1) I've been considering buying a 2 bedroom apartment instead of a 1 bedroom. The disadvantage is the obvious cost of "buying more house". The advantage is being able to weather out a bear market, even if we have kids, as well as reduced transaction costs(we're planning on kids in the next 2-3 years). I feel like a sinner for even thinking about violating a core ERE tenet here - thou shalt live in small space
2) Cost would be 4-5 times annual net income for a 2 br, 3-4 for a 1 bdr. Add 400-600 dollars a month in co-op fees(which includes water, heating, cable TV, sometimes internet but never electricity). We have roughly 1.5 times annual net income in assets. Am I crazy considering buying at these prizes? There's no property tax.
3) There's no 30-year mortgages around here, most people choose a variable interest rate adjusted every 3 months. The longest term is 10 years, but there's no possibility of refinancing. Or you're free to, but then you have to compensate the bank for lost interest, so it's pointless. This applies if you sell before the mortgage expires, too. I'm thinking about getting a 5-year fixed, paying down the minimum while hoarding cash/assets. 15 % down is required. We should manage a 50 % savings rate, in which cases assets~mortgage when the mortgage term expires. We're just starting out in our careers so we might see some salary increases along the way too.
Does this sound like a reasonable plan? The main risk I see is falling house prizes coupled with one of us losing our jobs(likely me since my girlfriend has a very stable job market). Of course there's opportunity cost, but getting something cheaper would mean long commutes or a much more volatile job market for me. Also there are personal reasons for wanting to live here.