Buying without a Job (Dallas, Plano: rental, mortgage, buying a house)

[NYRelocate3]

hello

my husband and i are planning to relocate to Dallas by the end of the year, early next year. We do not have jobs yet, but are not too concerned with finding a job. We are looking in McKinney, Plano, and Frisco. We have family that relocated from NY a few years ago and live in Denton. We want to buy something soon since everything seems to be going up in price. i know the commute can be hell, but if you had to pick an area to move without having a job, where would you chose? we live in NY and i actually work in Times Square, so i feel like although the commute is bad, nothing really can compare to NYC and how crazy it is. Also, i understand people picking a place close to where they work, but what if your job changes? I would rather find a community that i love instead of an easier commute. So, what areas are most central, newer builds for 300-400k with good schools? thanks !

[TurtleCreek80]

That is ridiculous. Wait until you get here and find jobs.

The areas with new construction going for $300-400k are anything BUT "centrally" located. They are on the northern, southern, eastern, and western sides of Dallas, typically in the adjacent counties. Seriously, chill out and wait until you land jobs and even then, rent for a year. Buying a house that is located near a job you end up hating for schools that are a bad fit for your kids can be a really expensive decision. Plus, the metroplex is HUGE. You could buy a house in Aledo and end up working in downtown Dallas (probably 1.5-2 hours in a car each way). Or end up buying a house in McKinney and needing to drive to one job in Plano (not a bad commute, 20-30 min) and another close to I-20 (1.5 hours each way).

If you're moving to DFW for a better quality of life, let yourself actually have one! Most people in Tri-State area commute 2 hours each day- or more! Most people here commute less than 1 hour per day. Enjoy your extra hour! Don't spend it because you have fear of being "priced out". You won't be. Wait until you're settled before buying and then you will know which neighborhoods or suburbs meet your budget criteria and are a reasonable commute.

[Transplanted99]

Originally Posted by TurtleCreek80

If you're moving to DFW for a better quality of life, let yourself actually have one! Most people in Tri-State area commute 2 hours each day- or more! Most people here commute less than 1 hour per day. Enjoy your extra hour! Don't spend it because you have fear of being "priced out". You won't be. Wait until you're settled before buying and then you will know which neighborhoods or suburbs meet your budget criteria and are a reasonable commute.

Some good, agreeable points, but I think they are more concerned about the "opportunity cost" vs being "priced out", if I understand it correctly.

It is a potentially valid concern with the recent announcement of Toyota relocating their HQ and we have yet to feel the full effect of State Farm and Raytheon moves (offices are still under construction). It all comes down to how far out their timeline is and what they judge the market will be at that time vs now.

If we have a "momentum effect" (i.e. other large corporations following pursuit on a relocation to DFW), the market will turn white hot for a bit (then perhaps deflate later as builders finally catch up with inventory to meet the demand, and maybe overshoot it), but may stay elevated from today's price for some time.

As an alternative, if they have that kind of money available, I might suggest they consider investing in call options on the Case-Shiller index, specifically for Dallas (DAXR, I believe). I think the transaction costs would be the less, and it is easier to get in and out (i.e. no contingencies, wait times, etc). In fact, since it is tracking the median price, it might outperform a higher price point, as the under $300K is hot right now.

[veuvegirl]

Moving from the east coast here, it really is bad traffic. Don't discount people saying this as a factor on your purchase.

[ChristieP]

I agree 100% with finding a job first! then deciding where to live. Doing it the opposite way is just an exercise in futility, and there's no good reason to even attempt it.

[loves2read]

Could be very expensive mistake--

[TurtleCreek80]

Originally Posted by Transplanted99

Some good, agreeable points, but I think they are more concerned about the "opportunity cost" vs being "priced out", if I understand it correctly.

It is a potentially valid concern with the recent announcement of Toyota relocating their HQ and we have yet to feel the full effect of State Farm and Raytheon moves (offices are still under construction). It all comes down to how far out their timeline is and what they judge the market will be at that time vs now.

