Another "Where should we buy a house?" thread. (Dallas: real estate, apartments)

[aggie972]

Okay, here is the scenario:

Income: My wife and I just got married. We are both 29, going on 30 in just a few months. DINKs, but with plans to start trying in a couple years. About $164,000 annual HHI, not inclusive of bonuses that I think are solid but nothing to write home about. We are fairly bullish that we have room to grow in terms of our respective incomes, but do not want to stretch ourselves too thin with this purchase or have to worry in case something were to go wrong. Our rent went up by about 8% at our recent renewal, and we believe that it is time for us to buy. We think it's a pretty good bet that we will stay in the DFW Metroplex for the foreseeable future, and while we have some apprehension about unwittingly buying in at the "top" of a housing market that could be due for a correction, we feel like we don't really know what the future will hold for the housing market, and we also would not want to keep seeing huge annual rent increases while chasing a moving target that is housing prices. Watching prices go up 10% a year the past few years while we've kinda-sorta thought about buying has been painful. We've run the rent vs buy calculators, and they seem to indicate that buying is worth it for us.

Job locations: My company is moving to the Legacy area at DNT/Sam Rayburn (along with everyone else it seems!) in September. My wife works in consulting, and either travels, works at a client's office, or works from home. For the purposes of calculating her mileage reimbursements, her company's office is in Addison, but she almost never actually goes there in the mornings. I *think* I will stay with my current company for the foreseeable future, although that could be subject to change. The other companies in my industry are mostly spread out around North Dallas/Plano/Addison, really wherever. My wife might switch to the client side in a couple years when we have kids in order to cut back on travel and have more reasonable hours. Having a reasonable commute is pretty important to me. As renters, we have moved apartments to be closer to our jobs a couple times. I know I don't have any control over population growth and traffic patterns, but as far as my preferences go, I'll trade things like extra space that I don't feel I really *need* or shiny new cabinets to avoid having to sit in traffic 1+ hour each way. My industry has mostly shied away from approving 100% work from home arrangements; at least all the established companies with several team members and an office space already leased have. I don't really have any reason to think this will change in the near future.

Current budget/timeline: I'm currently looking at about $375,000, and I don't really think there's much upward flexibility here. With our current savings, we could afford to put about 5% down, cover the closing costs (which I'm estimating to be 4%), and have about $5,000 left over in cash reserves and about $2,000 for misc furnishings, tools, etc. Our lease is up in about a month, and our plan is to sign a new lease for 7 months, which would take us to about March 20th. My thought is that if we try to close at the end of February, we will get a better deal, as we will not be competing with the spring/summer buyers who want to move before the new school year. (I realize this also means less supply of houses, as many sellers will just wait to sell). We will also use that 7 months to boost our savings: Either to give us a stash that we might need to draw on to cover a gap in the amount we offer vs the amount the bank appraises the house for (if we feel like its worth it), or ideally to get our initial equity up to 10%. Signing the shorter lease also kind of puts our feet to the fire a little bit and helps us get serious about our savings goals, with a concrete deadline in place. Both our credit scores are excellent, and the only other debt we have is auto debt at like 2%. I actually also have some credit card debt that's 0% for terms ranging from about 6 months to 18 months, because I figured: why not? (So really, our cash is more than our net savings, and we might be able to put more down if the math makes sense). If I understand correctly how the loan underwriters do their calculations, we will have no problem meeting the front or back end DTI ratios for conforming loans. But I don't really want to stretch any further than this. $375k home on $164k HHI is about 2.3 price to income. I'd prefer to be lower, but I also don't want to turn around and get hit with the transaction costs involved with selling/buying again several years down the road, because we sacrificed too much in terms of school quality, space for our growing family, location, etc.

Other considerations: My wife is Puerto Rican. We are both fairly liberal politically, but have close friends on both sides of the spectrum. We are not especially religious. We don't dislike it, but we are questioning/skeptical. We don't really go out to the bars all that often, but will go with a group of friends maybe 1 night a week. Most of our friends are concentrated more around the Dallas proper area. Although we are kind of homebodies anyway, so I don't know how big a deal this is. My mom is in her 60s and not in great health, and she lives in Far East Dallas. But her living situation might be fluid anyway. I'm not very good with fixing things, although I'm not afraid to break a sweat or try to learn something new from YouTube. I don't have any delusions of being able to heroically rescue a run down house Fixer-Upper style though. I value a solid build and reasonably new high cost items (roof, HVAC) over things like shiny new countertops or custom cabinets.

Areas we are currently considering:

-Plano, preferably more to the northern and western parts, as budget allows, because of office location.
-Midway Hollow area in Dallas-If this is still doable on our budget; I'm thinking it may not be.
-Pockets of North Dallas outside the Preston Hollow area where our budget allows, and where we are reasonably close to the DNT.
-West Richardson area. The 75082 zip code looks like it could be a solid option. (Edit: not 75082)

Obviously I'd love to hear everyone's suggestions on what other areas might be worth considering. The above list isn't comprehensive; those are just the areas that I've looked at so far, and that seem like they could make sense for us.

