Will house prices ever go down? (Portland, Clackamas: renters, mortgage, refinance)

[redguard57]

Originally Posted by conlainhothuong

Houses in Texas are definitely cheaper than here. We will get more bang for the buck, but I am not too sure if the Texas culture is for me. I mean, the humidity is a major turn off already. I heard traffic is horrible. I want to live somewhere that I would be able to enjoy I am not sure if I'll be able to enjoy life there. Husband doesnt care, he thinks the top priority is finding an affordable house and relocating if it doesnt work out here. He said why buy a fixer upper here for 350k when you could live in a mansion for that same price in texas?

350k in Texas will certainly NOT get you a mansion. It will get you a nice house but no mansion. Also keep in mind that Texas's property tax rates are 50% more than Oregon's depending on the jurisdiction. You will pay more per month for a 350k house in Texas - so in your monthly PITI payment it'd be like buying a $400k house in Oregon.

Notice the estimated monthly cost is more for this:
https://www.zillow.com/homedetails/70-Bighorn-Cyn-San-Antonio-TX-78258/65089543_zpid/
2157/mo

As opposed to this:
https://www.zillow.com/homedetails/8...48567177_zpid/
2042/mo

Commute time to the downtown business district is about equal between those two -18 miles San Antonio vs Portland 12 miles, but they've got bigger highways in Texas. About 20 minutes no traffic, 40-50 minutes with traffic in both cases.

Where Texas has an advantage is in the price per square foot - as you can see you get an extra bathroom, about 60% more square feet (!) (but no extra rooms, so you basically get cavernous rooms including that loft area that I saw in so many TX houses that has no use), and about a 20% bigger lot. You will pay more in energy costs as a result. Running the a/c in Texas summers can get pricey, especially for a house that size. I pay about as much in energy bills in Oregon for a 3/br, 1600 sq ft. house that I paid for a 1br 750 sq ft apartment in Texas. Those extra costs I saved on from TX have negated the higher income tax in OR for me.

If you are used to doing things outdoors in the PNW - you will definitely lose that in Texas. I'm born and raised from Texas... outdoor activities are far less a part of the culture there, largely because it's so hot half the year. There is no easy access to public lands, probably the biggest change I noticed.

All that said, there are things about TX I like better and miss.... but you're right - traffic is bad, it's very hot, the culture is quite different and it's not all that much cheaper.

[Johnny Z]

How much can you save while you wait for prices to come down while you continue to pay rent? If they ever do come down, you could wait a long time. It may be better puting that same money into buying a house. You never get your rent money back, it's gone forever. You can sell a house and usually make a little money back even in a weak market. Think of it as an investment.

[StealthRabbit]

Originally Posted by Johnny Z

How much can you save while you wait for prices to come down while you continue to pay rent? If they ever do come down, you could wait a long time. It may be better puting that same money into buying a house. You never get your rent money back, it's gone forever. You can sell a house and usually make a little money back even in a weak market. Think of it as an investment.

Or not...
Getting into the WRONG house purchase can tube your opportunities, and keep you sequestered for yrs and even an entire career fighting to keep it, fix it, sell it.

While I have sold every home for more than I paid for it, few have been significantly positive for total return, most have cost me much more than rent would have been.

Rents is just a typical housing expense, you are going to spend it one way or another.
Buying a personal home is a huge commitment / responsibility / expense (time and money).

Yes, buying is often considered the 'best' choice... at the right time and price.

1. Know what you want
2. Have 20-30% cash minimum to pay down
3. Have secure income
4. Calculate the holding costs (Mortgage, taxes, utilities, insurance, maint, reserves)
5. Add the Opportunity Costs of that capital sitting in your home. ($300k could be spinning off $3k / month income)
6. Do Tax scenarios through out the ownership period. (new tax law limits the SALT (deductions)), BTW, there is not MAGIC in 'housing deductions', it make NO sense to spend $10k in interest or taxes to get a $1k tax deduction.
   
7. Run the numbers and understand your objectives.

There are other options to Buying or Renting.
Do what is best for your family situation, as you must live somewhere, just don't get stuck / overburdened in debt and responsibility.

As a landlord... my tenants get a GREAT deal, man y have stayed 10+ yrs, typical is over 7 yrs. They do NOT participate all the increased costs I see (Insurance / taxes / maint). All (100%) of my tenants drive much nicer cars than I, and ALL have cable TV (which I have never had). NONE of my tenant lay awake nights wondering how they will make the mortgage or how they will replace or repair the home if a storm takes it out. They don't worry about the well ($10,000), or the septic ($20,000), or the driveway condition ($12,000), or the roof ($30,000). Or having $300k in capital tied up, or the $3m liability policies and how one renter 'dog-incident' with the postman can lose your whole estate.



Choices in life...
None are perfect.

[BendLocal]

Originally Posted by StealthRabbit

($300k could be spinning off $3k / month income)

What is the investment and risk level?

[ccjarider]

Originally Posted by conlainhothuong

We definitely need to buy a house sometime in our future.

1). There are 5 of us living in a 2 bedroom apartment. Only 1 bathroom. All my kids are boys. They are getting older (oldest will turn 7 at the end of the year). At some point, they will want their own space. We live in a 1000 sqft unit, so it didnt feel too bad when they were babies and toddlers, but now you have kids fighting over the bathroom to go poop or pee, not enough running space, and it becomes chaotic. I am so over the renting life. Renting a decent sized house to accommodate all of us cost at least 2k if not more. In my opinion, there are so many pros to buying instead of renting. We get to have a bigger living space, no noisy neighbors, and not throwing money down the drain as my parents like to call it.

