How Do People Afford It?

[KatieDidIt]

I met that older homes in the city are built better then a majority of the newer homes. Our home now was built in '64 and the previous we lived in was older. Everything is solid in the home and has little problems at most. Buddies of mine who have

newer homes, even one buddy that has a home worth close to a million in Sienna Plantation, they have a laundry list of problems.

I also understand why people live in the suburbs. If you can only afford $90,000 on a house and want to live in a good school is the first one I can think of. You listed great reason as well. The fact is many people just want the biggest house as they can afford even if its wasted space, and they just don't care what sacrifices they need to make to have that huge house.

I personally think Sugarland, Kingwood, Clearlake, the woodlands all have great things about them. Many people work close to the homes in these areas. Place like Katy, Cypress, I just don't get though. Just drive down Fry road between 290 and I-10 and you will understand. I met a guy this weekend at this hunting ranch we go to. He is in his 30's with one kid and he and his wife work off of San Felipe close to the loop and they make good money. They live in Cypress and he complained in every conversation about his commute time. He also complained about his shopping and eating choices as well. I then ask him why doesn't he just move closer to work. His response was, " Why should I pay three times as much for the same home?" I just don't get some people and there logic.

In the 300 and up category,they want to live in a "nicer" home than what they grew up in. Buying a "crappy old" house in Briargrove, West Memorial,West U or River Oaks is not nearly as glamourous as the Generic Mansions they can live in way out of town. Doesn't matter how nice the neighborhood is, or how close to work it is., it doesn't look "rich" to them. After living amongst them for a couple years they all wanted to give nicer things to their kids than they had. Kids absolutley cannot share rooms.

I showed an old neighbor a picture of our New Old house in West Memorial and she crinkled her nose. I think she thought my husband lost his job or something. Of course being Houston it cost about 40% more than the McMansion we moved out of.

Edited March 10, 2008 by KatieDidIt

[lockmat]

Do yall think property taxes plays a big role? I know my dad built a new house in montgomery country and sold the one in harris just b/c they were so much cheaper in montgomery county. He doesn't think he'd ever be able to retire had he stayed in harris b/c the taxes were so high. I'm not sure about other counties outside of harris besides montg.

[KatieDidIt]

Do yall think property taxes plays a big role? I know my dad built a new house in montgomery country and sold the one in harris just b/c they were so much cheaper in montgomery county. He doesn't think he'd ever be able to retire had he stayed in harris b/c the taxes were so high. I'm not sure about other counties outside of harris besides montg.

Lockmat, on a house in Sterling Ridge we were paying 18,000 a year in County, MUD,School and Association Fees. Our total cost for for a house worth 250,000 more in Harris County, SBISD and with Association Fee was 12,000. SO I don't know why people think its cheaper up there. Of course its an older home so the "improvement/house" is minimal on the bill. Everything in Sterling Ridge was brand new and taxed at full sales cost. The land was worth nothing.

Edited March 10, 2008 by KatieDidIt

[jgriff]

Lockmat, on a house in Sterling Ridge we were paying 18,000 a year in County, MUD,School and Association Fees. Our total cost for for a house worth 250,000 more in Harris County, SBISD and with Association Fee was 12,000. SO I don't know why people think its cheaper up there. Of course its an older home so the "improvement/house" is minimal on the bill. Everything in Sterling Ridge was brand new and taxed at full sales cost. The land was worth nothing.

I've run into the same thing. I thought about moving out further West from the Memorial Villages area and found that the taxes made it unaffordable.

[TheNiche]

I met that older homes in the city are built better then a majority of the newer homes.

Being the owner of an older home, and of older commercial properties, I'd challenge that. It's a mixed bag, and you never know what you're going to get.