Misc: I think we are probably only interested in looking at detached houses. Although I do like a lot of the appeal of more dense/urban type accommodations, I'm afraid that a townhouse or condo is not "future-proof" enough for us given that we are pushing 30 and planning on having kids. I've also read that condos and townhomes haven't historically appreciated very quickly in DFW, especially ones outside the prime areas like Uptown (Maybe that's subject to change though as single family homes become more difficult to afford on the average local income?). We might be willing to consider something like a zero-lot line house with a patch of grass and no wall-sharing, especially if it were a new build and still within our budget, but I'm not totally sure yet.

Thoughts?

[Waterdragon8212]

Wow! You are giving great details and I think there should be a number of people on this board that will weigh in and try and help you. It sounds like you've really thought through all of this and I wish you the best of luck!

I'm no real estate guru, but based on friends who have bought in the past few years, I thought I'd throw a few things out there. While I understand your line of thinking about February, I've actually heard it has been a bit fierce in the current market, as it is right before the spring crush and people are often looking to get a leg up on the competition. Our friends who have had the best luck with less competition (albeit less inventory) have found homes in late October and November - right before the holidays. While people buy homes year round here, many don't want the hassle of moving during the holidays. It's a small sample size I'm referencing, so take it with a grain of salt, but our 2 family friends who tried getting a jump on the spring season (i.e. February) felt overwhelmed and outbid, but found luck and success in the late fall.

Also, 75082 is East Richardson. Do you mean 75080? Most of 75082 is going to be a hike for you, especially since westbound traffic on George Bush is pretty heavy in the mornings and the intersection of Bush and DNT is a disaster.

[aggie972]

Originally Posted by Waterdragon8212

Wow! You are giving great details and I think there should be a number of people on this board that will weigh in and try and help you. It sounds like you've really thought through all of this and I wish you the best of luck!

I'm no real estate guru, but based on friends who have bought in the past few years, I thought I'd throw a few things out there. While I understand your line of thinking about February, I've actually heard it has been a bit fierce in the current market, as it is right before the spring crush and people are often looking to get a leg up on the competition. Our friends who have had the best luck with less competition (albeit less inventory) have found homes in late October and November - right before the holidays. While people buy homes year round here, many don't want the hassle of moving during the holidays. It's a small sample size I'm referencing, so take it with a grain of salt, but our 2 family friends who tried getting a jump on the spring season (i.e. February) felt overwhelmed and outbid, but found luck and success in the late fall.

Also, 75082 is East Richardson. Do you mean 75080? Most of 75082 is going to be a hike for you, especially since westbound traffic on George Bush is pretty heavy in the mornings and the intersection of Bush and DNT is a disaster.

Thanks! You're right that 75082 is not the area I was thinking of. I'll look into 75080.

[WorldKlas]

Yes. Buy. I would focus on houses feeding into Hebron High School attendance zone due to your budget and that location. Great area for you

[Gravy Train]

Well-researched first post and you seem to be realistic with expectations. Depending on finishes/features and size of the yard, you should be able to target an updated 3/2 or modest 4/3 in the $130/sf range.

A few streets in the Phase 4 development of Castle Hills feature smaller homes with 6000-8000 s.f. lots and feed into Castle Hills Elementary. I'd also look into the Phase 2 area of The Legends Neighborhood in The Colony and other portions of town that feed into Hicks Elementary. If things go to plan, you may be in a position to upgrade over the next 5-8 years!

Good luck and keep the hunt on so you'll be more educated and focused on target neighborhoods once you're ready.

[stan4]

In the areas you mention, your budget will be the tough part.

Consider Carrollton, as well.

Btw, this market is not really speculative, so I don't think it's a bubble with a forthcoming "downturn."

[Gravy Train]

New office parks will fill up, corporate relos will slow down and residents of both coasts will still consider Texas as a flyover state. Inflation is real, equities are overvalued and we're due a fair economic correction.

Even if none of that happens, property taxes and eventual interest rate hikes will cool this price run-up. It may be more like 18-24 months away than 6-12 months.

[UnfairPark]

Target this small subdivision, pounce quickly as soon as something in your price range comes up. This is ideal for your needs.

http://www.realtor.com/realestateand...9-17575#photo9

I'm assuming zero lot and Hebron feeder (Lewisville ISD) are acceptable for you.

[WorldKlas]

Originally Posted by UnfairPark

Target this small subdivision, pounce quickly as soon as something in your price range comes up. This is ideal for your needs.

2917 Prestonwood Dr, Plano, TX 75093 - realtor.com®

I'm assuming zero lot and Hebron feeder (Lewisville ISD) are acceptable for you.

Anything under $400K in Hebron attendance zone is just about the best possible match for OP.

[CREW747]

Good for you for thinking things thru and sticking with an under $375,000 purchase price.More people should try to follow the under 2.5x income rule...Here are some terrific under $375,000 neighborhood options in Plano&Richardson.These neighborhoods have beautiful mature trees and many houses have pools...

Richardson
-Canyon Creek
-The Reserve

Plano
-Park Ridge
-Deerfield