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Old 08-21-2010, 10:07 AM
 
13 posts, read 27,920 times
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I am in the market to ptentially buy a home. I am looking in the memorial, west university, spring valley, sugarland, and katy areas. So most likely I am looking at 300K plus if I want to buy a nice place with relatively quick access to downtown.

Is this whole homebuying thing a scam? I mean seriously, if you take Briargrove Park for instance, homes since 1999 have gone up nearly 100%. If you buy a 350K house, you have to pay around 8K a year in property taxes after the homestead exemption. Then you are putting down around 50K or so maybe. Homeowners insurance of 2K.

In reality, with property taxes as high as they are, can you expect another 100% increase in an regular home in these areas that have appreciated? Property taxes crate a ceiling as to how high homes can go I believe. If a home does not appreciate, then homebuying is a losing proposition.

Am I wrong?
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Old 08-21-2010, 10:18 AM
 
1,632 posts, read 3,310,099 times
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Even without appreciation buying a home can be a good financial decision -- just depends on what you're looking for and what your alternatives are. To rent a place like the one I'm living in was going to be about $2,000 a month.

I took out a 15 year mortgage and am paying $2,150 a month (and that includes my property tax, home owners insurance, and pmi). Of that, starting on day one of the loan, over $700 was going towards my principle. Throw in tax deductible interest and that knocks about another $300 off, which gives me an effective monthly rate of about $1,200 a month, which is more than enough savings to cover the repairs and maintenance associated with home ownership.

Over the years, as I pay down more and more principle, the savings will only go up. Now, if I were to move in the next 3 or 4 years, the closing costs on both ends would probably eat up the majority of the 'savings', so I wouldn't recommend buying for people who have a short window, but for the long term owner, you can save a lot of money, even with zero appreciation.
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Old 08-21-2010, 10:47 AM
 
Location: West Houston
1,075 posts, read 2,905,742 times
Reputation: 1394
As long as the taxes and interest are deductible, buying a home makes sense for most folks. You have to understand, though, that:

1. Buying a home is a long-term investment. The days of flip'em are over. You buy the home and you have to assume that, if you sell within 3-5 years, the overall cost will probably be a wash.

2. Primarily, you're buying shelter. You HAVE to buy shelter, whether it's an buying a house or renting an apartment, house, or hotel. To continue the poster above's examples:

My apartment (in Briargrove Park, very near where I now live) was $1,000 a month for a 1200 square foot 2 br 2 ba, and I had a storage room for an additional $200 a month. My house note on a 2200 sq. ft. 4 br 3 ba house (with 2 car garage) is $1,640 a month, PITI (Principle, Interest, Taxes, Insurance). My tax credit winds up being about $600 a month, best guess. That means I'm paying $1,040 a month for shelter vs. $1,200 rent. Financial advantage: me.

I have the additional advantages of having more space, no neighbors sharing walls above/below/beside me, a yard for my dogs, pride of ownership, etc.

Now, the disadvantages? I have to do the maintenance and upkeep, whereas the apartment complex took care of all that. I have to suffer the whims and vagaries of the market; my house can fluctuate above what I paid or even below, who knows? I am stuck; if I sell the house, it could take months in the current economy and I'd have to pay all associated costs, whereas if I need to move from an apartment, all I have to do is give 30 days notice and (maybe) forfeit the deposit.


While home ownership is a good investment (for me), I don't worry nearly as much about the "investment" side as I do about what type of shelter to purchase and how much to pay for it. The fact that it's a good investment is an added bonus.
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Old 08-21-2010, 10:54 AM
 
Location: Charleston Sc and Western NC
9,273 posts, read 26,395,509 times
Reputation: 4741
Quote:
Originally Posted by Maytagman View Post
I am in the market to ptentially buy a home. I am looking in the memorial, west university, spring valley, sugarland, and katy areas. So most likely I am looking at 300K plus if I want to buy a nice place with relatively quick access to downtown.

