Homeowners costs - worth the savings? (Houston, Tyler: sales, real estate, lease)

[scootiepie]

I am a native Texan (moved at age 22 and have never been a homeowner there) living in Virginia & pondering moving back to Texas, mainly hoping to reduce our cost of living by reducing our mortgage payments.
Even though I can go to real estate sites and see that homes are much less expensive in TX, I am just wondering if the cost savings will be eaten up in other expenses... mainly I'm worried about homeowners insurance (highest in the nation), electricity (up there too), and property taxes (is it true that schools can tax you in addition to city and county)? I just don't see the point in saving on a mortgage payment if you just pay for it somewhere else.
I'm just wondering what other's experiences are who have moved here.
Do you really have more money in your pocket?

[High_Plains_Retired]

Originally Posted by scootiepie

I am a native Texan (moved at age 22 and have never been a homeowner there) living in Virginia & pondering moving back to Texas, mainly hoping to reduce our cost of living by reducing our mortgage payments.
Even though I can go to real estate sites and see that homes are much less expensive in TX, I am just wondering if the cost savings will be eaten up in other expenses... mainly I'm worried about homeowners insurance (highest in the nation), electricity (up there too), and property taxes (is it true that schools can tax you in addition to city and county)? I just don't see the point in saving on a mortgage payment if you just pay for it somewhere else.
I'm just wondering what other's experiences are who have moved here.
Do you really have more money in your pocket?

New Mexico is certainly not Texas, but fifteen years ago I moved from Maryland to Albuquerque and found that the lesser cost of living greatly overshadowed the lose to my income which was significant. I too am a native Texas having left when I was eighteen. You should know that school taxes will be by far the largest part of your annual Texas property tax bill.

The "trick" to successfully moving to Texas is to pick a county in an area of the State where you want to live, one that has an adequate tax base to support its population, and one that has shown some restraint in tax rates in prior years. Rural agricultural counties sometimes break the backs of property owners in town by placing on them most of the County's tax burden.

I'm in that process right now of selecting a Texas county in which to buy my last home for retirement. As to property taxes, Texas has 254 counties which resemble as many separate nations. Pick and choose wisely and you should do well.

[loves2read]

you can also factor in the fact some countries are experiencing a boom with owning land that has a gas lease on it and the general increase in sales tax from strong economy in those areas

right now price of NG is down from year ago--Chesapeake is first company that says it wll pull back on expansion in some ways--will be lowering rig count maybe 20 rigs and drilling to hold production--not expand what they have under production...

school taxes are high compared to some areas but a quality school district offers re-sale strength.
but salaries in TX often are less than on east or west coast--so that is definitely a factor

right now there is no state income tax and unless things get very bad I don't think there ever will be one...

[Trainwreck20]

You can do better or worse by owning in Texas. At the risk of repeating myself (), owning a modest house in Texas is great for a two-income household, but is not so good for a one-income household living 'large'. Since there is no state income tax, you can basically divide the property tax between the wage earners and will (generally) come out much better than an income tax. If you are coming from somewhere w/o an income tax, that obviously is not a savings, though.

Also, if you itemize your taxes, a certain amount will be deductible from your federal taxes. If you are carrying a typical 80-20 mortgage or thereabouts, you will usually find that itemizing is the way to go and will get 1/4 to 1/3 of your property tax value back. Once you have paid off a house (or getting near paid off), itemizing is not a given, though.

[tstone]

You will only get some back if your itemizations are above and beyond the standard deduction for the tax year. Every year the standard deduction goes up, and as you pay off your mortgage the amount you can write off (interest) goes down. Taxes do go up a bit but are kept in check to an extent. Therefore in theory, at a certain point an equilibrium will be met and there will be no advantage to itemizing. Anyway it's a small advantage. Many realtors will blow this 'tax advantage' element out of proportion. In reality people out there are burning $10k/yr in interest to receive a $2k/yr tax refund. Deductions are not credits.

Anyway as far as Houston goes, I pay 2.9% of the appraised value less homestead exemption on property taxes annually. (If I were in a suburb town it could easily be 3.3%). I'm 8 miles from the coast and HO & flood insurance comes out to be about $2,100 a year total. 500 yr flood plain. On elec+gas that ranges $75-250/mo but $150/mo average. HOA is about $475/year. So that's about $800/mo in extra bills besides the mortgage.

So as you can see, there are a lot of hidden fees that suck out any potential appreciation. I'm in a 'city-burb' that's fetching about $100/sq ft and appreciating about 5% per year. I'm sure the bills I have to pay are canceling out any return I may receive. Even if roofs & AC's have to be replaced, I keep telling myself it's better than renting. It might have something to do with the lawsuit I brought on (and won) but that's another story.

Generally speaking, you can go modest on a nice house and put any other gravy in something that will return more. Nowadays though, not sure what that is.

[WillysB]

What do you want for a home? Multi-bedrooms/baths/garages or something modest? Where do you want to live? How far will you commute and how much time and expense are you will sacrifice for work?

[scootiepie]

We are a a one-income family while our children are babies. And I'm thinking about homeschooling, so maybe much longer.
We definately aren't ones to live beyond our means. I think we could get all the house we need for less than 200K easy. I would like to stay below 160K. Our house in VA that we paid 250K for would be probably an 80K house in TX. So I want to upsize the house while downsizing the mortgage basically (but not if there is no real savings on the bottom line after taxes). My family is near Tyler we would not want to be more than a 3-4 hour drive away (but not right on top of them either).

[Trainwreck20]

That is a hard question to answer without opening up excel and doing the math. Without knowing what taxes you are paying in Va (income, property, sales?), what your income is, etc. it is impossible to answer.

However, assuming you have some flexibility in where to live, you should be able to get your property taxes down to less than 2% (living in the county, probably) within that range to Tyler. It is easy to refigure the mortgages, payments, and taxes, but insurance it a little more difficutl, plus auto ins. difference, plus no income tax, but a 6.25 sales tax (plus more in the cities), etc., etc. You really, really, need to do the math ahead of time to avoid any surprises. It is also quite possible that you will be much better off on a month to month, but those property taxes never get paid off .

[killer2021]

Here is my two cents.

This really depends on your situation. As I have said before, there is a lot of hidden costs to being a homeowner.

The first cost is cost of transportation. When you own, you have to commute pretty much. Make sure to factor that into the cost of ownership. When you rent you usually live very close to work and hence that is a savings

Next would be the opportunity cost of jobs. When you own you are limited to an x amount of miles you are willing to travel for jobs. If you change jobs often I would not buy. That also means you will probably have to pass on certain (better paying) opportunities. My idea is that buying is for someone who has settled down into a job they like and plan to stay there for a long time (preferably until they retire). If you are young and climbing the ladder then do not buy it is cheaper to rent.

Also electricity costs, property taxes, insurance are all relative to the value of the home. If you plan on buying one of these 300k mansions then you will pay the price for it. If you don't want to pay all those high prices then stick to the 100-150k homes.

With that being said I would do the following:

1) Only buy what you can afford (20% down, good credit etc.)
2) Only buy when you have a stable job
3) Only buy when you plan to live in that home for a very long time.

[changeofpace]

We found the cost of building a new home was much better in TX than in CA, AZ, NM, NV and FL. Property taxes higher in TX, cost of utilities about the same, corporate taxes less in TX, no personal income tax in TX or FL. We relocated from MN to TX and our income is less but property taxes less, utilities less and and cost of living is less so our net "income" is higher in TX overall.