time to live according to a predictable monetary output.

This means I can use this time to build savings into my money habits, and even challenge myself to lower spending in certain areas. A major life change, even if I got a great deal on a house, would rock the boat and bring about major expenses like movers, higher insurance, and furniture for a new home.

So, while hammering and cement mixing happens right outside my door, I remain confident in my decision to continue renting. It’s easy to jump the gun and buy a beautiful house simply because a mortgage calculator says you can. But just because I’m finally living with comfortable means doesn’t mean I should commit my hard-earned dollars to something unless it’s right.

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