For instance, it never ceases to amaze me that so many contractors back then thought that they could get away with pouring concrete with inadequate or no reinforcement. And then there are the previous homeowners that have done crappy remodels at various times, have used crappy plumbing parts, or other stupid-ass things that convey to new owners. And back then, code enforcement was more lax or just non-existent. I don't think I'll ever buy an older building again without hiring a structural engineer (not just an inspector) to check it out.

[memebag]

$1000/month for auto fuel??

How is that possible? That's 11 gallons a day (if you drive into town every day). Even if your car only gets 20 mpg, that's 220 miles each day. Are you folks commuting from College Station?

[ricco67]

That's a good question... I need the size of the truck as i haul a lot of musical equipment, all the time. However, I've been driving a Chrysler Town and Country van while my truck is being serviced, and although it's not very macho, it has been great when loading and unloading. So I'm seriously considering buying one.

for an example:

I had a client who was (and probably still is) an avid cyclist and said he NEEDED an SUV to carry his bike and have room for equipment on his weekend trips. Taking his commute, lifestyle, and finances into consideration, I had suggested a good mid sized car or hatchback (like his wife's car whose brand I can't remember) and use a bike rack. He didn't want to explose he $5k bike to the elements, so he got a Mazda Tribute.

Whatever.

As time passed (two years) his tribby (that's the name) broke down and was forced to use his wife's car. The very one I suggested and 'Lo and behold! It held not only HIS bike, but his Daughter's and all their equipment for a weekend.

when he drove off, I did a little jig of vindication as his wife later told me she did a "I told you so" to him as everything fit.

Moral of the story: Look at a car objectively for what you need.

[cnote]

$1000/month for auto fuel??

How is that possible? That's 11 gallons a day (if you drive into town every day). Even if your car only gets 20 mpg, that's 220 miles each day. Are you folks commuting from College Station?

Driving an F-250 in rush hour, and you wont even touch 20 mpg, try 10 or less...assuming his is not a deisel...

EDIT: forgot to quote, and this is an active thread...

Edited March 10, 2008 by cnote

[ricco67]

$1000/month for auto fuel??

How is that possible? That's 11 gallons a day (if you drive into town every day). Even if your car only gets 20 mpg, that's 220 miles each day. Are you folks commuting from College Station?

If you're referring to me, yes that is an average for me. My clients are literally all over the city. As south as Clear Lake to as north as the woodlands and I drive it every single day. One day I had to drive from NASA, to Tomball, to Sugarland. I called it the Triangle of death. I'm ecstatic when my appointments are all within the 610 loop.

[sarahiki]

Driving an F-250 in rush hour, and you wont even touch 20 mpg, try 10 or less...assuming his is not a deisel...

EDIT: forgot to quote, and this is an active thread...

This thread is spinning off topic a little bit, but whether one is talking about what car you choose or what house you choose, it's a personal choice. I'd love for everyone to drive a small, fuel-efficient car, and some posters here clearly think people should choose a small house. But sometimes people have a good reason for the choices they make. Sometimes they don't, but I'm pretty sure that's none of my business.

[ricco67]

Sarah,

What I (and SOME others on here) are merely saying that some people need to pick what they need wisely. If you need an escalade, get an escalade, but be sure to look at all the other options first.

[sarahiki]

Sarah,

What I (and SOME others on here) are merely saying that some people need to pick what they need wisely. If you need an escalade, get an escalade, but be sure to look at all the other options first.

I agree with that.

[Scott08]

Buying a "crappy old" house in Briargrove, West Memorial,West U or River Oaks is not nearly as glamourous as the Generic Mansions they can live in way out of town.

Not so sure about your first two neigborhoods, but ANYONE in the Houston area that doesn't think of West U and River Oaks as upscale neighborhoods obviously hasn't done their homework. As Borat might say "they cannot afford."

[KatieDidIt]

Not so sure about your first two neigborhoods, but ANYONE in the Houston area that doesn't think of West U and River Oaks as upscale neighborhoods obviously hasn't done their homework. As Borat might say "they cannot afford."

