2015 HCAD valuations starting to trickle in. (Houston, Howe: sale, buying, cabinets)

[PedroMartinez]

Originally Posted by ptt

Cars, clothes, funitures etc. aren't thing i considered as my assets or investment . I do not care about them.

You might not consider them assets, but once you actually purchase them (not financing but paid for) they are assets. When you pay for your car, even if that means after 5 years and you finally have it paid for, it is an asset. You can liquidate it and have currency in its place.

No, they are not investments, but they end up as assets.

Although it's relatively rare, I can point to thousands of homes in areas of cities like Detroit where the homes didn't turn out to be investments but liabilities.

In Houston, there are many neighborhoods consisting of tens of thousands of homes that once you count what was paid in interest, taxes and maintenance, didn't yield their owners a dime. If you bought a home in several of the neighborhoods in Champions in 2000 and sold it in 2010, you most likely didn't make a dime after you count all of the associated costs of having that home - interest, taxes, maintenance and repairs.

Originally Posted by ToyYot

I think you're confusing this issue. Yes, you SHOULD consider the purchase of your home as you would any other investment because that is exactly what it is. ANYTHING you put money into IS an investment.

That's false. I put money in my car that I'll not see any ROI.

Originally Posted by ToyYot

Now, is it the best investment you'll ever make? Maybe not, but when you're plunking down 15, 20, 25% or whatever of your take home salary on a house for 15-30 years I find it absolutely ludicrous your advice is NOT treat that as an investment.

Crazy talk.

Not for most people.

Let's say you buy a home for $250k and have a 4% APR for 30 years.

You end up paying $180k in interest alone.

How Much Will My Loan Cost

How much do you think taxes, insurance and maintenance is going to cost you over those 30 years?

If your effective tax rate is 1% a year on that house, you'll pay $75k over those 30 years.

So, we you'll pay $180k in interest plus $75k in property taxes. So, just between those two, that house will cost you $255k (not including the $250k you paid for it).

So after the 30 years, that $250k house cost you $505k before we start adding up maintenance.

Since a home's maintenance is between 1% and 4% of it's value per year ( Look at Maintenance Costs Before Leaping Into Homeownership - US News ), we'll go low and say 1%. That means you'll pay $2500 per year which will be another $75k for those 30 years. That's also not counting the increase year to year due to inflation.

So, now we are up to $580k.

Let's say in Texas, you end up paying $1000 per year in insurance. Just like maintenance, we won't factor in that this will continue to rise. So, we'll say $30k over the 30 years.

Now we are up to $610k for that $250k house "investment". Meaning that you'd have to clear at least $610k to make any kind of profit.

Now, in Texas, historically we have seen a 70% increase in value over 30 years ( Historical Census of Housing Tables Home Values - Housing Topics - U.S. Census Bureau ).

If you did better than history, let's say you doubled it and you saw a 140% increase in value over those 30 years, you'd be looking at at value of $600k when you sold your home.

That means you'd actually lose at least $10k.

Would you consider losing $10k a good return on your investment?

[ipuck]

Originally Posted by Scientific

Looks like land where there's anything close to being desired is at a premium. Just because land is cheap in Trinity Gardens doesn't mean its a bargain.

I'm sure a few other expensive cities still have a ton of land.

Until this urban trend of moving back to city center the last 10 years, there was not much appreciation in those areas that is trendy now.

Also big difference here is there is no zoning law and the state/city/county is more than willing to give license to build as many house as they want.

I read somewhere Houston along issue 70k new house permit last year while the whole state of California issue 6k. There is no scarcity here.

[PedroMartinez]

Originally Posted by ipuck

Until this urban trend of moving back to city center the last 10 years, there was not much appreciation in those areas that is trendy now.

Also big difference here is there is no zoning law and the state/city/county is more than willing to give license to build as many house as they want.

I read somewhere Houston along issue 70k new house permit last year while the whole state of California issue 6k. There is no scarcity here.

Yes, the close in hot areas that really saw huge value increases were just a small percentage of the overall Houston market.

[Hangster]

Originally Posted by ipuck

I read somewhere Houston along issue 70k new house permit last year while the whole state of California issue 6k. There is no scarcity here.

Are you saying that in the whole state of California last year there were only 6k new homes built???