If we have a "momentum effect" (i.e. other large corporations following pursuit on a relocation to DFW), the market will turn white hot for a bit (then perhaps deflate later as builders finally catch up with inventory to meet the demand, and maybe overshoot it), but may stay elevated from today's price for some time.

As an alternative, if they have that kind of money available, I might suggest they consider investing in call options on the Case-Shiller index, specifically for Dallas (DAXR, I believe). I think the transaction costs would be the less, and it is easier to get in and out (i.e. no contingencies, wait times, etc). In fact, since it is tracking the median price, it might outperform a higher price point, as the under $300K is hot right now.

But you also have to look at what the "opportunity cost" of buying now actually does cost:

1. Roughly $25k of carrying costs on a second home for 1 year (they'll still own or rent where they live now until they move to TX), not including pool/lawn care and any utilities that need to be on so the home doesn't suffer foundation issues, termites, rodents, or any other issues that come with long-term vacany.

2. The headache and risks of becoming a long-distance landlord. Sure they could rent the place out and cover the $25k carrying costs but being a LD landlord isn't ideal -> you can't drive by and check to make sure the lawn is taken care of and the driveway gate isn't broken, you won't know the neighbors and have the relationship where they are willing to call and "tattle" on bad tenants (you'll be some faceless out of state "investor" type ownere to them), and even good tenants won't take care of a home as well as owners do. One could easily spend anywhere between $1k and $10k between cleaning/ deferred maintance/ repairs after a tenant leaves. I usually budget for approx 1 month's rent when turning over tenants and am happy when the bill is less!

3. Tax complications:

Income taxes- if they sell their primary residence to buy this one, they will not only lose out on being able to deduct mortgage interest and property taxes on their current home, they will be taxed (at their federal/state rate) on the rental income of the TX house. Quick math on a comprable mortgage + tax bill in current home @ 25% tax rate would be a loss of approx $5,000 tax bill savings from itemized deductions and an added $2,000 tax bill from rental income less allowed expense deductions = net $7,000 income tax bill increase per year.

Also, the loss of being able to claim the Homestead Exemption on property taxes for at least 1 more year than if they bought when they moved here (approx $800/yr discount in Plano for a $350,000 home). Usually if you buy during the year, you can claim the previous owner's exemptions for the current year (unless brand new construction) and then file your own for the next year since you were an occupant by Jan 1. They will certainly lose 1 year's savings and possibly 2 (if new construction). Not a ton, but surely there are better ways to spend $800-$1,600 than unncessary additional property taxes!


It just doesn't seem worth it to "save" a little bit on the purchase price. Even if home prices go up 15% next year (doubtful), a $300-350k homes would still be within their $400k max budget next summer.

[Transplanted99]

Originally Posted by TurtleCreek80

But you also have to look at what the "opportunity cost" of buying now actually does cost: ...

All good points (makes the case for the Case-Shiller option) and depends on the OPs situation how they would be affected and their judgement on risk. There is no black and white answer without knowing this.

[Renu.Uner]

Sometimes, people come with jobs but change it later so its better to stay central. Coppell, Richardson, North Dallas(Plano school) and West Plano are most central places under $500k with good schools.

[NYRelocate3]

Thank you for the responses. We currently own in NY, and would hopefully sell before we buy in Texas (although we don't have to). Alot of the new builders we have been in contact with have new phases that would not be ready until the end of the year, which would be ideal. my husband is a building engineer and i work at HBO. i am not looking for a career in texas, just a part time job that will pay the bills so i can be home more to raise kids. From what i am seeing, there are alot of engineer jobs in texas, especially with new construction going up. we have an idea what we are looking for in a community and that seems more important to me than commute times when jobs can change. i know alot of people disagree, and i do not want a ridiculously long commute time, that is why i was asking if between Plano, Frisco and McKinney, is there one more centrally located that might work for people who have not landed jobs yet? And yes, buying high is a concern for us with Texas growing so fast. Also, we have family that moved from NY to Texas a few years ago and they bought one house while they were still living in NY, eventually sold their house in NY, moved down to Dallas, and bought another house. i respect everyone's opinion, but i think there are alot of opportunities when you can buy a house and have little to no mortgage.