[jIM_Ohio]

Compare the 120k houses in area to 320k houses in same general area.

Which ones resell faster?
Which ones appreciate more (go back more than 10 years to get good history)
Will you ever see the need to sell the 120k house to get a 180k house or 240k house?

I agree the bank approval is not what to base decision on. Bank approval is needed to purchase, but analysis of the budget and tax implications can really swing the decision one way or the other.

I moved from a 180k condo to a 352k house in same town (same schools) to get more room and a place to raise a family (in Ohio). The house is bigger than we needed, and the house payment is close to 50% of what I take home, and about 25-33% of overall take home (both spouses in my house work).

Here are some issues that some friends pointed out (check your area, not all statements apply to all areas):
1) In other parts of city (different towns) the taxes are higher, but homes also sell much much quicker.
2) the same houses (from the same builder we used) in other towns cost around 40k more (because schools are better and richer people live there)
3) school levies tend to pass more in towns where property taxes are higher
4) move to a place which should grow before kids are school age (meaning if kids are 2, you need a place which will have good schools in 4 years, if kids are not born yet, you have 6-8 years for town to grow before schools are an issue).
5) If private schools are being considered, the town (and taxes) of where you live is less important.

We clearly bought more house than we needed 2 years ago. With twins here we are loving the decision to think ahead- our kids will be in a huge neighborhood with other kids their age, we have the budget established before the kids arrived (house budget anyways), and we don't have to move unless a job change requires it (both spouses dislike the thought of moving prior to retirement). We will not need to move because of 2 or 3 (or 4??) kids in a house because we have enough room with what we have now.