Dallas Home Prices Turning the Corner: Why is Our Real Estate Market So Darn Tootin’ Healthy? (Plano: new house, job market)

[synchronicity]

Originally Posted by TX75007

Natural resources are not the real story for the Nordic nations. They embraced free trade, sold off most state enterprises, and radically privatized many things. In many ways, they are much freer than even Texas.

What



The Nordic countries are perfect analogues for the Southern States in that they were a backwater for Europe for most of the 20th century until the deregulation of state-controlled enterprises and the rise in the price of oil in the 90s helped them.

Beg pardon? In terms of GDP per capita and other metrics, they were hardly "the backwater of Europe". From WWII until the 70's Sweden (taking one scandinavian nation as an example) had some of the greatest growth in the industrialized world and they still had a very large "welfare state" and high taxes. From the 70's thru the early 90's that growth dropped, but from the mid 90's to today their growth has outpaced that of the US, even with (as noted) much higher taxes, much greater social spending and much less income inequality. Unlike Norway, they are not a major producer of oil.

Yes, I know there are other factors at play, I keep saying that. But you're making it sound like the scandinavian nations were all economic backwaters, but then in the 90's they mystically embraced the "free market" and between that high oil prices, WOOSH, they took off. That's just not the case.

All of which is far afield from Texas real estate.

[synchronicity]

Originally Posted by Considering Coming Back

No. The bank really won't give you as big of a loan, they figure property taxes into their formula.

Another point to consider, if I live in a 400k Fairfax house and make 100k I pay about $9,500 a year in property+income tax. If I live in a 400k Dallas house and make 100k a year I pay about $8,800 a year in property taxes. The 0.7% savings isn't going to convince me that Dallas is a better economic environment.

To be fair, you get a crudload more house for 400K in Dallas than you do in Fairfax.

[Johnhw2]

So true and I dont even know what a crud load is lol. Additionally you live around a lot fewer lawyers in Dallas.... assuming Fairfax cty still has the most lawyers per capita....what a proud honor to have

[EDS_]

Originally Posted by Johnhw2

We see higher home prices in California not a better market necessary. This factor wont impact how the market is from year to year but will lower prices ocer the long run. It isnt the only factor in prices obviously. Higher cost to own an asset will keep its price down vs other similar assets in any case where all else is equal.

Lets look at it this way if the marginal new home buyer is buying as much home as they can afford and if household income is $100/yr. With a 33 % limit on mortgage they can afford (no car payments or other long term obligations), then the home price they can afford in a state where property tax is 1%/yr of home value vs tx with up to 3%/yr of home value, the reality of what they can py is lower in Tx.

I believe it is a factor in home prices in Tx... not the only one of course but a meaningful one

I get your point that property taxes are a cost and the do have some impact on things. That impact, so far as Texas v. Cali, is very much overshadowed by the raw cost per foot of homes in Cali and it's not like Cali has no property taxes. Last year my brother and I thought about going in 1/2s on condo just off Russian Hill in San Francisco @ 700$+ per foot and IIRC property taxes were 1.25% or so. So if you net out property taxes and the extreme prices differences per foot.....well I'm still struggling to see how a slightly higher property tax rate and a lower overall tax burden (by an lot) makes Texas real estate seem more costly. It flatly is not.

[EDS_]

Originally Posted by MckinneyOwnr

You're kidding right? You really are going to use the term "regulated economy" in regards to two dictatorships and the Soviet Union (which basically was a dictatorship for decades.) Really?

I was kidding to but to make a point. And in economic terms dictatorships are hard left hyper regulated economies - ten minutes with a book by or about Marx will cement my claim.

[EDS_]

Originally Posted by TX75007

Natural resources are not the real story for the Nordic nations. They embraced free trade, sold off most state enterprises, and radically privatized many things. In many ways, they are much freer than even Texas.

What



The Nordic countries are perfect analogues for the Southern States in that they were a backwater for Europe for most of the 20th century until the deregulation of state-controlled enterprises and the rise in the price of oil in the 90s helped them.

Well just disagree on this one.

1. Norway for example has about 4 million people it's in the top 15 oil producers in the world. It's the only Nordic county with a PPP GDP higher than The US.

2. Some Nordic countries have aggregate tax burdens about double that of Texas - I can't see how they are more free.

[EDS_]

Originally Posted by Considering Coming Back

No. The bank really won't give you as big of a loan, they figure property taxes into their formula.

