Am i ever going to buy house in DFW? (Houston: renters, buying a home)

[BongoBungo]

Originally Posted by J800

Interesting..these numbers seem way too high. $477K seems like a bit much for the middle of that range. On $125K, I wouldn't go any higher than $350K and that's pushing it.

Depends. Someone with relatively few other expenses who lived frugally could easily afford a $477k home on a $125k salary. But, say a family of five with 2-3 car payments? No way. Everyone's financial situation is different. There are far more factors in whether a home is affordable than the price of the home and the household income. Someone with no kids could probably afford twice as expensive of a home as someone with two kids, for example. Full time daycare for two kids is often more expensive than the mortgage and property/insurance/taxes of a $350k house.

[avayan]

Originally Posted by BongoBungo

Depends. Someone with relatively few other expenses who lived frugally could easily afford a $477k home on a $125k salary. But, say a family of five with 2-3 car payments? No way. Everyone's financial situation is different. There are far more factors in whether a home is affordable than the price of the home and the household income. Someone with no kids could probably afford twice as expensive of a home as someone with two kids, for example. Full time daycare for two kids is often more expensive than the mortgage and property/insurance/taxes of a $350k house.

Also, the price of the home is really not what defines whether it can be afforded or not by any given individual, it is the "price" of the mortgage. If I had 300K and I put it all as a down payment on a 500K home (not saying it makes sense to do so!), then I would be paying on a 200K mortgage. At 125K a year? A mega breeze!


The hard part is getting the $300K, but clearly there is plenty of people out there with those kind of pockets.

[thenewtexan]

Originally Posted by Zync33

One of the reasons why market is so high is bcoz people are buying homes by spending more than they can afford. They are also getting loan approvals unfortunately. But it is affecting people who think like me .

I know couple of my friends who bought house for 480k in Frisco . Their family income is 112k to 115k. There are lot of people like this and bought houses from past 2 to 3 years. It's working for them. And some of their houses went up 30% already.

I know I m taking risky step by buying house for 350k. But I am not alone.

Bingo. Just stop and think about what you just wrote. Do we really want another 2008? Remember at that price range you'll be paying another $10K in taxes.

[thenewtexan]

Originally Posted by avayan

The problem nobody seems to be mentioning is that the premise is "housing costs are going up because the DFW economy is growing and wages will go up."


That statement is broken, though! If I were to move to San Francisco, I could easily rake in more than 200K doing the exact same thing that I do here. There is no way I am even close to that now, and rest assured it seems quite implausible I can ever dream of achieving anything like that in the next 10 years.


It may be my fault for not moving from company to company every 6 months, which may be the only way to get a 10% raise every year. Nonetheless, house pricing has been increasing at 10% pretty steadily.


One can't keep without the other! So those who are moving from richer places, with massive equities, will end up displacing the ones who were already here, because of this simple equation.

I stopped reading this when you mentioned San Francisco, where $1,000,000 gets you a rat infested closet in the hood. Good luck.

[stan4]

Originally Posted by Zync33

One of the reasons why market is so high is bcoz people are buying homes by spending more than they can afford. They are also getting loan approvals unfortunately. But it is affecting people who think like me .

I know couple of my friends who bought house for 480k in Frisco . Their family income is 112k to 115k. There are lot of people like this and bought houses from past 2 to 3 years. It's working for them. And some of their houses went up 30% already.

I know I m taking risky step by buying house for 350k. But I am not alone.

Don't be dumb. You do not have enough in savings or salary to be making these kind of moves.

[stan4]

Originally Posted by Zync33

House prices are increased 40% in last 3 years . But wages are not increased at all.

My mind says house properties are overvalued and its bubble. But price increases are not stopping at all.

It's not a bubble.
West Plano real estate didn't even take a hit in 2008.

[avayan]

Originally Posted by thenewtexan

Bingo. Just stop and think about what you just wrote. Do we really want another 2008? Remember at that price range you'll be paying another $10K in taxes.

Nobody wants another 2008, but what else can we do? Stay in an apartment forever just because of fear of repeating another 2008? This is the typical "between the sword and the wall" situation in which no option is without its myriad of troubles.

We can buy an overpriced house and face economically strained hardship, or stay in an apartment and throw every single cent down the drain.

When I own a house, at least I am creating some equity. With the apartment? NADA!

And with the house, the property taxes and upkeep are way higher than on the apartment. Not everything can be recovered! You can enjoy it, though.

There is no way of surely winning here. All we can do is try to lose the least and enjoy the most. And, if we have some seriously massive discipline, we might be able to milk a cow or two.

[stan4]

Originally Posted by avayan

Nobody wants another 2008, but what else can we do? Stay in an apartment forever just because of fear of repeating another 2008? o.

You stay in an apartment until purchasing the home is a responsible and financially feasible thing to do. No matter what year it is.

Have some sense and have some discipline. That's what being a grown-up is about.

[NoClueWho]

Originally Posted by avayan

Nobody wants another 2008, but what else can we do? Stay in an apartment forever just because of fear of repeating another 2008? This is the typical "between the sword and the wall" situation in which no option is without its myriad of troubles.

We can buy an overpriced house and face economically strained hardship, or stay in an apartment and throw every single cent down the drain.

Or you can just do what a lot of hard working, middle class people who want to own a home are starting to do---or AT LEAST consider---and just leave DFW and move somewhere more affordable.

There's no shame in it. DFW is not the first place that has priced its middle class out and it won't be the last; you just have to do what's best for you and your family and love DFW from afar.

[EDS_]

Originally Posted by avayan

The problem nobody seems to be mentioning is that the premise is "housing costs are going up because the DFW economy is growing and wages will go up."


That statement is broken, though! If I were to move to San Francisco, I could easily rake in more than 200K doing the exact same thing that I do here. There is no way I am even close to that now, and rest assured it seems quite implausible I can ever dream of achieving anything like that in the next 10 years.


It may be my fault for not moving from company to company every 6 months, which may be the only way to get a 10% raise every year. Nonetheless, house pricing has been increasing at 10% pretty steadily.


One can't keep without the other! So those who are moving from richer places, with massive equities, will end up displacing the ones who were already here, because of this simple equation.

You can run some pretty simple calculations to determine if you'd truly be better off financially out there. Having run 100s of COL+tax burden - city v. city comparisons, probably 1/3 involving The Bay Area, I can tell you a few things with great confidence:
1. Few jobs actually pay greatly more out there than in Dallas, Denver, Houston, Nashville etc. This isn't me talking it's monthly published BLS data. There is no question that some people at Google, Apple etc. etc. make exceptional money but they comprise a tiny sliver of the Bay Area employment picture and these people are top of the world talented..........they'd do well anywhere.
2. Real pay (real in the economic sense) is lower in The Bay Area than Dallas, net of taxes it's even lower still. That's been the case for a long time.
3. I haven't looked this up in several months but I'd bet it still holds......the relationship and trajectory of the relationship between the top 25% and 50% of earners and local COL metrics is worse in SF than Dallas/DFW.

______________

Observers do not set real estate prices, buyers and sellers do. To your claim local buyers are overextended I can't find any data that makes that point.
1. At least since the early 1980s home prices in DFW have been low to very low relative to incomes.
2. Across all important income data metrics the professional set in DFW compares very well with any big city in The US and the world - very high disposable incomes, very high real COL adjusted incomes, lowish tax burdens etc.
3. Many who relocate show up with lots of fresh home equity money to re-invest in local RE.
4. The market here looks very stable into the future ergo lots of REITs, sovereign wealth money, foreign individual buyers and others are scooping up homes, apartments, and other RE.

That and other thing = a hot market.