Build or Buy? Facing a financial dilemma (North NJ)
Hi,
I am in a bit of a dilemma. I actually grew up in NJ but currently don't own. I am looking to own in Somerset, Morris, Passiac, Essex, Middlesex or Bergen county. My top towns are a few in North Bergen, Livingston, Montclair, and a few towns in somerset. I am skipping the whole "starter" home phase and looking for something more multigenerational. Specifically a lot larger than 0.25acre and 4k sqft, surprisingly that is very expensive but I am open to all options including building, and willing to spend $1M - 2.5M.
The reason why this is a dilemma is that I dont live in NJ and dont plan on it, but the appreciation in the market is signaling that the sooner you buy the better, regardless. Appreciation is an exponential growth. Waiting "till prices come down" is a losing strategy beyond 1-2 years, specifically for NJ. Even in 2008, the average decline was only 15%, and recovered quickly. So I feel like buying now is better than when I will live in NJ which could be 5 years away. I would hate to however pay a mortgage on a house I am not living in. I could rent it but I own a rental and the way tenants tear up homes is insane.
This is why building is of interest to me in that there are a few empty lots floating around or like most I can demolish a home and rebuild. This is actually not as expensive as I thought because most of the value in most NJ homes is the land. For example at $300/sqft a 4k build is $1.2M, you cant find that in North NJ, all the margin is in trying to get the land cheap. I feel like it would make more sense in paying off a lot over 2-5 years, than carrying a full mortgage, or carrying a rental and not care about tenant damage as its going to be torn down. When I am ready a home can be put up in a year.
Essentially, if I want to buy now, but I am not in a rush to have a functional home, what is the best bang for my buck option?