I live in a smallish town (~22,000) where two international companies (both of which have historic ties to the town as their headquarters, but now have headquarters elsewhere) are the clear major employers, bot employers focusing on white-collar workers (indirectly hiring blue-collar with facility staff).

I don't have an exact number of employees in my town, but to give you a perspective: the company I work for's main location is obviously corporate HQ (located in another state). Their second largest (by employee count) location is here. Globally my employer has over 15,000 employees. The other company in question is very similar in these regards.

Well before I joined one of the two companies and moved to the town there's been rumors aplenty that both companies would pull out and move their people out of the town and to their own corporate headquarters.

I'm not an economic expert but my uneducated guess is that the local economy would basically collapse if both companies left the town. I assume the effect on white-collar-expense housing would see an even more dramatic fallout as a vast, vast majority of white-collar workers would no longer be in the town.

However the rumors are just that; rumors, with nothing official to go off of. Some of the rumors make sense, but they're watercooler talk and I can give no honest estimate of how likely they are.

I'm currently renting, but I'm now 27 (debt free) and having rented for nearly the past 4 years I have started to want to purchase a house. This is obviously a concerning prospect with the rumors as they are.

Is there any advise or best practices to go off of, from this? Should I reduce my housing budget since it has greater possible risk? Is there any guidelines/rules of thumb for such a situation? If my employer does announce that they're moving (likely announcing it several years in advanced) I imagine the simple announcement will collapse the housing market here, and I won't be able to resell the house anywhere close to its purchase price.

  • I gather from your description that you work for one of these companies. Are we to assume that, if your company pulled out, you would also move out of this town? – BrenBarn Feb 22 '17 at 2:56
  • @BrenBarn Right, that's correct to assume. I should have stated that directly. – Ranger Feb 22 '17 at 5:47

It seems pretty clear to me that one of two things will happen regarding your local housing market:

  1. The rumors will become reality and as people move away there will be a larger supply of houses for sale and rent, and home values will drop.
  2. The rumors will not become reality and housing prices will stay about the same as they are now, and perhaps start making modest increases over time.

Personally, I'd hold out until either 1 or 2 happens, and then buy. (Assuming you plan to stay in your town regardless.) If you wait you'll end up with either a stronger investment or a big discount.

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BLUF: Continue renting, and work toward financial independence, you can always buy later if your situation changes.

Owning the house you live in can be a poor investment. It is totally dependent on the housing market where you live. Do the math. The rumors may have depressed the market to the point where the houses are cheaper to buy. When you do the estimate, don't forget any homeowners association fees and periodic replacement of the roof, HVAC system and fencing, and money for repairs of plumbing and electrical systems. Calculate all the replacements as cost over the average lifespan of each system. And the repairs as an average yearly cost. Additionally, consider that remodeling will be needful every 20 years or so.

There are also intangibles between owning and renting that can tip the scales no matter what the numbers alone say. Ownership comes with significant opportunity and maintenance costs and is by definition not liquid, but provides stability. As long as you make your payments, and the government doesn't use imminent domain, you cannot be forced to move. Renting gives you freedom from paying for maintenance and repairs on the house and the freedom to move with only a lease to break.

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  • Sorry, but "financial independence?" Do you mean debt free, or ready-to-retire? – Ranger Feb 21 '17 at 20:34
  • Financial independence means you have the means to support yourself whether you ever work again or not. At your age, and being debt free, you can reach that in anywhere from 7 to 20 years, depending on how expensive the lifestyle you want to live. – Xalorous Feb 21 '17 at 20:48
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    "The rumors may have depressed the market to the point where the houses are cheaper to buy" - maybe, but prices will likely plummet if the rumors become reality. – TTT Feb 21 '17 at 22:55
  • "Renting gives you freedom from paying for maintenance and repairs on the house" Um, no. Most definitely not. Renting hopefully means that those costs are baked into your monthly rent, but if you own, you should be setting maintenance money aside anyway (either in cash equivalents or in credit availability, the latter generally by paying off loans). So on the whole, if you do things right, the difference is largely academic; either way, you are paying for roughly the same maintenance. (Who owns your dwelling space doesn't by itself change what maintenance is going to be needed.) – user Feb 23 '17 at 10:07
  • @MichaelKjörling Long time renters are used to calling a landlord for major repairs. First time buyers can easily not set aside maintenance money for a number of reasons. My point is that you have to account for those costs when determining your average monthly cost, or the comparison is not complete. And I've never lived in a location where the codes allowed the tenant to be billed for major repairs, UNLESS the tenant was somehow negligent and caused damage which required repair. – Xalorous Feb 23 '17 at 16:55

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