Why you should buy now in Houston FAQ's

[geturmotorunin]

There are good arguments on both sides of this issue.The bottom line is if you really want to own your own home and look at it as an investment then be smart about it ( do your homework and if it is an investment treat it as such) dont become to emotionally attatched,dont put money in that you wont get out,in many parts of the country for the past few years the smart money has been in renting and saving.Houstons market has remained relatively flat but there are more and more bargains poping up and the buyer is in the driver's seat with the inventory going up so learn how to be a negotiator and be prepared to move on to the next rather than going higher than your set price,nothing worse than a case of buyers remorse for years.My last house was in CA. bought in 03' for 150k sold in 06' for 372k and I have been making 5%+ on the money for 2 years.Stock market has been to volitile for me.Im now ready to buy a home for cash in fort bend county,Investment? if I play it smart yes!

[EasilyAmused]

Sorry. I just don't see Fort Bend county or Mongtgomery county as an '"investment." After any improvements and realtor fees, if you break even count yourself lucky.

Investment properties are based on location. Location is closeness to downtown or most desirable neighborhoods within a city.

[amyalta]

Agree absolutely, glitterik. The trouble is that 'most' people who extol the benefits of renting are not working people like you and me, and, let's be frank, most of them on Texas forums probably would like to abolish SS, too! The rentier class always has it good at the expense of people like us. We intend to buy for cash.

[Jamesww]

Originally Posted by tstone

Some thoughts:

* Unless we're talking about fast food, inflation is more than 3%.
* You provide no hard data examples to extract 6.8% from your explanation.
* You provide no mortgage interest or equity loan rate examples.
* You provide no tax/insurance/maintenance cost examples.
* John Doe's rental rates increasing faster than Jane Doe's purchase rate does nothing for my personal bottom line.
* Rate of return is exponential, not additive. <== when I see this one, I immediately disregard
* My tax benefit was nothing close to 15% of my total annual housing expenditure; it's not as if the standard deduction just disappears. Another hard example (following Schedule A) would be nice.

I'm sorry but this has to be the most convoluted, distorted explanation I've ever seen.

Please accept my apologies, but you're not gonna win the time/money-analyst crowd over with that one.

year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8 year 9 year 10Mort.-6090-6421-6765-7123-7495-7881-8282-8700-9132-9584Ins.-1200-1247-1296-1348-1401-1456-1514-1574-1635-1700Prop. Tax-3960-4116-4278-4447-4622-4804-4994-5190-5395-5608Mat. Exp.-1800-1880-1963-2051-2142-2237-2337-2441-2550-2664Total-13050-13664-14302-14969-15660-16378-17127-17905-18712-19556(+) Rent15561162521697317727185141933620194210912202723006Total 2511258826712758285429583067318633153450fed tax 15%150715801656.51735.51817.61902.81991208321792278Ext. Equity331034393576371638634013417543304516N.S.P.57667Net C.F.732876077903.58209.58534.68873.8923395991001063395Closing cost for purchase estimated at 6% of loan amountFinanced value kept at 70% of

30 year inflation rate of 4.44% will be used for calculationsmarket value30 year appreciation rate of 3.94% will be used for calculationsorginal loan amount= $84,0001st mortgage calculated at 7.25% (30 year fixed rate interest only) Down Payment & closing costs=43200HELOC calculated at 10% (15 year fixed rate interest only)Sales expenses in year 10 @ 7%HELOC used to extract equity on a yearly basis to keep loan to value ratio at 70%5 year inflation rate 2.89% 30 year inflation rate 4.44%IRR=20.05%93 year inflation rate 3.72%Source: Historical Inflation data from 1914 t the presentHousing appreciation (in percent) by metro area*Metr oareaRankingQ1 20061-Year5-yearHouston-Sugar Land-Baytown, TX2032.275.2424.25Source: House price appreciation by metro area - MSN Money (http://moneycentral.msn.com/content/Banking/Homebuyingguide/P85324.asp - broken link) 5-year appreciation rate works out to 4.44%Bitmap 30 year appreciation rate is 3.94% http://recenter.tamu.edu/mreports/HoustonSLBay.pdfHouston-Sugar Land-Baytown Market Overview 2007Average rent per square foot $0.79 $0.79Average rent for units built since 2000 $0.90 $0.76Average occupancy 92.2% 93.3%Average occupancy for units built since 2000 94.1% 92.8%Apartment MarketData ResearchHouston GalvestonAbove home used as example for calculations1995 sq. ft. 4 bedrooms 2 bathroomsI feel that texas a&m per sq. ft. rental rate to high so I used on 0.65 rather than 0.79 a sq. ft.
In response to your post I can see where I might have confused someone by doing such a rapid fire post based on things about numbers I take for granted. I went on to HAR found a property did research on rental rates, inflation rates, and appreciation rates in houston. Houston's appreciation rate is 0.5% less than the inflation rate. Despite this I have done a complete time value of money run down for a four bedroom, 2 bath, 1995 sq. ft. newer house in Houston. It is not a foreclosure is in a decent liveable neighborhood.

