Buying a new Home questions

[lockmat]

I guess anyone who is buying a new home could post a question in here but I'm gonna start it off by asking questions for myself.

A few to start off with:

1. What is the difference between a PUD (public utility district) and a MUD (Municipal utility districts)? I'm assuming they tax for the same reasons and provide the same services, no? Any other differences?

2a. How often does the property tax rate go up (or down, which I doubt it ever does)? HAR provides 2009 rates and on all the homes I like I've calculated 2010 rates from hcad numbers. I think in all instances the rate has gone up at least a little bit, up to a whole tenth of a point.

2b. I've heard some say that older neighborhoods tend to have lower property tax rates, I guess because they've already paid most of the MUD costs. Is this true? One of the homes I like is 30 years old and it's rate is still 3.2%. Will it ever stabilize? What conditions might make it stabilize?

3a. What are the major things to consider when buying a home in relation to major costs? I'm thinking of the foundation condition, roof condition and age of the a/c system.

3b. The home I like the best so far is 30 years old but I keep being told that newer homes will give me fewer problems and that they're more energy efficient. I know that's not absolutely true but if the builder did a good job, it's probably truer than not. The old home I like has windows that are mostly shaded and on the east side. The windows on the southern side are almost not an issue with the sun b/c there's an enclosed patio covering them. How much of an issue is air leakage in an older home? Can I simply tell by putting my hand around the edges of the windows? For this particular house, I just don't think energy savings will be a huge issue.

Thanks in advance to anyone willing to answer and explain a question or two.

[TheNiche]

I guess anyone who is buying a new home could post a question in here but I'm gonna start it off by asking questions for myself.

A few to start off with:

1. What is the difference between a PUD (public utility district) and a MUD (Municipal utility districts)? I'm assuming they tax for the same reasons and provide the same services, no? Any other differences?

Very few differences. Here's a good information resource. Here's another.

2a. How often does the property tax rate go up (or down, which I doubt it ever does)? HAR provides 2009 rates and on all the homes I like I've calculated 2010 rates from hcad numbers. I think in all instances the rate has gone up at least a little bit, up to a whole tenth of a point.

Expect that your tax rate will vary a little bit each year as the tax rolls get certified and the taxing entities review their budgets and set their tax rates. Expect that your taxable value will vary a little bit each year, as well. Sometimes the differences are offsetting. Sometimes you get anally raped; the important thing is, always fight back.

2b. I've heard some say that older neighborhoods tend to have lower property tax rates, I guess because they've already paid most of the MUD costs. Is this true? One of the homes I like is 30 years old and it's rate is still 3.2%. Will it ever stabilize? What conditions might make it stabilize?

The first step is to determine what is meant by stable. School districts may not be as stable as you might think, and the circumstances can change with any given legislative session. If it's in Harris County, you can view the tax rates by viewing the CAD record for prior years. Not sure where all you might be looking. As for the utility district, you have to remember that a new subdivision that hasn't been built out yet is going to initially have a high tax rate because its tax base is lesser; that's really the big thing. A utility district with aging infrastructure requiring repair might also end up issuing new debt and raising their tax rate, but it is a case-by-case basis.

3a. What are the major things to consider when buying a home in relation to major costs? I'm thinking of the foundation condition, roof condition and age of the a/c system.

Get an inspection done and get estimates done on the cost to cure all these issues, and build that into the cost. Be sure to understand not only that there is a problem, but how the problem has come about so that you can anticipate problems that may arise later. A lot of problems have to do with the kinds of materials and construction techniques used at the time, so ask what are typical problems of houses from the 70's, 80's, or whenever, of your inspector.

3b. The home I like the best so far is 30 years old but I keep being told that newer homes will give me fewer problems and that they're more energy efficient. I know that's not absolutely true but if the builder did a good job, it's probably truer than not. The old home I like has windows that are mostly shaded and on the east side. The windows on the southern side are almost not an issue with the sun b/c there's an enclosed patio covering them. How much of an issue is air leakage in an older home? Can I simply tell by putting my hand around the edges of the windows? For this particular house, I just don't think energy savings will be a huge issue.