"crappy old" was not my sentiment. Its was that of those I lived near in the burbs.

I love my crappy old. It has squeaks and character.

[Gary]

$1000/month for auto fuel??

How is that possible? That's 11 gallons a day (if you drive into town every day). Even if your car only gets 20 mpg, that's 220 miles each day. Are you folks commuting from College Station?

I've got a F250 4X4 with a 7.3 diesel, and at $3.65 a gallon I can easily reach the $1000.00 mark.

[RedScare]

Do yall think property taxes plays a big role? I know my dad built a new house in montgomery country and sold the one in harris just b/c they were so much cheaper in montgomery county. He doesn't think he'd ever be able to retire had he stayed in harris b/c the taxes were so high. I'm not sure about other counties outside of harris besides montg.

This makes no sense. Montgomery County tax rates are much higher than Harris County's. Perhaps he moved to a less valuable home, which would make the total tax bill lower, but the rates up there are higher.

[CDeb]

This makes no sense. Montgomery County tax rates are much higher than Harris County's. Perhaps he moved to a less valuable home, which would make the total tax bill lower, but the rates up there are higher.

But would the assessed value on a similarly sized home be low enough to where the tax bill is lower?

[KatieDidIt]

But would the assessed value on a similarly sized home be low enough to where the tax bill is lower?

Yes, Harris County rarely hits you anywhere close to full market value,especially in older homes.

My comparisons above were on the exact same size house. One 3 years old on a 12,000 sf lot in Montgomery,the other 40 years old on 1/2 of an acre in Harris that actually has a higher market value. We are saving 6 grand a year living in Harris. Remember in Houston you don't get hit with MUD tax and its 2.8 for school and county.

Edited March 10, 2008 by KatieDidIt

[lockmat]

This makes no sense. Montgomery County tax rates are much higher than Harris County's. Perhaps he moved to a less valuable home, which would make the total tax bill lower, but the rates up there are higher.

I'll have to ask him. I thought that was the case. I do know that he had to fight a couple times to bring the appraisal of the house down.

[TJones]

"crappy old" was not my sentiment. Its was that of those I lived near in the burbs.

I love my crappy old. It has squeaks and character.

I will take a "crappy old" house in West U or River Oaks over a brand spankin' new McMansion in Katy ANYDAY of the week, if they are the same price.

Edited March 11, 2008 by TJones

[TAK]

having read this thread, i have come to the conclusion that i'm just cheap, prefer to stick money in the bank as i get older, didn't save enough when i was younger, shouldn't have gotten a divorce (although i didn't lose much money at all), and my parents shouldn't have been poor...

because i make 'enough' and i'm not considering $300k for a house...

[lockmat]

i have come to the conclusion that I just don't make enough money.

[houstonmacbro]

i have come to the conclusion that I just don't make enough money.

You and me both brother!

[musicman]

having read this thread, i have come to the conclusion that i'm just cheap, prefer to stick money in the bank as i get older, didn't save enough when i was younger, shouldn't have gotten a divorce (although i didn't lose much money at all), and my parents shouldn't have been poor...

because i make 'enough' and i'm not considering $300k for a house...

lockmat and houmacbro......listen to TAK.

[houstonmacbro]

lockmat and houmacbro......listen to TAK.

It is sound advice for sure.

[texas911]

This is America! Set some goals. If people want to live in their dream house, then let them work and afford it. Opportunities are endless here. At least here a $300K house is a very very nice house.

[TAK]

This is America! Set some goals. If people want to live in their dream house, then let them work and afford it. Opportunities are endless here. At least here a $300K house is a very very nice house.

I agree with all of this, but still don't know how people who don't make sixfigs are able to pay for a $300k house, save anything, or make it through any type of financial emergency. i understand a little better now - especially if parents are dropping 1/3rd of the purchase price in cash (although, i'd take that cash and invest it for a better return than the 6% i'd save on a mortgage, but i understand that doesn't deliver cashflow, so no house.)

give me $100k and I'll make money for both of us.

