Where can you find a house for under $300,000? (Dallas, Plano: real estate market, 2015)

[Walter Benjamin]

Although today's white-hot real estate market is a happy thing for property owners, the very short supply of available homes has led to many tales of woe and despair, among many prospective home buyers who find themselves priced out of formerly affordable neighborhoods in the Dallas area.

After reading so many of these sad stories, I became quite curious about the current state of the housing market in the area, in particular, the sub-$300,000 market, since that is a range with which I have some familiarity. I wanted to find out: Is it still possible for a family to get a foothold in homeownership in the Dallas area for less than $300K?

After playing around with a number of real estate searches, I reached mixed conclusions. Based on my research, I concluded: Yes, But.

Yes, there are still many areas with a variety of sub-$300 listings, which will seem appealing to at least some prospective buyers. But, more so than just a few years ago, it is clear that to buy a home in this range today requires making a number of compromises.

First, most such listings are "small" and "old," at least by the standards of many buyers here. They are under 3000 square feet, five or twenty years old, with up to three bedrooms.

There are also clear trade-offs with schools and commute. Many of the homes would have a commute of 30 or 40 minutes to downtown Dallas, at a minimum. And many of the neighborhood schools are middling at best, as measured by the GreatSchools rating for elementary schools and the average SAT score for high schools.

I found a number of ZIP codes that have many such listings (at least a dozen or two), and copied a couple of examples for each ZIP Code below. To indicate the school and commute ranges, I included these numbers:

* Elementary: GreatSchools rating (out of 10)
* High School: average SAT score (out of 2400)
* miles to downtown Dallas

The listings appear in the format below. The ZIP codes are ordered by typical price per square foot, in descending order.

Built
listed at
Sq Ft:
$ / sqft:
Beds:
Bath:
Elementary
HS
miles to DTD:



76069 - Fairview/McKinney

352 Wrangler Dr.
Built 2003
listed at $300K
Sq Ft: 2172
$ / sqft: $138
Beds: 3
Bath: 2
Elementary: Lovejoy - 10/10
HS: Lovejoy - 1650
miles to DTD: 33

353 Rio Bravo Dr.
Built 2004
listed at $278K
Sq Ft: 1667
$ / sqft: $167
Beds: 3
Bath: 2
Elementary: Lovejoy - 10/10
HS Lovejoy - 1650
miles to DTD: 33

1212 Steepleview Ln
Built 2013
listed at $290K
Sq Ft: 1602
$ / sqft: $181
Beds: 3
Bath: 2
Elementary: Malvern - 5/10
HS: McKinney - 1562
miles to DTD: 35


75063 - Irving

9704 Valley Ranch Pkwy.
Built: 1995
listed at $300K
Sq Ft: 2189
$ / sqft: $137
Beds: 3
Bath: 2.1
Elementary: Valley Ranch - 9
HS: Coppell - 1699
miles to DTD: 19

9726 Windy Hollow Dr.
Built: 1993
listed at: $290K
Sq Ft: 2132
$ / sqft: $136
Beds: 3
Bath: 2
Elementary: Valley Ranch - 9/10
HS: Coppell - 1699
miles to DTD: 19


75075 - Plano

2364 Claridge Cir.
Built 1974
listed at $299K
Sq Ft: 2032
$ / sqft: $147
Beds: 3
Bath: 2
Elementary: Shepard - 9/10
HS: Plano Senior - 1709
miles to DTD: 21

2509 Stone Creek Dr.
Built 1975
listed at $300K
Sq Ft: 2655
$ / sqft: 113
Beds: 3
Bath: 3
Elementary: Davis - 6
HS: Plano Senior - 1709
miles to DTD: 23

2524 Cedar Elm Ln
Built 1973
listed at $294K
Sq Ft: 2603
$ / sqft: $113
Beds: 3
Bath: 2
Elementary: Davis - 6/10
HS: Plano Senior - 1709
miles to DTD: 22


