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OK, sorry for using the "Californians" term. It seemed like a good way to group the populace who is accustomed to paying close to 1 million dollars for less than 2000 SQFT, whose only plausible reaction would be to find any of our 3000 - 4000 SQFT homes, at practically half the price, the ultimate steal. There is no complexity on such a simple phenomenon.
I do agree the situation is convoluted in nature and to find a simple "sentence-long" explanation is not trivial. It would need to be some weird equation nobody here would want to read. But here is the thing!
People agreeing to pay 600K for a 450K home will have to pay taxes on 600K, not 450K. Here in Collin County I see rates in the 2.0% to 2.6%. So Assuming 2.3% (which is one of the most typical ones), now you need to cash out almost 14K in property taxes, whereas two years ago (when the home was in the low 400K's) the toll would be in the low 9K's.
I will admit ignorance on the insurance side, though. But if it goes up because now we have a "600K" home, and it would "cost more" to rebuild it in the event a Tornado or a fire flattens it, you also need to add this increased cost.
So we are not only paying more for the actual structure, but also more on taxes and probably insurance. But hey, it's called evolution so surely this was just meant to be.
When I started this thread a month ago, my question was whether this was a bubble. Nobody seems to think it is. In fact, the consensus seems to be that basically the DFW metroplex was super cheap and it is now equalizing itself to the rest of the country.
After all, one of the fears we must contemplate is: what if I agree to pay 600K for a 450K home, because everybody is doing so, and then all of a sudden the market craze comes to an end and my home IMMEDIATELY goes back to be worth 450K? This would be great for the property taxes, but the day I want to sell it? WHAMMO! Painful endeavor...
Others have touched on this. Generally speaking those who consummate transactions set prices not observers. You decide what you are willing to pay and that is it.
I believe that when "everyone" is saying "it's not a bubble, it just can't be, they just can't let it be a bubble!"; when "everyone" is saying "but this time is different"; when the loudest strongest voices against a bubble are those with vested interests in it not being a bubble (whether commercially, or because they just invested in it); you should be watching out. If you don't have an historical perspective on this, I urge you to read "Extraordinary Popular Delusions and the Madness of Crowds".
I agree watching the crowds perspective is wise but to ignore fundamentally job growth, affordability ratios (home price per job wages or typical local buyers) and lack of competition from new housing in certain areas due to n so zoned vacant land etc is not smart. The fundamentals of dfw are strong not bubbly so crowd sentiment is not the only or strongest measure of is there a bubble. I contend there is not one currently or in foreseeable fture.
I believe that when "everyone" is saying "it's not a bubble, it just can't be, they just can't let it be a bubble!"; when "everyone" is saying "but this time is different"; when the loudest strongest voices against a bubble are those with vested interests in it not being a bubble (whether commercially, or because they just invested in it); you should be watching out. If you don't have an historical perspective on this, I urge you to read "Extraordinary Popular Delusions and the Madness of Crowds".
... Or some people have just been around DFW real estate long enough to know that the reasons/causes for a bubble are absent in the current market. You can choose to ignore all the evidence of a strong local economy and the numbers of people moving to DFW every day (you have to, if you want to believe there's a bubble occurring) or you can realize that properties in TX were chronically undervalued compared to other areas of the country.
I don't have a vested interest in whether there's a bubble or not (I own a home, but frankly I'm not planning on moving anytime soon so I would actually be perfectly content if prices fell, it just lowers my property taxes) but this is a situation born of simple supply and demand. Demand for homes in North Texas has never been hotter, and there are no signs of this letting up yet. Even when the supply created starts to catch up to demand, that still won't lead to a correction, that will only cause prices to stop rising as equilibrium is reached.
I can't say about new housing in exurbs but land value in desireable locations within top school districts like Park Cities, South lake, West Plano, Coppell have gone up significantly because there is no more land there. It's a precious commodity.
Home values are very secure there in long term as value is not into construction that would go down with aging, value is in land, proximity to employment/shopping/entertainment/airports/elite private schools and quality of public schools. I don't see it going down as they aren't making more land here.
If you want to compare then pick diffrent homes in diffrent towns and look on County CAD for difference between land values.
Land can easily go down in value, it is not immune in any way.
And in terms of desirability, true to some extent, but during the last downturn Park cities had a significant drop in property values, same with the most expensive neighborhoods in west plano and so on. It was not limited to Frisco, Mckinney, Allen, etc.
OK, sorry for using the "Californians" term. It seemed like a good way to group the populace who is accustomed to paying close to 1 million dollars for less than 2000 SQFT, whose only plausible reaction would be to find any of our 3000 - 4000 SQFT homes, at practically half the price, the ultimate steal. There is no complexity on such a simple phenomenon.
I do agree the situation is convoluted in nature and to find a simple "sentence-long" explanation is not trivial. It would need to be some weird equation nobody here would want to read. But here is the thing!
People agreeing to pay 600K for a 450K home will have to pay taxes on 600K, not 450K. Here in Collin County I see rates in the 2.0% to 2.6%. So Assuming 2.3% (which is one of the most typical ones), now you need to cash out almost 14K in property taxes, whereas two years ago (when the home was in the low 400K's) the toll would be in the low 9K's.
I will admit ignorance on the insurance side, though. But if it goes up because now we have a "600K" home, and it would "cost more" to rebuild it in the event a Tornado or a fire flattens it, you also need to add this increased cost.
So we are not only paying more for the actual structure, but also more on taxes and probably insurance. But hey, it's called evolution so surely this was just meant to be.
When I started this thread a month ago, my question was whether this was a bubble. Nobody seems to think it is. In fact, the consensus seems to be that basically the DFW metroplex was super cheap and it is now equalizing itself to the rest of the country.
