Moving to Houston & Want to buy first house - Please advise (Dallas: apartment)

[youngprof]

Hi everyone,

I am excited to be moving to Houston this summer after finishing grad school. I lived here when I was younger so I have a few friends in Katy, Sugarland and energy corridor. I am looking to buy my first house.

Budget: $140k to $170k
Location: within 30 minute commute from the galleria
Building detail: 3 bedroom townhouse, prefer newer construction (2008+)
Neighborhood: Safety is number one priority.

About me: 26 year old, young single professional. Ideally would like to be somewhat close to shops, restaurants and nightlife but my budget is way under inner loop.

I would appreciate advice on where to purchase my first house.

Thank you

[HoustonProfessional]

Don't buy a place. Rent an apartment. Your budget will get you a house in Katy, but why do that to yourself? You do not want to be single and 26 living in Katy. Your dating pool will consist of girls living at home because they are taking a break from college. That's it.

[youngprof]

Really? Didn't think about the potential impact on dating life. Thanks for your input.

Two questions spring to mind:
1. If I were to rent where would you recommend? Midtown, Greenway?? With the rent about $1500 - $2000, isn't it better to start building equity than pay out $18k to $24k a year? Over five years, that comes out to paying $90k to $120k on rent. If I bought a house in the range I'm thinking, in 5 years I could be more than halfway paid up.

2. If someone my age were to buy, where would you recommend if my budget was now $200k? Does it make a difference or am I still in Katy with the college girls taking a break ;-)

Thank you

[houstonfan]

You need to use a mortgage calculator. If you think $20k/yr for 5 yrs will put $100k equity in your house, you need to recalculate. A lot of what you pay in the first yr is for interest, little goes in equity. Second, you will need to budget in tax, HOA, maitenance, repair, insurance. The HOA/condo fees are usually very high in houston. So if you allow 1500 for housing, subtract all those things and you may only have, say, about 700-900 towards mortgage. Subtract interest and you barely have any equity in the first few years.
If you think you need/want more space than 1bdrm apt, then consider buying. I'm not discouraging buying, i just think you may not be basing your decision on the correct info

[cheryjohns]

I agree. Rent first. At LEAST a 6 month lease in an apartment. Give yourself time to know the city. A family can buy right away, according to schools and commute. Singles will want to explore a little before buying.

[Htown2013]

For singles, there seems to be plenty of smaller 2 BR townhouses in the western half of the inner loop area. I don't know pricing, but I think some of the newer ones go for $225k up. You could probably get an older 1980s for your budget, but it may have very high HOA, and I'm not sure that would be a good investment. For a single, I would recommend renting for at least a year. For the inner loop, the smaller but still newer (2000+) and decent townhouses probably start at $225k (correct me if this is not accurate) and then go up from there. If you think you could afford that in a year or two, that's what I would do.

[Htown2013]

I see that you mentioned 3 BR townhouses. In the loop, those are much more expensive. I'm guessing the newer ones (2000+) go $275k unless there's something wrong with them or they're next to something undesirable. Very new (2008+) that are 3 BR and upscale are probably $300k+. Parts of Houston near the Galleria/Memorial area probably have 3 BR townhouses that may be close to your price range, but they are definitely older (1960s - 1980s), and I'm not sure what the HOA is.

[youngprof]

Thank you for all your input. I really appreciate your insight.

I plan to rent first, get more acquainted with Houston, learn more about home financing THEN buy a house.

I am going to focus my search for a nice apt that would allow me to still save aggressively (for house and other personal goals). Rent: $1100 +/-150.

Although I could afford 225k, I don't want to spend that much on my first house. My goal is to pay off the mortgage as soon as possible so I can move on to other things. Part of that is putting down a substantial down payment, the other part is limiting the loan amount. For me, I'm not sure the additional 50-75k is worth the convenience of being in inner loop. Therefore when the time comes, I will likely settle for a more affordable house outside of the inner loop.

[iamCraigHenry]

Everyone has advised you perfectly @youngprof. Do a short term lease. Get to know the areas. You might find you like Montrose over The Heights. Or Medical Center over Midtown. Houston has a lot of pockets, Katy is not a pocket for a young 26 year old. It's your money and you can certainly spend how you want to. lol. But take it from a 27 year old, I wouldn't spend it in Katy.

Welcome to our wonderful city. I think you will love it here. And if not, there's always Dallas. I joke, I joke, I kid, I kid.