Another point to consider, if I live in a 400k Fairfax house and make 100k I pay about $9,500 a year in property+income tax. If I live in a 400k Dallas house and make 100k a year I pay about $8,800 a year in property taxes. The 0.7% savings isn't going to convince me that Dallas is a better economic environment.

Are you talking about Fairfax VA?

[Johnhw2]

Originally Posted by EDS_

I get your point that property taxes are a cost and the do have some impact on things. That impact, so far as Texas v. Cali, is very much overshadowed by the raw cost per foot of homes in Cali and it's not like Cali has no property taxes. Last year my brother and I thought about going in 1/2s on condo just off Russian Hill in San Francisco @ 700$+ per foot and IIRC property taxes were 1.25% or so. So if you net out property taxes and the extreme prices differences per foot.....well I'm still struggling to see how a slightly higher property tax rate and a lower overall tax burden (by an lot) makes Texas real estate seem more costly. It flatly is not.

Yes I see your point, it clearly is not as big a driver than many other items. But on the margin when comparing comparably similar properties, perhaps not in a highly desireable Ca area, it makes owning property with the same sales price meaningfully higher in Tx.

California real estate defies my limited ability to understand. I like the weather but not that much more than Tx, I like the views and ambience in SF but as a function driven Engineer would see maybe 10% more value in the california property for these items.... so clearly I am not a cali buyer.

[EDS_]

Originally Posted by Considering Coming Back

No. The bank really won't give you as big of a loan, they figure property taxes into their formula.

Another point to consider, if I live in a 400k Fairfax house and make 100k I pay about $9,500 a year in property+income tax. If I live in a 400k Dallas house and make 100k a year I pay about $8,800 a year in property taxes. The 0.7% savings isn't going to convince me that Dallas is a better economic environment.

With all due respect you missed by point almost totally.

1. The average price per sq ft in Fairfax Va is 240$ in the better areas more like 350/375$ per foot.
2. The average price per sq ft in Dallas is less than 100$
3. You can buy in Preston Hollow for $150-225$ per ft all day long. You can buy on Strait Lane for 240$.


So house per house your tax analysis is way off.

[savanite]

Originally Posted by MckinneyOwnr

Agreed. Most areas of TX have not come close to the type of RE appreciation that CA as a whole has seen. I know a guy who bought a house in CA 15 years ago for $320k. Even after the market collapse, he could easily still sell for $8-900k. (At one point, his house was valued at over $1.1 mil.) My parents, for comparison, bought a home in Plano over 20 years ago. They've probably seen about $50k of appreciation in all that time. Max value in 2007/2008 before the bust was probably only about $20k higher than it is now.

Because the majority of Texas RE never experienced a dramatic boom, we were also spared a dramatic bust of pricing. It's as simple as that.

Yes, those who bought cheap in California and can now sell at a much higher point certainly got lucky. The Draconian housing environment in Cali was certainly goof for them. But the only way they can retrieve these alleged values is to cash out and move away. Which is what a lot of people there are doing.

Compare Cali to a Communist economy such as Cuba, but assume cars instead of houses. If I have a 15 year old Cadillac in Dallas, it is very unlikely to have appreciated in value. But if I have a 15 year old car in Cuba, I can make a fortune (assuming I can sell it on the black market). but the enormous increase in price for automobiles in Cuba does not mean the people are wealthy, or that the economy is well regulated.

The gross appreciation in Cali housing prices and the expectation that this will continue indefinitely are examples of the "Hot Hand" fallacy. Just from the law of averages, a craps player in a casino will have a streak of luck. The other players convince themselves he has a "hot Hand", and they ride along with him. When his luck turns, everyone is wiped out because the episodes of winning and losing truly are random. Nobody really has a hot hand.

Similarly, the vast run up in housing values (or prices) are truly a random, isolated event. Just like the Tulip bubble in Holland, or actually like a Ponzi scheme. Ultimately, the cost of a good or service in a marketplace is priced in terms of its utility, not its speculative expectation of future price. People are stupid enough to believe that a random fluctuation is other than random, because stupidity creates self-delusion.

Every speculative bubble eventually runs out of greater fools. Cali still has a way to go to totally collapse, but eventually, will come to its senses. or maybe not. Perhaps the exodus, either of the financially shattered, or the sensible, will leave the state with a smaller population of the self-deluded, those who will never get it.