I think I’ve ruined my financial future by buying a house

I’m in my mid 30’s, gross 145k, net 75k. Married but my wife has an erratic income, net 30k now, possibly 15k to 0 in the future. We’re in a high tax area and I’m forced to pay a lot into benefits because of forced retirement. We’ve been living frugally and saving up for a cross country move for several years now and have managed to get 175k together. Work dictated our move, so unfortunately the timing with the housing market wasn’t great. To spare too many details, we bought something pretty quickly without getting a great feel for the market. Found a house in a great neighborhood, fairly renovated, had everything we wanted except it was way at the top of our budget. But we needed a place to live, so we put in an aggressive offer and got it. 4br 2ba 2200 sq ft, list 400k, appraised 410k, paid 420k. We put down over 100k.

This all seemed fine to us considering the state of the housing market, we can afford it ok, and we figure if we’re feeling squeezed in a few years we can sell and downgrade, that is until some details of our new reality started coming out.

First of all, big property tax increase coming next next year. I accounted for an increase but not to this degree, from 6k per year to over 10k. My monthly payment will be about 2200, and at my stable income of 6200, this does not feel like it’s leaving much to live on or save with. Especially considering everything is getting more expensive, we’ll need to buy a car soon, maybe my wife is deciding now she may want to have kids, and onto the next issue…

The house is old, which we were of course aware of, but we’ve already had issues that weren’t made apparent by the inspection, namely old electrical. It isn’t something that needs to be replaced now, but as it ages it’s likely to cost us 20k at some point whether we repair it ourselves or knock it off a sale price. Additionally, the water heater, garage roof, roof, and hvac are all probably halfway or more through their life. I think realistically we could be spending 75-100k in maintenance alone if we stay in the house for 5-10 years.

None of this felt like a death sentence until I really started digging into the market in this city. I’ve been keeping an eye on houses since we bought and every day it becomes more apparent how badly we overpaid. Our location is fantastic and walkable, plus the school district is the best in the area, but otherwise, 400k gets you a lot more in other areas. Our house is not laid out practically, there’s no bathroom or closet on the first floor, the basement has areas where you can hit your head, the bedrooms are small and the closets are tiny, no master bath. It works fine for a child free couple but it makes no sense for anyone else. I must add also, this was a really cheap city to live in just 2 years ago. It is a far cry from anything like Chicago or New York or California. 420k is a ton of money here. It is still easy to find nice houses in the suburbs for 325k or less. Essentially we paid for location and bad market timing.

I feel like I’m totally trapped now. If we stay in the house, we’re only saving money while nothing is going wrong. It’s only a matter of time something big happens and my wife’s income dries up, and there goes all of our savings. I think if we sold this house right now we’d be lucky to get more than 350k considering what’s been selling lately. So I’d be losing all or more of my 100k down payment. If we were to rent anything other than an apartment, we’d only be saving maybe 100-200/mo plus whatever we’re spared in maintenance. If we go look for another much cheaper house to buy, we’ll have very little for a down payment, so the payment difference between that and our current house wouldn’t be all that much, could take 10+ years to get past break even.

I don’t know what to do at this point. I’ve completely set myself up for failure and I’m not seeing any way out. I need some wisdom and advice