[texas911]

But TAK, how do you know what people are making?

[TAK]

if you know what someone does, you have an idea of what they make.

i do know there are alot of people making a lot of money. i'm not denying that. i know a lot of people live in the burbs and make a lot of money, too - because they'd rather pay less for the house and get more space, land, etc...

i want to live in the city and have more space and land... for less... call me greedy.

[sifuwong]

It is just called priorities man! Priorities! Some people like to live in shacks, but drive an Escalade. Others like to live in mansions, but drive an old Buick. Some have money,but live frugally. Others don't have money, but live lavishly. Some spend alot of their money on familys, relatives, etc. Others spend money on themselves only. It goes on and on and on....

[sowanome]

It is just called priorities man! Priorities! Some people like to live in shacks, but drive an Escalade. Others like to live in mansions, but drive an old Buick. Some have money,but live frugally. Others don't have money, but live lavishly. Some spend alot of their money on familys, relatives, etc. Others spend money on themselves only. It goes on and on and on....

Sifuwong... I totally agree with your statement, esp the buick/mcmansion & escalade/shack example. The thing about it, is that if you just go 2 months and track everything that you spend $ on, people will be very "Shocked" @ how much they can actually afford or save...But to each it's own and "It goes on and on".... (@ least a house isn't a depreciating asset)

[woolie]

Ok. I am the scenario in the OP. The answer is you can't afford a $300k home.

We are 24+25 years old. Our household income for 2008 will be right around 80k. We are in the process of buying a $225k 1900sq ft. 3 story townhouse in midtown. Our existing debt is negligible (a few thousand.) We are putting 10% down and have an additional ~20k in savings (this mostly came from an unfortunate early inheritance...) We have no children and do not expect to have children. Our car is a cheap Hyundai and paid off and we are not buying a new car. I ride my bike or take train to work in the TMC. All of our expenses are completely elastic and could easily cut our discretionary spending by half by eating out less (we are excellent restaurant patrons..)

Of course, our household income will be probably be 100k in 2009, 130k in 2011... corresponding to acquisition of a certain professional license and finishing a PhD, respectively. So that factors into our calculations on what we can comfortably afford.

ps. I would never live in the burbs. I'd prefer to live in Museum District or Montrose but it's simply out of our price range.

Edited April 2, 2008 by woolie

[DaveMc]

Me, wife, one son, one more on the way - currently in a 3/2/2 @ 1492sf...

I work at home and need an office.

My wife has her own company and needs a separate office.

Currently, my wife offices on our dining room table and I take up a BR. room.

We need one more room. A 3 BR and a study would work for right now, but If the next child is a girl, we'll eventually need another room.

Those are just the "needs".

A play area for the children and their toys would be nice. A guest BR would be nice (although wife's office and guest bedroom could probably be one in the same).

So, we're looking at 4 BR + Study or 5 BR. We don't "need" 2500 SF, but it would be pretty close. We're in 1492 now and can't fit bedroom furniture in the kid's room - fortunately, he's just in a toddler bed - a real bed wouldn't fit with the furniture and toys.

That is why we need 2500sf. 1500sf was perfect when I was single. It was still good when we had no kids. No longer.

Chear, Chear. Those that like to live in the dirty cramped city, more power to ya.

The burbs are great. My wife, three kids and I live very comfortably in our 4200+sq/ft house. Our energy/utility bills are (really) crazy low. I work just a few miles away with a 10 minute commute. I've only needed to go to Houston (med center) a couple times in the last decade.

Different strokes you know.

[20thStDad]

"Dirty, cramped" city with a soul, or shopping center and surface lot covered wasteland of the soul-less suburbs...different strokes indeed. I hope I never end up out in the boonies with every other chain store/restaurant just 5 convenient minutes away.

