What is going on with all of this 400K homes listed at 600K (Plano: apartment, houses)

[octo]

Originally Posted by avayan

Hence, we are hosed. Or I am hosed... Because there is no way I can bring myself to pay top dollar for any of these homes.

Blaming this on "Californians" is silly. This is a complex function of supply, demand, interest rates, job market...

You are not hosed. You sound entitled. You simply have to compete with other people who will pay top dollar. Or buy a cheaper house. They still exist in the metroplex.

[Cheesesteak Cravings]

We just refinanced. Our 1350sqft house (brick built in the 50's) was appraised at about 140k when we bought it (was never put on the market, we bought it in pretty poor shape), ended up gutting both the kitchen and bathroom and did most of the work ourselves. We just refinanced and our appraisal came in at 257k. If we hadn't bought it when we did, we'd be priced out of the market. We're lower middle class at best. McKinney is getting pricey to live in very quickly.

[avayan]

Originally Posted by octo

Blaming this on "Californians" is silly. This is a complex function of supply, demand, interest rates, job market...

You are not hosed. You sound entitled. You simply have to compete with other people who will pay top dollar. Or buy a cheaper house. They still exist in the metroplex.

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...

[VegasMan_72]

Originally Posted by avayan

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...

The simple answer to your "equation" is, don't buy. No one is forcing you to.

[Katana49]

Originally Posted by avayan

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...

There are those of us on this board who have lived in the DFW area for decades. We've seen what prices have been historically vs the rest of the country. The Dallas area has lagged other cities all this time. I'm sure we all have stories about how two identically priced homes in different parts of the country have appreciated in vastly different ways.

Two examples I can give, my parents bought a home in Plano in the 80's for $180k. It's worth about $350-$375k now. My aunt and uncle bought a home in Naperville IL at the same time, also for about $200k. That home is now worth $750k.

A former coworker of mine sold his home in Irving, bought a cheap (!) home in California when he transferred for a job, paid $300k in the late 90's. Now it's worth $1.2 million.

Dallas real estate was a well kept secret compared to the rest of the country, but now the secret is out, and pricing is equalizing with respect to other areas of the country. Every long time resident of the DFW area will tell you this. I wouldn't worry at all about a $600k home falling to a $450k price level. It's just not going to happen. Even in the financial/mortgage meltdown in 2008, prices didn't really fall here... They just stayed flat.

[Stevehanrahan41]

I'm just mind blown that someone can be so oblivious to the market and trends, and even be in the 450k market!

[UnfairPark]

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.

[TxNat_567]

There's no such thing as a $400K house. A house is a house, and it is worth what it's worth based on market conditions, location, land value, what buyers are willing to pay, etc. I just don't understand the logic here.

[Katana49]

Originally Posted by TxNat_567

There's no such thing as a $400K house. A house is a house, and it is worth what it's worth based on market conditions, location, land value, what buyers are willing to pay, etc. I just don't understand the logic here.

OP isn't using logic. They simply think that what a house was worth 4-5 years ago is what it should still go for today.

It's ludicrous, but I can understand the frustration. The smart people who live here and wanted to upgrade homes did so before this run up in pricing.

At my last home, there was vacant land sitting unused for about 7 years. The original builder bought it but went under in 2008-2009. The original plans called for this subdivision to have homes priced at the $400-$550k mark, because this land was in between 2 other completed subdivisions, one with prices starting around $600k, and the other with prices from $250k-$450k. In other words, this land was supposed to bridge the gap.

Instead, the original builder lost the land, and a new builder took over, and wanted to build homes starting at $180k.

This pissed off everyone in the other two subdivisions, as we worried about our home values being devalued by having cheap homes built right next to us.

However, as the market heated up, the starting price went up to $200k, then $220k, and now I think it sits at $285k to start. That home at $285k is no different than the base home that cost $180k a few years ago. For someone who's been sitting on the sidelines, that's a bitter pill to swallow if they want to purchase now.

[Aceraceae]

Originally Posted by UnfairPark

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.

We could sell our house for 40-50k more than we bought it for in Melissa two years ago. We plan on being here for a few more years. Easy access to in laws and we have a newborn and a two year old.