Austin-area median home prices hit all-time high (Round Rock, Weir: real estate, rent)

[Novacek]

Originally Posted by Sam.adams33

I don't think it's an entirely separate issue. You were talking about affordability -

No, we were talking about the contribution of house prices _to_ affordability. Home prices are almost entirely uncoupled from tax burden.

If you want to expand the conversation to overall affordability, sure, we can do that. But then you not only need to include taxes, but also average commute lengths, average gas prices, average fuel economies, average utility bills and the increase overall efficiency of houses, the cost of all other goods, etc.

Originally Posted by Sam.adams33

You can be pretty confident that the $75K house in 1990 did not have the same tax bill that the $255K house does in 2015.

Of course it doesn't. But what is that bill, and how much has it increased? We certainly won't be able to tell that by looking at the total property tax revenue of the entire state of Texas.

[petro]

Originally Posted by scm53

In 1990, the median income was $39,400. In 2014, it was $75,400 -- up 91%

Median house price in 1990 was $73,000. In 2014, it was $239,900 -- up 228%

Or so a presentation this week by city demographer Ryan Robertson to the Regional Affordability Committee says.

Very interesting article. I thought another enlightening data point is that the median home cost has gone up by $79,000 since 2005, while the median family income has only increased by $8,000.

[IC_deLight]

Originally Posted by Novacek

Right, but what was the interest rate? Remember, the vast majority of the true cost of a home for most people is the financing.

A 200k home @6% and a 200k home at 3% have totally different affordability.


Looks like in 1990, the prime rate (not exactly the mortgage rate, but I'll use it as a proxy) was 10%. And it's about 3% now.
Prime Interest Rate History

$75k @10% for 30 years = monthly payment of $661

$239k @3% for 30 years = monthly payment of $1,011
($0 down in both cases)

Seems like incomes have increased 91%, but the actual cost of buying a home has only increased 53%. By that measure, Austin is _more_ affordable than it was in 1990.

(You can get slightly different numbers by using different length mortgages, putting down 20%, using slightly higher rates to account for more likely mortgage rates, etc. , but it still won't be 228%).

You won't find much in the way of "0% down". 10% down in 1990 was $7,500. 10% down in 2015 is $23,990. That's a hard money increase of 220%. In addition, if people are engaging in rational economic behavior then they would have refinanced as rates dropped during that timeframe.

Don't think anyone would agree with your claim that Austin is more affordable today than it was in 1990 - although 1990 might not be the best year considering the economic climate Austin was in at that time.

[ATX Wahine]

Originally Posted by Sam.adams33

I'm not going to get into one of your multi-page, thousands of underscores, bickering contests - but the bottom line is that the overall cost of housing in Austin is rising, and in many folk's perception - rising faster than wages over the past few years.

He certainly does have a deep affection for _underscoring_ ... lol.

There's no arguing that property taxes don't count in the overall affordability factor and I can't imagine how anyone could be convinced otherwise, not even with another multi-page underscore bickerfest.

[Novacek]

Originally Posted by IC_deLight

In addition, if people are engaging in rational economic behavior then they would have refinanced as rates dropped during that timeframe.

Sure, but then you're no longer comparing the same thing (the cost to get in the market for the first time).

If you're talking about people who have been here, then 239k isn't the right number either, as that's not the price that the vast majority who were already here paid.

[HappyTexan]

Originally Posted by Novacek

That's an _entirely_ different issue, and unrelated to home prices.

Property appraisals could be cut in half tomorrow for everyone, and property taxes wouldn't change (the tax rate would just double). Valuations are the _denominator_ to the budgeting process, not the numerator.


Though you're also looking at the completely wrong number. That 340% increase includes a near doubling of the population.

Edit: It's also completely the wrong number because that 340% increase was for Texas as a whole, not Austin.

You are the one that brought mortgage payments into the equation.
Property taxes are part and parcel of buying a home and it's cost.

And if you single out Austin vs the state then Austin's property taxes probably went up even higher than 340%.

[Novacek]

Originally Posted by Nor Cal Wahine

There's no arguing that property taxes don't count in the overall affordability factor

Who's arguing that?

But we weren't talking about "the overall affordability factor".

We were talking about the price of houses.

And tax burden isn't included in the mortgage-adjusted price of houses (though if you're smart, of course it's something you should look at as well when buying).

[Novacek]

Originally Posted by HappyTexan

Property taxes are part and parcel of buying a home and it's cost.

Sure, as are commute costs.

As are heating and cooling costs.

As are insurance costs.


We weren't talking about any of those. We were talking about the cost of purchasing. Which _does_ include the finance cost for most buyers.

Originally Posted by HappyTexan

And if you single out Austin vs the state then Austin's property taxes probably went up even higher than 340%.

Then what's that number?

[paul6835]

Originally Posted by Sam.adams33

I don't think it's an entirely separate issue. You were talking about affordability - the rising cost of property taxes, and rising tax load is a piece of that. You can be pretty confident that the $75K house in 1990 did not have the same tax bill that the $255K house does in 2015.

Same as the mortgage rate logic. It's all a piece of the "monthly payment" that determines affordability for the 99%. I'm not going to get into one of your multi-page, thousands of underscores, bickering contests - but the bottom line is that the overall cost of housing in Austin is rising, and in many folk's perception - rising faster than wages over the past few years.

Taxes and Mortgages are relative to house price, which is the denominator of the ratio. If you are considering income/housingcost as the ratio of affordability, taxes are already (mostly) baked in assuming tax rates are relatively constant, which they appear to be https://www.county.org/about-texas-c...nts/index.html

[Novacek]

Originally Posted by scm53

In 1990, the median income was $39,400. In 2014, it was $75,400 -- up 91%

Median house price in 1990 was $73,000. In 2014, it was $239,900 -- up 228%

Or so a presentation this week by city demographer Ryan Robertson to the Regional Affordability Committee says.

The fact is, that comparison is totally bogus (and I'm blaming Robertston, not you). It's comparing two _completely_ different groups.

He's taking the median income of every household in Austin

and comparing that to

The median price for those who bought in 2014.


What's the price income ratio for those who bought in 2014? We don't know. For all we know, everyone who bought could be making 200k /year (though I wouldn't expect so).