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We want a house <25 years old....

Ah, there's the catch. If you relaxed this requirement, you'd have a wider selection on size and price.

...great school district...If we go farther out, the houses get cheaper, but then we're over an hour commute from work....

But don't compromise on location, location, location. No sense in getting a beautiful new house if you're not there to enjoy it (oh, and time with family) because you're stuck in traffic, or if your kids aren't doing as well in school as they could be doing.

But those damn interest rates........... :)

If interest rates rise, housing prices will fall accordingly. Buyers can afford only so much in monthly payments. In fact, the second best time to buy a house is when interest rates are high, because then you lock in a good price; later, when rates fall, you can refi to get a good rate. (The first best time to buy is when it makes sense for you personally to own, and you've found a good house at the right price in the right location.)

The answer may be to just rent right now...

Very sensible. Gives you maximum flexibility, and time to add to your savings.

Good luck!

Got married; then rented for 2 years; then bought house #1 (a 1940's Cape Cod) with a 13% mortgage, sold after 12 years; then bought house #2 (a 1950's rambler) with an 8% mortgage, have upgraded bit by bit over the 20 years I've been here so far. Refi'd many times.
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