Edited April 2, 2008 by 20thStDad

[sarahiki]

Chear, Chear. Those that like to live in the dirty cramped city, more power to ya.

The burbs are great. My wife, three kids and I live very comfortably in our 4200+sq/ft house. Our energy/utility bills are (really) crazy low. I work just a few miles away with a 10 minute commute. I've only needed to go to Houston (med center) a couple times in the last decade.

Different strokes you know.

just curious, how are your energy bills so low?

[DaveMc]

just curious, how are your energy bills so low?

The house is mediterranean.

Low ceilings,

polished concrete tiles floors downstairs,

white stucco exterior with a North/South exposure.

Well ventilated tile roof

High efficiency appliances

High efficiency HVAC

No MUD

I know it's only winter months but the last five have averaged Water/NG/Electricity/Trash-sewer combined about $150

[sarahiki]

The house is mediterranean.

Low ceilings,

polished concrete tiles floors downstairs,

white stucco exterior with a North/South exposure.

Well ventilated tile roof

High efficiency appliances

High efficiency HVAC

No MUD

I know it's only winter months but the last five have averaged Water/NG/Electricity/Trash-sewer combined about $150

Impressive. That's better than my so-called energy-efficient townhome.

[sowanome]

Ok. I am the scenario in the OP. The answer is you can't afford a $300k home.

Excellent post Wollie, with 10% down you are right on.... I will stick to intial thought and current situation, If you put 20% down and your mtg. only accounts for less than 30% of your monthly income, YOU should be ok, with extra $$$ left over to invest in retirement, vacation, etc. However, you really have to recognize where you're spending your money...(Eating out is usually the #1 culprit, Purchasing Alcohol may be #2)

By the way....LOCATION, LOCATION, LOCATION (If the majority of houstonians wanted to live in the suburbs, why was this post created and why does the inner loop have higher prices psf?) KEEP me IN THE LOOP (or at least near it)...

Edited April 2, 2008 by sowanome

[infinite_jim]

No MUD

this post is not directed at the quoted poster but this is my itch with the burbs and sprawl in general;

it's parasitic nature in it's thirst for more infrastructure &/or utility services and extensions from the city core

(and that there's no spice in the burbs).

in ref to the thread title:

conspicuous consumption is not a novel concept today, more status quo

[sowanome]

Chear, Chear. Those that like to live in the dirty cramped city, more power to ya.

Different strokes you know.

"Dirty Cramped City?" >>Have you ever been to NYC, Chicago, etc...You don't know cramped/urban if you haven't been to those places....STAY on Your Farm!

[DaveMc]

"Dirty Cramped City?" >>Have you ever been to NYC, Chicago, etc...You don't know cramped/urban if you haven't been to those places....STAY on Your Farm!

Yes, yes

and Los Angeles

and Detroit

that's why I'm tired of the city. I need something a little toned down.

[TAK]

ok... so how do you afford 300k on $150k?

and save for retirement...

and save for college...

and whatever...

I *could* do it, I suppose. I'm just a cheap bastard.

[ChandoJMC]

ok... so how do you afford 300k on $150k?

and save for retirement...

and save for college...

and whatever...

I *could* do it, I suppose. I'm just a cheap bastard.

Just chiming in with my own $0.02...

I used to be a cheap bastard, but after really evaluating my midtown rent situation, purchasing a townhome really started to make some financial sense to me. Not in any way trying to be boastful, but as a 23 year old single male buying a $265k townhome, it really isn't that un-affordable if you have no forms of debt. I am fortunate to have college grants/scholarships + signing bonus to leave me with a car with no payment and no debt, but it is easily financially feasible to afford a $265k place on less than $100k salary. I may not be living a lavish lifestyle, but I value the fact that I can call my place my own (well, Bank of America's). It means a lot more to me to not throw away $12k+ yearly on rent than it does to have an Escalade or some fancy depreciating asset. I would be more stretched if I hadn't lucked out on my HCAD appraisal being based on lot value...

