Planning to relocate to Austin,TX (real estate, low crime, mortgage)

[A-Tex]

Originally Posted by jonlovet

Thanks riaelise. I got it. Yes, perhaps that website does not have latest numbers. I agree that 2500 can be an amount but it is way better than 4.5k (800k house with 30yr mortgage). after paying 2500, i would have an asset whereas now 2.5k is just getting wasted. Also a few of my fresher friends working there are making 85-90k. I am hopeful (given my 5yr exp) , i would be able to atleast make 100k. So I think I can afford 2.5k mortgage per month.

Keep in mind that that $2500 mortgage would also need to include property taxes (huge factor here), insurance, any HOA fees, maintenance, etc. it"s not an apples to apples comparison that many first time home buyers think it will be.

Get the job first. Rent first. Get a feel for where you want to live. That $250K number so many calculators love to use as the average price is not only outdated, it encompasses the entire Austin metro area. When you look at the neighborhoods, home styles, locations, amenities etc. you will have a much better grasp on what things are really going to cost. That simply can't be done on the Internet.

[AnotherExPat]

Jonlovet, so here's my take. I currently live in the Bay Area and have similar issues to you.

I have visited Austin twice now on research trips and have spend a few weeks there getting to know the ins and outs. A few weeks won't give me a full picture but at least it scrapes through the internet haze!!

Austin is growing rapidly. It's a bit like Las Vegas as far as construction is concerned and the roads are getting congested similarly. However there is a lot better planning as far as housing communities are concerned. They plan housing areas so that the facades on the houses look different and there a pool or community area. That's something I like as you don't feel like you're just in a cookie cutter house.

As far as property, I believe you get good value for money. They seem to be well constructed and have guarantees by the builders. But who knows ??? Taxes typically run 2.5% - 3.5% per year based on the assessment of the house. Typically assessment are lower than the appraised value but this all depends on the market conditions.

As far as work is concerned, the high-tech is picking up there but it's not like the Bay Area where you can generally easily jump ship. People have a more long-term view of jobs there. But with Apple and Google I'm sure the opportunities are getting better. Lot's of start-ups are there because it's a lot cheaper than the Bay Area (this is the main reason for me looking at moving as I'm a start-up guy and have a lot of experience in developing electronic products).

As far as commute, it seems to be reasonable (not like the 101 parking lot we have here). Friends of mine typically complain about a 20 minute commute as being bad in Austin. Not your 1.25hr each direction commute like the Bay Area.

Geography: It's flat. Seriously flat. You will most definitely miss the Bay Area mountains and coastal access as well as the access to places such as Yosemite. I guess you can't have it all. Austin has hills. Then it's flat..... forever! I jest not.

Climate: Way different from the Bay Area. Muggy in the summer like you wouldn't believe. Otherwise typical humid southern climate. Politically it seems to be more reasonable. Let sleeping dogs lie kinda mentality opposed to the 'milk the system' mentality in California.

Shopping/activities: There are a few good Shopping Malls. Barton Creek Mall being the main one IIRC. A bit like the Stanford Mall but Enclosed and bigger. All the recognizable stores are there and it's very accessible. Apparently there's a good arts scene and live music/theater/performing arts but I've not had a chance to experience that. There seems to be a big thing about using the river for water sports. Downtown Austin (city center) has a few bars and whatnot. During the day it's a business center and at night it's got a few streets with bars and that's it. I've yet to find better entertainment but this will probably come with actually living there and talking to locals.

Schools, University of Texas is the main one in Austin. Apparently an excellent school. Education is very well supported by the state from what I gather.

So that said, the biggest issue is to find a job. There is a lot of competition.

I very much hear you on the Bay Area state of affairs!! Best of luck. BTW, take a trip first before jumping in. Cheap, regular flights from San Jose to Austin are the way to go. They call it the nerd bird!

[COCUE]

We made the move from the bay area to Austin in December and we couldn't be happier... We decided that we had had enough. The cost of living was slowly killing us even though we both made really great incomes even by bay area standards.

We both worked for tech companies.. Me at established huge company on the peninsula and Dh at a growth phase start-up in the city. We decided that we were done and started figuring out how to make it work and luckily we were able to move with our jobs both in the NW Austin area. We decided not to rent and went ahead and bought immediately. But we visited for a long weekend and then didn't the next few months doing all kinds of research and it's all worked out. We live in Avery Ranch and gotta say I've taken to suburbia like fish to water.
I don't know about in a few years but today you can find a whole lot of house in areas closer to the NW area tech companies like in cedar park, Leander and even some NW Austin areas. And with 20% down, you shouldn't be paying up to $2500 including taxes and insurance on even a $350k home

[jonlovet]

@A-Tex:
"Get the job first. Rent first. Get a feel for where you want to live. That $250K number so many calculators love to use as the average price is not only outdated, it encompasses the entire Austin metro area. When you look at the neighborhoods, home styles, locations, amenities etc. you will have a much better grasp on what things are really going to cost. That simply can't be done on the Internet."