[Gantz]

Originally Posted by Hangster

Are you saying that in the whole state of California last year there were only 6k new homes built???

His numbers are definitely off. LA alone had over 10,000 house permits last year.
Houston is building a lot though, as far as single family homes, Houston MSA builds more than any other metro area in the country. (NYC for multifamily homes.)

[ipuck]

Originally Posted by Hangster

Are you saying that in the whole state of California last year there were only 6k new homes built???

Houston Is Issuing More Home Permits Than All of California - Businessweek

Google is your friend.

[crone]

Originally Posted by PedroMartinez

You might not consider them assets, but once you actually purchase them (not financing but paid for) they are assets. When you pay for your car, even if that means after 5 years and you finally have it paid for, it is an asset. You can liquidate it and have currency in its place.

No, they are not investments, but they end up as assets.

Although it's relatively rare, I can point to thousands of homes in areas of cities like Detroit where the homes didn't turn out to be investments but liabilities.

In Houston, there are many neighborhoods consisting of tens of thousands of homes that once you count what was paid in interest, taxes and maintenance, didn't yield their owners a dime. If you bought a home in several of the neighborhoods in Champions in 2000 and sold it in 2010, you most likely didn't make a dime after you count all of the associated costs of having that home - interest, taxes, maintenance and repairs.



That's false. I put money in my car that I'll not see any ROI.



Not for most people.

Let's say you buy a home for $250k and have a 4% APR for 30 years.

You end up paying $180k in interest alone.

How Much Will My Loan Cost

How much do you think taxes, insurance and maintenance is going to cost you over those 30 years?

If your effective tax rate is 1% a year on that house, you'll pay $75k over those 30 years.

So, we you'll pay $180k in interest plus $75k in property taxes. So, just between those two, that house will cost you $255k (not including the $250k you paid for it).

So after the 30 years, that $250k house cost you $505k before we start adding up maintenance.

Since a home's maintenance is between 1% and 4% of it's value per year ( Look at Maintenance Costs Before Leaping Into Homeownership - US News ), we'll go low and say 1%. That means you'll pay $2500 per year which will be another $75k for those 30 years. That's also not counting the increase year to year due to inflation.

So, now we are up to $580k.

Let's say in Texas, you end up paying $1000 per year in insurance. Just like maintenance, we won't factor in that this will continue to rise. So, we'll say $30k over the 30 years.

Now we are up to $610k for that $250k house "investment". Meaning that you'd have to clear at least $610k to make any kind of profit.

Now, in Texas, historically we have seen a 70% increase in value over 30 years ( Historical Census of Housing Tables Home Values - Housing Topics - U.S. Census Bureau ).

If you did better than history, let's say you doubled it and you saw a 140% increase in value over those 30 years, you'd be looking at at value of $600k when you sold your home.

That means you'd actually lose at least $10k.

Would you consider losing $10k a good return on your investment?

Speaking as a person who bought in Champions area in 1990 and sold in Dec of 2013 for 50K over what I paid plus a roof, windows, Hardi, paint in and out, new kitchen, window treatment , flooring Yada, Yada.


Yes but, I had somewhere really nice to live for all those years. A cheap ass apartment would have run me a thousand a month.

[ipuck]

Originally Posted by Gantz

His numbers are definitely off. LA alone had over 10,000 house permits last year.
Houston is building a lot though, as far as single family homes, Houston MSA builds more than any other metro area in the country. (NYC for multifamily homes.)

Maybe I am off by 4000. 60,000 in Houston vs 10,000 in LA with 4X more population.

Wonder why a 80 year old shack in borderline ghetto cost 400k in LA? Who wins beside the developers?

[Gantz]

Originally Posted by ipuck

Maybe I am off by 4000. 60,000 in Houston vs 10,000 in LA with 4X more population.

Wonder why a 80 year old shack in borderline ghetto cost 400k in LA? Who wins beside the developers?

That's because the most predominant form of new construction in LA are not single family homes, but multifamily dwellings. Those are counted separately.

[ToyYot]

Originally Posted by PedroMartinez

That's false. I put money in my car that I'll not see any ROI.

I do see an ROI because my car gets me to work every day.

Originally Posted by PedroMartinez

Would you consider losing $10k a good return on your investment?

Its a better investment than spending $900k on rent over the same time period.

I'm thinking you missed my point, anyhoo, we're off topic....