75070 - McKinney

10400 Colfax Dr.
Built 2007
listed at $285K
Sq Ft: 2660
$ / sqft: $107
Beds: 3
Bath: 2.1
Elementary: Mooneyham - 9/10
HS Frisco Heritage - 1543
miles to DTD: 33

9417 National Pines Dr.
Built 2008
listed at $292K
Sq Ft: 2728
$ / sqft: $107
Beds: 3
Bath: 2.1
Elementary: Scott - NR?
HS: Frisco Heritage - 1543
miles to DTD: 34

4121 Pecan Bend Ln.
Built 2013
listed at $293K
Sq Ft: 2136
$ / sqft: $137
Beds: 3
Bath: 3.1
Elementary: Lois Lindsey - 10/10
HS: Allen - 1618
miles to DTD: 32

4409 Pecan Knoll Dr.
Built 2013
listed at $295K
Sq Ft: 2124
$ / sqft: $139
Beds: 3
Bath: 3.1
Elementary: Lois Lindsey - 10/10
HS: Allen - 1618
miles to DTD: 32


75035 - Frisco

5616 Sims Wy.
Built 2004
listed at $300K
Sq Ft: 2412
$124 / sqft
Beds: 3
Bath: 2
Shawnee Trail Elementary: 9/10
Centennial HS - 1623
miles to DTD: 28

5308 Promise Land Dr.
Built 1993
listed at $290K
Sq Ft: 2273
$/ sqft: $128
Beds: 3
Baths: 2.1
Curtsinger Elementary - 9/10
Centennial HS: 1623
miles to DTD: 28


75071 - McKinney

5416 Centeridge Ln
Built 2006
listed at $290K
Sq Ft: 2745
$ / sqft: 106
Beds: 3
Bath: 2.1
Elementary: John A. Baker - 8/10
HS: Prosper - 1576
miles to DTD: 38

5209 Datewood Ln.
Built 2013
listed at $294K
Sq Ft: 2302
$ / sqft: $127
Beds: 3
Bath: 2
Elementary: John A. Baker - 8/10
HS: Prosper - 1576
miles to DTD: 39

405 Elm Creek Dr.
Built 2011
listed at $300K
Sq Ft: 2449
$ / sqft: $123
Beds: 3
Bath: 2.1
Elementary: Minshew - 8/10
HS: McKinney Boyd - 1613
miles to DTD: 35


75056 - The Colony

5821 Pinebrook Dr.
Built 2007
listed at $280K
Sq Ft: 2696
$ / sqft: 104
Beds: 3
Bath: 2.1
Elementary: Stewarts Creek - 4/10
HS: The Colony - 1512
miles to DTD: 26

6345 Cedar Falls Dr.
Built 2007
listed at $265K
Sq Ft: 2636
$ / sqft: 101
Beds: 3
Bath: 2.1
Elementary: Stewarts Creek - 4/10
HS : The Colony - 1512
miles to DTD: 26

[lovethisarea]

Wow!!! This is awesome on your part for performing such analysis.

Did you use filters on Zillow to derive the data?

Also because of current fast paced market, some of the listings may already be under contract. But still it is great snapshot of current real estate situation.

[Walter Benjamin]

Hey, thanks! Um, not sure if I can mention any particular site - will PM...

And of course, I am just an amateur, so caveat about mistakes and omissions...

Originally Posted by lovethisarea

Wow!!! This is awesome on your part for performing such analysis.

Did you use filters on Zillow to derive the data?

Also because of current fast paced market, some of the listings may already be under contract. But still it is great snapshot of current real estate situation.

[aggie972]

Why is it "a happy thing for property owners"? Some property owners, yes. The ones who are landlords and are not occupying their homes. The ones looking to downsize, or to move from a high CoL area to a lower CoL area.

But why should Joe Blow rationally get excited when his formerly $200k house is now appraised at $300k if he doesn't fall in the above buckets? Maybe he thinks that his newfound equity will help him "trade up", but here's the problem. If his house went from $200,000 to $300,000 then the house he wants to trade up to that was previously $400,000 is now $600,000. So while he made $100,000 due to appreciation, his new purchase will cost him $200,000 more than it would have prior. Yes, the new equity will help him make the downpayment on the more expensive house, but in the long run, he's paying more for housing than he would in a market with more modest appreciation.