The bottom line is that it all comes down to personal lifestyle... I think a $300k place on $150k is EASILY do-able. I'll just be sticking to domestic beer and not blowing $100/weekend on "going out" like my friends.

[jm1fd]

I would be more stretched if I hadn't lucked out on my HCAD appraisal being based on lot value...

Prepare to be stretched. You'll get clobbered at full purchase price plus next year.

[ChandoJMC]

Prepare to be stretched. You'll get clobbered at full purchase price plus next year.

Yeah, I already had this year's purchase price tax money saved up before closing, so I'll be fine. I honestly think that a majority of Americans don't know the first thing about the amount of capital required to purchase a home the right way. Sure there are 80-20, 80-15, and Bank of America's new 95% mortgage, but you get nailed in monthly payments. Twenty percent down is really the way to do it, IMO.

[amadeuz]

This is a good thread. I always wondered the same thing. However, I think you need to adjust the 300k number. If you want to live in the most desirable places Inside the Loop (aka West U, Braes Heights, Bellaire) 300k won't buy you much at all. I live in Braeswood Place and always wonder what kind of people are buying these 800k+ new construction homes.

But it's just not Inside the Loop anymore either. Try looking for homes in Memorial, Energy Corridor, or Spring Branch. 300k won't get you much anymore. But if you look in other parts of the country, people like us wouldn't even dream of living in the nicest neighborhoods. So have to take things in perspective I guess.

[CHiPs]

Thanks to the baby boomers and inheritance, etc, a lot of young people buying ITL have gobs of family help, I'm discovering. I went to few office wedding showers last year and the most popular topic of conversation was home buying and how much the 'rents where kicking in on the downpayment. $100K was a nice round number I heard often. The other interesting thing was the attitude that it was just sort of expected, to be getting that kind of cake from mom and dad. These aren't rich spoiled kids, just young accounting nerds. As long as they're buying and driving development, cool.

Hopefully they won't decide en masse to start having children and move from Rice Military to Pearland, then the market gets soft with a glut of townhomes. I'm really interested in the next round of census data.

With technology, demographics, population changing so rapidly, who knows, they may have the census every 5 years.

Edited August 25, 2008 by CHiPs

[TAK]

Lol @ myself.

7 years later, I've moved and my house is (now) worth 300k, and people are now buying 1mm houses 3 miles away from me and we're outside the loop...

And I still wouldn't to want to spend 300k.

I am cheap, indeed.

[rbarz]

It is still the same 7 years later!

 

 

Check out the Zillow Mortgage App, which happens to be a good, quick calculator to figure out mortgage/tax/insurance payments.  It has an affordability calculator and its default setting is shocking to me...  

 

For example:

Income: $80,000/yr

Down Payment: $60,000

Interest Rate: 3.125%

 

"You can afford a home up to $405,710.  This home should fit comfortably within your budget"

 

You can add monthly debt to the calculator to bring the price down, but it seems out of touch.  Maybe it is on purpose, because it is to Zillow's advantage to have people looking for homes or maybe all of the U.S. is out of touch...  

 

When I entered all of my information in to the calculator to determine what price home it thought I should budget, the "affordability" was 40% higher than a price I would even consider looking at!

 

 

 

 

[innerloop]

Maybe it is on purpose, because it is to Zillow's advantage to have people looking for homes or maybe all of the U.S. is out of touch...  

 

 

 

You've hit the nail on the head.  The home buying experience is a snake pit for the uninformed/uneducated buyer.  Everybody else in the process benefits by the buyer spending more... the seller gets more, the listing agent gets more commission, the loan broker makes more, and in a blatant conflict of interest, the buyer's agent makes more.  No one is exerting any discipline on the wide-eyed buyer, not even the loan guy because he's going to flip the loan to someone else just as soon as possible, so he won't be on the hook when the homeowner can no longer make their monthly payments.