How do people afford $800k - $1.2 million homes? (West, Westlake: credit, lenders)

[Biscuits]

Originally Posted by orngkat

If that happened to me, I would sell it as quick as I could and buy a small house that didn't cost a fortune to maintain. My boss has a house valued at $1.5 mil here and he pays hundreds per month in utilities, landscaping, cleaning service etc. Believe it or not, a few of us wouldn't choose that lifestyle if you gave it to us.

I know people who live in an $1,100 two-bedroom apartment and they pay "hundreds of per month" towards utilities, cleaning service, and maintenance.

Try this on: For $800,000 one can currently have a zero-energy home (solar, geothermal HVAC, etc.) built that has a personal water well, septic system, and zero-maintenance landscaping; essentially making the total utility bill zero. Would you find a way to turn your nose up at that as well if it were given to you?

I hate to break the news to some here but inflation will eventually give us all a $500,000+ house and the taxes to go with it. Some of us will have an income that keeps pace and many of us will not. Rather than feeling politically or morally superior to those with expensive properties, consider thanking them. They are the ones shouldering the largest property tax burden and without them many of us would be down-sizing to areas that most would agree are less than desirable.

[austin-steve]

Originally Posted by orngkat

If that happened to me, I would sell it as quick as I could and buy a small house that didn't cost a fortune to maintain.

What if values were appreciating at 5% per year and you could rent it for 2 years for more than enough to cover holding costs, plus some profit? If you cashed out, where would you invest the money?

My boss has a house valued at $1.5 mil here and he pays hundreds per month in utilities, landscaping, cleaning service etc. Believe it or not, a few of us wouldn't choose that lifestyle if you gave it to us.

I don't disagree with this. I'm back to being a "small house" person, and I love it.

My point was that it's better to make financial decisions based on things other than emotional dislikes and to examine all the options. I might also immediately sell the hypothetical inherited $1M home, but I'd explore all the options first.

Steve

[curious1111]

My theory is that people may say they wouldnt want a more expensive home, but I dont think that is true. It's human nature to want more, better, etc. Remember, it's not just about fancy marble floors, it could be a larger lot, a better school district, bigger bedrooms for kids, whatever. Once you stand in something better/nicer, its human nature to want it. I think the key is not spending more than you can afford, staying conservative with ratios, etc. Our first house was $200k. We were perfectly happy as a family, and would have been forever if needed. But as we earned more money, we bought bigger houses, more room for kids, bigger yards, better schools, etc. We are in a $1MM+ house now, but our "ratios" are the same as they were back then. I do agree that the ancillary expenditures make me gulp sometimes - but I think a lot of those you have with any house, although they are a bit more expensive the bigger the house and lot, etc.

[ognend]

Originally Posted by Biscuits

Try this on: For $800,000 one can currently have a zero-energy home (solar, geothermal HVAC, etc.) built that has a personal water well, septic system, and zero-maintenance landscaping; essentially making the total utility bill zero. Would you find a way to turn your nose up at that as well if it were given to you?

Or you can have the same for $80,000 if you build a self-sustainable small home yourself.

OD

[Biscuits]

Originally Posted by ognend

Or you can have the same for $80,000 if you build a self-sustainable small home yourself.

OD

The same for $80,000? Hardly. I included desirable land in that equation. Where precisely would your hypothetical $80,000 zero-energy home reside? How much are you budgeting for the well, solar, geothermal, etc.?

[ScoPro]

Originally Posted by Biscuits

I know people who live in an $1,100 two-bedroom apartment and they pay "hundreds of per month" towards utilities, cleaning service, and maintenance.

Try this on: For $800,000 one can currently have a zero-energy home (solar, geothermal HVAC, etc.) built that has a personal water well, septic system, and zero-maintenance landscaping; essentially making the total utility bill zero. Would you find a way to turn your nose up at that as well if it were given to you?

I hate to break the news to some here but inflation will eventually give us all a $500,000+ house and the taxes to go with it. Some of us will have an income that keeps pace and many of us will not. Rather than feeling politically or morally superior to those with expensive properties, consider thanking them. They are the ones shouldering the largest property tax burden and without them many of us would be down-sizing to areas that most would agree are less than desirable.

About 30 years ago an AAS real estate article had a prediction that by the turn of the century in Austin the average home price would be over $200k.

I thought "NO WAY!".