If he simply stays in the $200,000 house, then when it goes up to $300,000 he ends up owing more property tax. I think a lot of people like seeing their home appreciate because it's their biggest investment, and a bigger number looks better on paper. But it seems irrational to me unless you fall into a very specific group of homeowners.

[Aceraceae]

You're right, my home value increasing sucks.


Don't get your view at all.

[aggie972]

Originally Posted by Aceraceae

You're right, my home value increasing sucks.


Don't get your view at all.

Well you don't seem to understand your own view either (you can't explain why it's such a good thing), you just seem to accept it as tautological.

[Aceraceae]

Originally Posted by aggie972

Well you don't seem to understand your own view either (you can't explain why it's such a good thing), you just seem to accept it as tautological.

An asset I'm working on owning is increasing in value. This seems a basic concept.

[dhakaia]

Originally Posted by lovethisarea

Wow!!! This is awesome on your part for performing such analysis.

Did you use filters on Zillow to derive the data?

Also because of current fast paced market, some of the listings may already be under contract. But still it is great snapshot of current real estate situation.

Good effort by OP to help out the Dallas forums! And I honestly hope he didn't use Zillow, as they seem to be the worst in updating "listing status"! We have been looking for over a year and found Ziprealty and Realtor to be the most accurate/ up-to-date.

We have personally experienced how "hot" this housing market is . After losing out on 20+ bidding wars... we finally got a contract on a house in Plano, 75075. 4/3/2, 2100 SQFT, Harrington elementary for sub 220k.

[aggie972]

Originally Posted by Aceraceae

An asset I'm working on owning is increasing in value. This seems a basic concept.

The more of your money you have to "invest" in the house you live in, the worse off you are if you're a rational investor. The Compound Annual Growth Rate (Annualized Return) of the S&P 500 from 1871 to 2015 is 9.11%. So if I buy a Vanguard S&P index fund in my 401k and pay ~0.11% in fees, then my return is about 9% annually over the long haul (My money would doubly about every 8 years). This is clearly a better investment opportunity than my primary residence, but I still need a home for shelter.

So which is better, having to buy a $300,000 house or having to buy a $600,000 house? Clearly it's better to be able to buy the cheaper house, and invest more money in the stock market. While there are some years like this one where the housing market yields 10% YoY, the historical average is about 3%, barely outpacing inflation. Plus when you take out property taxes, maintenance, insurance, etc. you're lucky to even be net positive. So yes, a house is an appreciating asset unlike a car, but it's a poor investment asset compared to the alternatives. The more money you have to sink into it, the less you can invest in stocks (opportunity cost!). Thus, you only buy as much house as you need/want for you and your family; you don't buy more house than that because of the amazing investment opportunity, because it doesn't exist. Thus, housing is a good, not an investment. You don't cheer when the price of cars or toothpaste goes up, because those aren't investments either.

You're still going to object based on the fact that after you've pulled the trigger on the purchase, all appreciation from thereon is gravy, but I've illustrated that it's only true for people who are planning to sell soon and then buy a less expensive house afterward. If you buy a more expensive house, then you'd ultimately fare better with low appreciation (2-3% annually) than with higher appreciation like the 10% we're seeing now. That's because your next house will be more expensive, meaning you'll spend more money buying it that you could have been putting toward a real investment like an index fund. You're "working on owning" an asset whose ROI is a pittance. You want that asset to be as cheap as possible so that you can get owning it over with, and find more productive uses for your money.

[serger]

Originally Posted by Aceraceae

An asset I'm working on owning is increasing in value. This seems a basic concept.

Yes, but even though it is an asset, it is quite different from many others, since it takes a lot of money to hold this asset even after the mortgage is paid off. If the values are sharply increasing, the property taxes are doing the same (yes, I know limited by 10% a year with homestead, but still, they catch up).