After all, one of the fears we must contemplate is: what if I agree to pay 600K for a 450K home, because everybody is doing so, and then all of a sudden the market craze comes to an end and my home IMMEDIATELY goes back to be worth 450K? This would be great for the property taxes, but the day I want to sell it? WHAMMO! Painful endeavor...
You still don't "get" it. If someone PAYS 600k, then that is its worth. Not 450k, not 250k. It's called the market. And one that those Californians you're blaming know all too well. They had houses that were high dollar, whose value tanked in 2008 and 2009. Did their homes change at all? No, the MARKET did.
OK, sorry for using the "Californians" term. It seemed like a good way to group the populace who is accustomed to paying close to 1 million dollars for less than 2000 SQFT, whose only plausible reaction would be to find any of our 3000 - 4000 SQFT homes, at practically half the price, the ultimate steal. There is no complexity on such a simple phenomenon.
I do agree the situation is convoluted in nature and to find a simple "sentence-long" explanation is not trivial. It would need to be some weird equation nobody here would want to read. But here is the thing!
People agreeing to pay 600K for a 450K home will have to pay taxes on 600K, not 450K. Here in Collin County I see rates in the 2.0% to 2.6%. So Assuming 2.3% (which is one of the most typical ones), now you need to cash out almost 14K in property taxes, whereas two years ago (when the home was in the low 400K's) the toll would be in the low 9K's.
I will admit ignorance on the insurance side, though. But if it goes up because now we have a "600K" home, and it would "cost more" to rebuild it in the event a Tornado or a fire flattens it, you also need to add this increased cost.
So we are not only paying more for the actual structure, but also more on taxes and probably insurance. But hey, it's called evolution so surely this was just meant to be.
When I started this thread a month ago, my question was whether this was a bubble. Nobody seems to think it is. In fact, the consensus seems to be that basically the DFW metroplex was super cheap and it is now equalizing itself to the rest of the country.
After all, one of the fears we must contemplate is: what if I agree to pay 600K for a 450K home, because everybody is doing so, and then all of a sudden the market craze comes to an end and my home IMMEDIATELY goes back to be worth 450K? This would be great for the property taxes, but the day I want to sell it? WHAMMO! Painful endeavor...
You keep missing the point. It is NOT a $450k house. It is a $600k house. It simply is not. Maybe it was 2-3 years ago. It is not today. Things change, real estate prices are not static. If a house is selling for $600k, that is what it is worth, to say otherwise is not being realistic.
We had been in the market to move for a few years. Kept a watch on the market in the areas we were interested in as well as the market for our house. Yes, we had to pay more now than a few years ago. Yes, we are selling more than our house appraised for a few years ago. There is a give and take to the whole equation. Our house would not have sold 3 years ago, it would have been a fluke if it had sold based on the market at that time.
Since we were on the extreme end of "acquired tastes" on the amenities we wanted, location, lot size, etc., we knew we would have to pay more. We ended up paying a good $400k more than what we originally stated out intending. I'm also selling at a good $150k more than what our house would have sold for a few years ago. I'm guessing my house is one of those "$450k houses they are selling for $600k". Damn straight I am selling it for $600k, actually a little more than that. We had it appraised before listing. Yes, it is in a price point that is the slowest to move, we knew that ahead of time. We knew we could end up having to support both houses for several months, if we could not float that, we would not have moved. However, we are glad we did and love the house we bought. Actually glad that the 3 other houses we attempted to buy did not go thru, thank you to the other buyers that beat us out on those! Yes, the one we did buy was more than those other 3, that is where that "acquired tastes" comes into play, this house is damn near perfect for us.
Our realtor knew that we were not going to put our house on the market until we had a firm contract to purchase another house. There was no way we were going to lose the house we had and have no where to go, apartment living is not our way of life. Nor is renting. We are too picky to settle for any house that only has half of what we want. The OP really should have followed that example, don't sell until you have a new house under wraps, especially if you are picky.
Meanwhile, my $600k+ house will sell to someone that sees the value in it and they will be enjoying their backyard, pool and hot tub, spacious house and media room while the OP is sitting in an apartment swearing they will not pay $600k for a house even if that is the type of house they want.
I know we are riding in a sellers market (or so I've heard), but after selling my home am kind of stuck in this hole as every home resembling what I am looking for is priced in the ~600K range. These are homes that were priced in the 350K's by mid 2013. How is it possible that anything almost doubles in price in a mere 3 years? Some of these homes would require some serious leap of faith to even acquire at 450K!
I am thinking this is a bubble and it will burst which is why there is no way I can even entertain getting on such ridiculous wagon!
Anybody has some sort of indication of when this bubble may burst or if this is just how it is going to be from now on?
The homes I refer to are 1 to 2 acres, between 2500 and 3500 SQFT and built between 1975 and 2000. The towns I have been looking at are Prosper, Lucas, Frisco, McKinney, Allen and Parker.
And no, they don't mention having a gold mine in their backyard...
Thanks for your input!
Really, this is funny. Homes appreciate. Some years faster than others. The home my parents bought in Plano was $12,000 new. Now, Zillow shows it worth $141,000.
No day dreams; no pipe dreams; no wishful thinking; no psychosis. The reality is that people are paying these prices today.
a lot people want to say there is a bubble have a hard time understand markets. The price of a home has no bearing what a value was two years ago. For instance all the building goon on means the market in frisco has changed to a new value. For some people it may not be a big deal to live near Toyota or FedEx.
For me I know the market is going higher because I actually had people tell me State Farm relocating was bad for the area(crazy talk there).
People make plenty of money to afford the average house still. You know you have. Problem if waiters are paying 600k for a house in a bad area.
If you believe the house is too much you best bet is too keep shopping. Sometimes if takes a while to to be truly comfortable buying at any price and it really means you not ready yet or need to looking a different area
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