Are we overreacting by deciding to wait?
Edit:
Thanks everyone for your replies. It does help to get various different outside opinions (especially since I tend to be very risk adverse person).
We decided to instead do a little hybrid. Instead of just cold stopping we're going to stop thinking of our move as a forever home and instead as just a good house upgrade. So we're likely going to drop our budget from 550 to something more reasonable and see what's out there so we can get the ball moving but with a more conservative price.
So my partner and I (32/34) were in the middle of selling our home and buying a new one with the dream of starting family in the future.
After looking we just decided to hold off and spend another 2-3 years saving. Which of course means pushing the idea of a family back more years (we plan to foster like a 4-5 year old).
Salary: 220k.
Townhome 2b: 294k left in mortgage at 375k value.
Emergency fund: 45k.
10% 401k and maxing ira Roth which we don't want to stop.
We put 2k into brokerage accounts a month.
150k in combined student loans.
43k car.
No other debt.
New house around 550k.
The only downpayment we have is equity, which is like 50k after agent fees. We really don't want to touch our emergency fund.
A new house would be like 1k extra a month. Which leaves us little for investing, and during months of issues, we'd be tapping pretty close to the end of the paycheck which for my personality scares me.
I suggested we wait 2-3 years. Cut our savings in half. 1k to investments and 1k to high yield for a house.
After 2 years that's 24k to help cushion closing costs and down payments. 3 years for 36k. Plus a bit more equity in house.
We're just not sure if we're being overly cautious by waiting and pushing life back more. Or waiting seems more reasonable given our current situation.