Ideally, we would like to buy a home that is no more than 300k. When we looked into it in 2012, there were so many nice houses that you could get at that price or less. We were interested in buying a newly built house in a neighborhood for only 150k. My husband is still hoping that we'll see those prices again, but I have a feeling its never going to happen.

hmm - OK good luck - I still don't see why is purchasing a house the solution? Renting a bigger place is not automatically "throwing $ down the drain." It all depends on soundness of plan, affordability, flexibility, overall financial picture and emotional state. I would hate to see you trade one problem (Lack of space) for a much bigger problem (home that crimps finances too much)

Repeating myself and others; but don't get bogged down that buying a home is ONLY solution. There are many ways to achieve what you desire.

If you can afford it and really want to buy, then buy for lifestyle. Stop worrying too much about what prices will be in future. Run the #'s assuming it drops in price 20%. Determine if you can live with that. Then you at least have some understanding of your risk factor.

Keep in mind, you only lose $ if you actually sell. If you live there a decade or more, odds are 95% you will have some equity. Note I said equity, not profit. If you make profit, consider that a bonus. Don't count on home profit in your financial plan and you will be OK.

[StealthRabbit]

Originally Posted by BendLocal

What is the investment and risk level?

Investment = Real Estate (as per the topic)
Risk = Real Estate (as per the topic)

As previously mentioned...

1. If you can't rent it for 1% / month of total purchase price (~10% cap rate)... don't buy it
2. If you can't resell tomorrow for 110% of purchase price... don't buy it
3. If there is any chance you will need to move in 5 yrs... don't buy it
4. If you can rent for less than 1% of purchase price ... don't buy it (put your money to WORK (in real estate) for you elsewhere)

All my 'investments' go through this formula (including primary home (which is a LIABILITY not an 'investment'))

[Oh Oh It's Magic]

Originally Posted by conlainhothuong

Houses in Texas are definitely cheaper than here. We will get more bang for the buck, but I am not too sure if the Texas culture is for me. I mean, the humidity is a major turn off already. I heard traffic is horrible. I want to live somewhere that I would be able to enjoy I am not sure if I'll be able to enjoy life there. Husband doesnt care, he thinks the top priority is finding an affordable house and relocating if it doesnt work out here. He said why buy a fixer upper here for 350k when you could live in a mansion for that same price in texas?

Home prices are not that great in Texas and neither are the property taxes.

[texasdiver]

Originally Posted by Oh Oh It's Magic

Home prices are not that great in Texas and neither are the property taxes.

Exactly. Texas is an enormous state. Much of it is empty ag land and arid rangeland with declining small towns that looks like Burns OR with less mountains.

The nice places where people might actually want to live such as the suburban towns around major metro areas and places like the Hill Country are not that cheap. And some places like Austin are approaching Portland prices.

The property taxes will also hit you. We lived in Waco and moved back to the Northwest. Our property tax rates in Texs were double what they are here so for a house with 2x the value our property taxes were essentially the same as back in TX.

All those typical Texas McMansions in fancy suburbs around the big cities are going to have enormous property taxes and will generate enormous utility bills for cooling in the summer and keeping the pool running if they have a pool.

[pdxMIKEpdx]

the simple answer is no. real estate prices in Oregon will never go back down to the way they were. Sorry to be negative, but you will never find a starter house 4 less than 250k unless it is an absolute rat-infested dump in a bad neighborhood.

[Larry Caldwell]

Originally Posted by 509

Prices do come down....

Way back in 1981 I looked at a nice 4 bedroom, 3 bath house in a small subdivision just outside of town. It was listed for $165,000.

As I was getting ready to move out of town in 1985 I was invited to a party.....at that house! The renter told me the bank was asking him to move since they sold the house.......for 45,000.

That would have been a huge hit on my future. Thank god, I ended up renting for those years, but ONLY because it took so long to sell the other TWO houses I owned elsewhere and by that time I was ready to another town.

A house can be a home....or a financial trap. But very rarely do they become gold mines.....my parents sold their home in California for a "fortune", but when I computed their rate of return it was around 4%!!.

If you paid $50,000 for a house in 1968, and expected 0% return on your money, you would have to sell it for $367,000 today. People think that houses are expensive, when it is the dollar that is cheap. The sweetness of the deal is that you lock in housing costs when you buy, and get out of the inflation rat race. My parents bought an 80 acre farm in 1961. Mortgage payments were $84/month. 30 years later, they were in no great hurry to pay it off.

The real payoff on a home starts when you burn the mortgage. My home has been a free place to live since 2008. It was really wonderful for my retirement cash flow. I figure it's still worth the same as I paid for it - a place to live and keep my stuff.

There are people who have done very well as renters. If you invest the money you would have tied up in a house, you can build some serious wealth. The break-even point for home ownership is about 5 years, so if you are not the kind to put down roots, rent. If you are the kind to stay put for 20 years, buying is a better option. Even if you have to move for a while, consider turning your home into a rental. My brother had a beautiful Danish Modern home right on the Puget Sound. He was transferred to Scotland for 5 years, so he sold the house. When he got back, he could not afford anything nearly as nice as the home he sold. Live and learn.