Whoops...

The 1st house we bought was on Kendal Drive in NE Austin - near Rundberg & Dessau Road. Paid $23,000 for a new 1,329 sq.ft. 3/2 NPC house - the 5th one to be built in that neighborhood.
In 1976 we bought a 5 year old 1,950 sq.ft. 4/2 home on January Drive in the Four Seasons neighborhood off east Braker Lane for $32,000. Lived there 19 years & sold it for $95k.

Our parents thought those were insanely high prices.

Inflation marches on.

A friend of mine built a custom 3,500 sq.ft 3/2.5 house on a 1.5 acre lot in Westlake with a downtown view for $500k in 1993. Wonder what that place would fetch now?

[G Grasshopper]

Originally Posted by curious1111

My theory is that people may say they wouldnt want a more expensive home, but I dont think that is true. It's human nature to want more, better, etc. Remember, it's not just about fancy marble floors, it could be a larger lot, a better school district, bigger bedrooms for kids, whatever. Once you stand in something better/nicer, its human nature to want it. I think the key is not spending more than you can afford, staying conservative with ratios, etc. Our first house was $200k. We were perfectly happy as a family, and would have been forever if needed. But as we earned more money, we bought bigger houses, more room for kids, bigger yards, better schools, etc. We are in a $1MM+ house now, but our "ratios" are the same as they were back then. I do agree that the ancillary expenditures make me gulp sometimes - but I think a lot of those you have with any house, although they are a bit more expensive the bigger the house and lot, etc.

I think your "theory" may be true for some, but it is not at all universally true. Perhaps you are trying to justify your own decisions. Personally, I did want a bigger yard, but I discovered that I didn't really want what I thought I did, and that my small yard is plenty for me to take care of. Our goal was to have no mortgage. So we bought a house that we could pay for, which means it needed to be reasonably priced. We find that we really do like the house and the neighborhood. I work on improving our home's energy and water efficiency, but I doubt we will aspire to anything bigger or "better." What do I want "more" of in my life? More friends, more faith, more peace, and perhaps more success in gardening.

[ognend]

Originally Posted by Biscuits

The same for $80,000? Hardly. I included desirable land in that equation. Where precisely would your hypothetical $80,000 zero-energy home reside? How much are you budgeting for the well, solar, geothermal, etc.?

I just bought a 2004 (2300 sqft) mobile home in great shape on level 5.3 acres in Wimberley, TX (in case you haven't been to Wimberley, it is a very nice Hill country village). All of the acreage is usable, it is fenced and already has a well and septic in. I paid $73,000 for it.

We intend to build our own energy efficient small home and pay as we go. We have experience growing food for ourselves and enriching soil with organic components, composting etc.

The home will use solar and will be built in such a way to require minimal heating and cooling.

So, it is doable. It may not exactly cost $80,000 but will not cost me an arm and a leg or a mortgage and indentured servitude to the Bank either

I am not saying you (or someone else) is wrong to pay $800,000 for a "green home". To each their own, everyone has their own priorities in life

OD

[Biscuits]

Originally Posted by ognend

I just bought a 2004 (2300 sqft) mobile home in great shape on level 5.3 acres in Wimberley, TX (in case you haven't been to Wimberley, it is a very nice Hill country village). All of the acreage is usable, it is fenced and already has a well and septic in. I paid $73,000 for it.

We intend to build our own energy efficient small home and pay as we go. We have experience growing food for ourselves and enriching soil with organic components, composting etc.

The home will use solar and will be built in such a way to require minimal heating and cooling.

So, it is doable. It may not exactly cost $80,000 but will not cost me an arm and a leg or a mortgage and indentured servitude to the Bank either

I am not saying you (or someone else) is wrong to pay $800,000 for a "green home". To each their own, everyone has their own priorities in life

OD

That sounds nice. I have been to Wimberley and like it very much.

[ognend]

Originally Posted by Biscuits

That sounds nice. I have been to Wimberley and like it very much.

Yeah. Once the house is done we plan on selling the mobile to offset part of the cost.

It took 7 months of looking though. Generally just a flat usable 5 acres in this area lists at $75K+. Add fence, well and septic and a decent shape mobile and $70K was a good deal. Inspection went fine on everything too (usually you think you found a "deal" and I am one of those people who always think "too good to be true" but so far I have tried hard to find something at fault with the whole set up).

OD