Is this whole homebuying thing a scam? I mean seriously, if you take Briargrove Park for instance, homes since 1999 have gone up nearly 100%. If you buy a 350K house, you have to pay around 8K a year in property taxes after the homestead exemption. Then you are putting down around 50K or so maybe. Homeowners insurance of 2K.

In reality, with property taxes as high as they are, can you expect another 100% increase in an regular home in these areas that have appreciated? Property taxes crate a ceiling as to how high homes can go I believe. If a home does not appreciate, then homebuying is a losing proposition.

Am I wrong?
I think the days of 100% appreciation are gone for a long time. That said, I would always buy a house where the land lot value far outweighs the "improvement value."

ie. Take a Briargrove Park property at 400k. The land is worth 300k and the house 100. Some places farther you can have an 850k house on an 75k lot. All it can do is depreciate as the house ages.

Some of the places you mentioned have an excellent track record of coming out of bad times. Others are an unknown entity. BGP may slow more than some of the others because of the school district.
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Old 08-21-2010, 12:41 PM
 
Location: Kingwood/Porter
262 posts, read 647,836 times
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Quick access to downtown from Katy, you say??? Share your secrets!!!
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Old 08-21-2010, 01:48 PM
 
Location: The Greater Houston Metro Area
9,053 posts, read 17,127,037 times
Reputation: 15226
In the long run, real estate always appreciates. Sometimes there will be some steep climbs and some deep falls in parts of the world where outside factors are influencing it - but even after the falls, it climbs back and usually gets right back on track to where it would have been had other things not interrupted the natural move upwards. Even places like California will eventually climb up over what it was in its highest so far. Houston, and other more stable areas, won't be that dramatic.

We had a drop here in the late 80's and a lot of people were underwater (most blissfully unaware - the people trying to sell were the ones affected) - literally not one house was built for over 3 years. We rebounded in a relatively short time and were appreciating again in few short years - then had some of the strongest appreciation from the late 90's and early 2000's. I once graphed it to see where I thought we would have been had we not had that happen in the 80's - and it seemed as if we would have been almost at the exact place we wound up anyway, given the average appreciation prior to the dip.

Even a loaf of bread, which was once much cheaper than it is now, will be worth more in the future. It seems the only thing that gets cheaper over time is technology.
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Old 08-21-2010, 01:49 PM
 
Location: 77441
3,160 posts, read 4,351,322 times
Reputation: 2314
Never buy a home with the intention of it being an investment. It is very difficult to make money in real-estate. People like to say they do but at the end of the day when all costs are factored in, they prolly didn't.
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Old 08-21-2010, 01:54 PM
 
Location: The Greater Houston Metro Area
9,053 posts, read 17,127,037 times
Reputation: 15226
Quote:
Originally Posted by Bily Lovec View Post
Never buy a home with the intention of it being an investment. It is very difficult to make money in real-estate. People like to say they do but at the end of the day when all costs are factored in, they prolly didn't.
You just have to be careful as to location. I have a couple that I help that moves every 2 years - bigger and bigger. They have made money on every house, but we were careful each time as to resale potential - location, floorplan, subdivision, etc.
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Old 08-21-2010, 02:47 PM
 
13 posts, read 27,920 times
Reputation: 25
I do not care to much if I make money, I just do not want to lose a lot of money. I am a single guy who makes less than 100K a year. Any tax benefit I get beyond the standard deduction seems pretty limited to me.

It would be cool to own my own house, but the cost is annoying.

Anyone have where I can buy a house in a safe area not too far from downtown (at least close access to a major freeway) that is not too old and rundown?

From what I can tell, real estate prices in the places I am looking has in fact gone down in the last 3 years, which is the nightmare scenario that I want to avoid.
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Old 08-21-2010, 03:32 PM
 
1,632 posts, read 3,310,099 times
Reputation: 2074
Home ownership isn't a scam... but it's definitely not for everyone in every stage of their life. If I were single I would opt to rent, as there's no way I could afford a house in the type of area I'd want to live in and I wouldn't want to spend half of my weekend doing housework.
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