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Project ahead 3 to 5 years when buying a house


Should you buy a house for a baby yet to be conceived?

Yes, say real estate specialists -- if your plans call for a baby born within three to five years of the home purchase. It's prudent to buy for your future needs instead of trading up when your child is born, they say.

"Rather than buy a house that fits skintight now, one should look ahead at least three years and try to accommodate your future needs," says Norman D. Flynn, former president of the National Association of Realtors.

The cost of real estate transactions is the main reason to buy a bigger first home rather than to trade up when the baby arrives a few years later.

When you find yourself selling and buying again to get more space for a growing family, you're likely to pay both a commission to the realty agent who sells Home A, as well as hefty closing and moving costs to get into Home B.

"Transaction costs are a terrible investment," says Peter G. Miller of Silver Spring, author of the book "Buy Your First House Now."

Andrew Gross, a Washington financial planner, adds, "It's a lot cheaper to make your housing decision once rather than twice."

Anyway, wouldn't you rather spend your money getting a family room or extra bedroom in your first home than covering transaction costs for the right to move later?

Despite the economic advantages of buying for your future needs, few do it. Some buyers can only afford the most basic starter home or condo. Yet many others who could afford to buy more house simply don't look beyond their current housing needs, real estate specialists say.

"People have a tendency to see absolutely crystal clearly the next week to six months, but beyond that the future horizon looks too hazy," Mr. Flynn says. "In many instances, they buy beneath what they really need."

If you don't have children, you may have little interest in the room that can hold a crib, or in space for the kid to build block towers when he turns 2. You may have far more interest in a luxury bathroom with Jacuzzi, a built-in bar or an upscale kitchen range that allows you to do gourmet grilling.

But imagining your housing needs after the birth of a child could save you money if you plan to settle down in one community and have a family any time soon.

"You have to see your house as something you'll own over many years in which your family is going to change and evolve. If your first home isn't the right type in the right location, that could compel you to either move or stay there unhappily," Mr. Miller says.

During much of the 1970s and 1980s, home buyers could be more cavalier in their selection of a property -- figuring that if they outgrew one place they could quickly trade it for another without suffering economic penalties. Rapid acceleration in housing values made it financially acceptable to own a succession of homes.

But during the last couple of years, property values have flattened or actually headed down in many neighborhoods of Maryland and beyond. These days it's unrealistic to expect that you could pick up enough appreciation in a couple of years to cover all the transaction costs related to a home trade.

"You may just find yourself stuck," Mr. Miller points out.

For childless home buyers interested in buying a property they can grow into as their families grow, realty specialists offer these pointers:

* Talk to friends and family members with young children about their housing preferences.

Many people find it hard to think like parents until they become parents. They need help to foresee how their housing needs will change.

"Interviewing others to anticipate housing needs may be unorthodox, but it's awfully practical," Mr. Miller says.

* Plan for the extra bedroom space you're likely to want after a baby is born.

Obviously, you'll want a minimum of one extra bedroom (beyond the master bedroom) for the baby. Indeed, many young parents appreciate having a second extra bedroom to be used as a noise and privacy buffer between their room and the baby's quarters. This second extra bedroom also could come in handy for a second child.

Even if it turns out you don't have children, extra bedrooms have a surprising array of uses, Mr. Flynn points out. They can be used as a guest room, library, exercise or sewing room.

* Look for a home with a well-separated family room.

A small child needs a room where he can hurl toys, tip over water glasses or spit up formula without ruining your interior design. Many parents like this noisy, "chaos room" to be close to the kitchen but off the beaten track. It can also be the room where you keep your TV tuned into "Sesame Street."

* Don't forget location in your selection of the right family-oriented home.

As Mr. Miller points out, many young parents prefer a quiet cul-de-sac or other lightly traveled street. They like relatively large, flat, fenced-in yards. And they like areas that provide high-quality day care centers, good elementary schools and recreational facilities.

* Don't get carried away by planning ahead too far into your housing future.

Five years forward is as far as most young people can reasonably plan, says Mr. Gross, the Washington financial planner. Beyond that, you'll probably only be engaging in guesswork and the process can drive you crazy.

"It's one thing to think about elementary school for the children you've yet to have," he says. "But if you're already thinking about where they're going to go to high school or college, that's neurotic."

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