I do not want to take job without complete research. Right now with my job(105k base sal) at bay area, i pay 40k tax and most of the rest in rent. Buying house is no more an option because by the time i think (~2-3 years) prices will go above
1M$ in Fremont. I see high inflation in daily items like fruits, vegetables etc with 300$/month every year rent increment making life ridiculous.

@AnotherExPat - Thanks for detailed response. Sure, I will take a trip to Austin. I am still surveying between various cities.
I may think of Releigh as another option.

@COCUE- Thanks .. could you please tell me the amount of time for your mortgage. is it 10 years or 15 years.

[winkosmosis]

The same thing is happening to rents and house values in Austin, and property tax is 3% so of course your tax will rise each year

[jonlovet]

Thanks winkosmosis.
I agree. The moment tech comes in, these things happen. But now, tech does not seem to be as flourished in Austin as in bay area. So buying house is a good value for money. The trade off is - 350 k house with 95k-105k salary in austin (5 yr exp s/w exp) with limited opportunities (since austin does not have lot of companies) vs 800k house with 110-120k salary in bay area with more opportunities. I just spoke to one of my friend who bought house in San Jose for 300k 20 years ago. Now it should be more than 500k. Considering all this, i think each area has it own pluses and minuses. But I am ready to take risk of limited opportunities in Austin and get house unless I get into some company in bay area which will pay me more than 140k (which is close to impossible). Goal is to clear mortgage in 10-15 years. As per mortgage calculator zillow.com
350k (100k down) per month it comes around 2394$ for 15 years
800k (100k down) per month it comes around 6746$ for 15 years
I think even if i earn 140 k in bay area vs 100k in austin, per month pay check wont have a difference of 4k (6746-2394).

[A-Tex]

Originally Posted by jonlovet

Thanks winkosmosis.
I agree. The moment tech comes in, these things happen. But now, tech does not seem to be as flourished in Austin as in bay area. So buying house is a good value for money. The trade off is - 350 k house with 95k-105k salary in austin (5 yr exp s/w exp) with limited opportunities (since austin does not have lot of companies) vs 800k house with 110-120k salary in bay area with more opportunities. I just spoke to one of my friend who bought house in San Jose for 300k 20 years ago. Now it should be more than 500k. Considering all this, i think each area has it own pluses and minuses. But I am ready to take risk of limited opportunities in Austin and get house unless I get into some company in bay area which will pay me more than 140k (which is close to impossible). Goal is to clear mortgage in 10-15 years. As per mortgage calculator zillow.com
350k (100k down) per month it comes around 2394$ for 15 years
800k (100k down) per month it comes around 6746$ for 15 years
I think even if i earn 140 k in bay area vs 100k in austin, per month pay check wont have a difference of 4k (6746-2394).

You're focused on monthly payments, which is pretty typical of first time buyers who are used to paying rent. Like I said before, there are other expenses in home ownership. Property taxes are significant here. That will add another $500 to $600 to your monthly bill. Your insurance will add another hundred-ish or more depending on many factors. HOA fees may be required depending on where you live. Also basic maintenance like landscaping add to the monthly output. So your $2500 monthly output becomes closer to $3500. That doesn't even count repairs, less frequent maintenance, updates etc.

I get that you can't afford to buy in the Bay Area and you're placing a significant value on home ownership (nothing wrong with that.) But to jump right into the biggest financial decision most people ever make without living in and truly getting to know a town is folly.

[jonlovet]

Thank you A-Tex.
But isn't 1k increment owing to property tax, insurance, hoa, maintenance, misc etc applicable to San Jose/bay area as well. I believe 6746 will go close to 7.5k then.

[centralaustinite]

Plus, why the rush to pay off? The 30 year mortgage is a fantastic tool and the ordinary person's best hedge against inflation!

[scm53]

Originally Posted by centralaustinite

The 30 year mortgage is a fantastic tool and the ordinary person's best hedge against inflation!

You are mistaking the mortgage for the asset value as an inflation hedge. It is the asset that keeps its relative value, and will keep it whether it is financed or not.