Dallas is the worst place to be a home owner (Vega: sales, real estate)

[VegasMan_72]

http://finance.yahoo.com/blogs/break...135324633.html

according to this article.

[aggie972]

How did you draw that conclusion from the article you posted?

[noid]

The article is a farce. You shouldn't pay more for a house than 2.5 times median income of the area? You kidding me?

[fwsavemoney]

As a prospective buyer, I wish this were true (the part about best places to buy a home hopefully without people being under) - but this is so far from the truth. Dallas market is HOT and life as a buyer is stressful right now!

[pharpe]

Yes Dallas is a terrible place to own a home. Please do not move here.

[Ralyks]

Originally Posted by noid

The article is a farce. You shouldn't pay more for a house than 2.5 times median income of the area? You kidding me?

The idea that a family shouldn't take on a mortgage more than 2.5 times the gross annual family income has long been considered a sound personal financial rule. (This could mean renting an apartment and saving up for several years for a large down payment.) I don't know about translating it to a community-wide comparison with median income, however, especially when a lot of people move here from higher cost areas after selling their houses for many hundreds of thousands of dollars; they can be buying a house 5 times their income here, but, with a big down payment from that old home sale, they could be carrying a mortgage only one or two times their income. Carrying a mortgage more than 3 times your own annual income, however, is generally considered a bad idea, financially speaking.

[Rakin]

If you write a Blog, you must be an expert.

[Transplanted99]

Not sure how Vegasman came to his conclusion.

That said, 2.5 times is a rule of thumb, but it is based on several assumptions.

One of them is the interest rate. Right now the interest rate is at historical lows. That should change that ratio a bit higher.

Another is what income demographic the buyer falls. If they can afford more, why hold themselves to 2.5 x the median? The well off afford $1M+ homes, and that market cycles very differently from the market the rest of us face. Maybe they should target 2.5x the median for their enclave? IDK.

Another point, the job growth here seems to be reaching into the higher side of the pay scale, with the numbers of white collar jobs relocating here. That would suggest the median is/will be increasing.

The cycles can be rather long. The question is are we at the beginning of one, or is it going to peter out soon and fall back? Not sure how many people can afford to wait an entire cycle out to time the market. If the average possession of a house is 5-7 years, one has to make their own judgement call on where we are and their likelihood to need to sell in a downturn.

Not sure how well articulated these points are, but there is more to it than some rule of thumb that we should dogmatically follow.

Compared to most of the large job markets in the country, Dallas (and Texas) is a bargain, while payscale for similar jobs does not differ that dramatically.

I think the fundamentals for Texas make it an attractive place for both employers and employees - and expect we will see continued growth and demand for housing. Not sure how fast developers can keep up to that demand, and that will be a key driver on where prices go.

[Ralyks]

Originally Posted by Transplanted99

Another is what income demographic the buyer falls. If they can afford more, why hold themselves to 2.5 x the median?

The rule of thumb is 2.5 to 3 times the buyer's income, not 2.5 times the community median income. I think the speaker was assuming that comparing medium income to medium home price was a good area-wide generalization, but I think it would be more telling to look at median mortgage debt than median home price, especially given how many people are moving into the area with a lot of cash from home sales in more expensive real estate areas.

[TheOverdog]

I like the 20-40% underwater statistic. Was the author just too busy too look at the correct number? How could there be that big of range in simple math without that number being pullled directly from the author's lower extremities?

The opinion poll shows there is a 20-40% chance that Johnny the puppykiller is going to be elected.