My example is for a ten year holding period and the rate of return is corrected for inflation so that it is a real rate of return. The above example's inflation adjusted rate of return is 14.95%. This beats both small cap. and large cap. stocks historical value.

[MissDaisy]

Originally Posted by Jamesww

year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8 year 9 year 10Mort.-6090-6421-6765-7123-7495-7881-8282-8700-9132-9584Ins.-1200-1247-1296-1348-1401-1456-1514-1574-1635-1700Prop. Tax-3960-4116-4278-4447-4622-4804-4994-5190-5395-5608Mat. Exp.-1800-1880-1963-2051-2142-2237-2337-2441-2550-2664Total-13050-13664-14302-14969-15660-16378-17127-17905-18712-19556(+) Rent15561162521697317727185141933620194210912202723006Total 2511258826712758285429583067318633153450fed tax 15%150715801656.51735.51817.61902.81991208321792278Ext. Equity331034393576371638634013417543304516N.S.P.57667Net C.F.732876077903.58209.58534.68873.8923395991001063395Closing cost for purchase estimated at 6% of loan amountFinanced value kept at 70% of

30 year inflation rate of 4.44% will be used for calculationsmarket value30 year appreciation rate of 3.94% will be used for calculationsorginal loan amount= $84,0001st mortgage calculated at 7.25% (30 year fixed rate interest only) Down Payment & closing costs=43200HELOC calculated at 10% (15 year fixed rate interest only)Sales expenses in year 10 @ 7%HELOC used to extract equity on a yearly basis to keep loan to value ratio at 70%5 year inflation rate 2.89% 30 year inflation rate 4.44%IRR=20.05%93 year inflation rate 3.72%Source: Historical Inflation data from 1914 t the presentHousing appreciation (in percent) by metro area*Metr oareaRankingQ1 20061-Year5-yearHouston-Sugar Land-Baytown, TX2032.275.2424.25Source: House price appreciation by metro area - MSN Money (http://moneycentral.msn.com/content/Banking/Homebuyingguide/P85324.asp - broken link) 5-year appreciation rate works out to 4.44%Bitmap 30 year appreciation rate is 3.94% http://recenter.tamu.edu/mreports/HoustonSLBay.pdfHouston-Sugar Land-Baytown Market Overview 2007Average rent per square foot $0.79 $0.79Average rent for units built since 2000 $0.90 $0.76Average occupancy 92.2% 93.3%Average occupancy for units built since 2000 94.1% 92.8%Apartment MarketData ResearchHouston GalvestonAbove home used as example for calculations1995 sq. ft. 4 bedrooms 2 bathroomsI feel that texas a&m per sq. ft. rental rate to high so I used on 0.65 rather than 0.79 a sq. ft.
In response to your post I can see where I might have confused someone by doing such a rapid fire post based on things about numbers I take for granted. I went on to HAR found a property did research on rental rates, inflation rates, and appreciation rates in houston. Houston's appreciation rate is 0.5% less than the inflation rate. Despite this I have done a complete time value of money run down for a four bedroom, 2 bath, 1995 sq. ft. newer house in Houston. It is not a foreclosure is in a decent liveable neighborhood.

My example is for a ten year holding period and the rate of return is corrected for inflation so that it is a real rate of return. The above example's inflation adjusted rate of return is 14.95%. This beats both small cap. and large cap. stocks historical value.

Jamesww, no offense, but I think you have officially given me an aneurism,
or at least made my eyes cross...which my mother says they will stay that way...

[glitterik]

I've been house hunting since Labor Day, and prices inside the loop haven't moved despite the rhetoric about a "seller's market." However, prices outside the Beltway have dropped, I have heard. Like they say, Location, Location, Location. You can't count on being 30 miles from the city in Katy or Clear Lake or Woodlands, etc. as being an "asset" when gas will be at $4 per gallon this summer.