New homes tend to have better windows and insulation, and may have more efficient A/C systems. Are there any mature trees on the lot that might provide some shade? That makes a huge difference and is one that a newer home typically won't have going for it.

Thanks in advance to anyone willing to answer and explain a question or two.

[lockmat]

I realized that hcad has a dropdown tab of years and goes all the way back to 2004. I called their office for years past that but they gave me the phone numbers for the other taxing entities, and they have been very helpful in giving me their rates back to the year 2000. Basically, the entities are the school district, MUD/PUD, Emergency response entity and the county taxes. Although that's only three or four entities and it seems there are up to 8 or 9 listed on hcad, all those fall under the umbrella of one of those main entities.

I was under the impression that the tax rate probably only went up, and at a very small increments. I was wrong. Over just six years, I've calculated rates and they've gone up and down and up to a .5% difference back and/or forth.

[Marksmu]

There is some good information from Niche...Ill add just my quick 2 cents.

Older homes are generally (generalization) built better than newer homes in my opinion. Depending on how old they are they may have actually been built by a carpenter and not by the cheapest person that can be found that can hold a nail gun. They tend to have less movement and fewer drywall cracks, walls that are actually square (take a 3' square and a level to a new build and put it on a wall...you will be appalled at how warped the walls are) and other things associated with a new build. Keep in mind with new construction it takes about 2-4 years before the little stuff starts to show up...small drywall cracks, nail pops, expanding/contracting of the crown molding, foundation movements, etc. Older homes are usually constructed with better base materials, better craftsmanship, and have had the years to settle out and expand/contract to a uniform place.

Older homes lack some of the new energy efficient technology. Older homes usually have old single pane windows, less insulation, and an insulation with a lower R Value along with less efficient air conditioners/heaters, and in many cases no natural gas. All those things can be replaced except for natural gas, but depending on where the home is, it does not always make financial sense to upgrade a home unless you intend to stay for a long time.

Also, even if you don't currently have kids, its still a good investment to buy into the best school district you can afford...its much easier to sell a home within a good school district than a crummy one. Final tidbit that comes to mind is that the smaller homes in a nicer neighborhood sell faster than the bigger/nicer homes in the same neighborhood....so if you don't need ALL the space, it does not necessarily make sense to buy it.

[RedScare]

To expound a bit on Marksmu's generalization, homes built in the late 70s to mid 80s may not be the best built. This was Houston's boom town years, and houses were being thrown together as quickly as the concrete dried. There are some custom built homes that are well constructed during every generation, but the combination of a boom period and lax standards make this a dicey time for homes.

Homes built in the last 10 years under City of Houston codes are going to be fairly well built. The wind standards, as well as energy efficiency codes required in Houston homes will get you a house that will withstand 115 mph winds and a 14 SEER AC unit. You'll also get some fairly stout insulation. Homes built in the ETJ may also be built to Houston code. Homes built in the county have much less regulation. Outside of Harris County, it drops even more. Montgomery County, for instance, pretty much only checks the sewer hookup...and that's not the county, but the MUD inspector. In these areas, you are really on your own. A good house inspector is critical. At least in Houston, someone checked on the builder. Not so in the county.

[TheNiche]

Also, even if you don't currently have kids, its still a good investment to buy into the best school district you can afford...its much easier to sell a home within a good school district than a crummy one. Final tidbit that comes to mind is that the smaller homes in a nicer neighborhood sell faster than the bigger/nicer homes in the same neighborhood....so if you don't need ALL the space, it does not necessarily make sense to buy it.

I disagree. The important thing is to have a picture of the demographic momentum impacting the schools to which you are zoned, and ride the wave without letting the crest slip you by. If you see that there are a lot of recently-built tax credit apartment complexes, you should stay away from there. If those complexes were built ten years ago then the demographic impact has probably been felt and priced into the homes. And of course, if an area is stagnant...like Aldine, let's say...then there's probably not any downside risk and you can take advantage of lower prices. It's not a bad option if your circumstances permit it.

And note that I'm talking about individual schools, not entire districts. Kids don't attend school districts, after all; the differences between the Conroe ISD schools in Conroe and the Conroe ISD schools in The Woodlands should prove the point, but there are also examples in north vs. south Katy ISD and elsewhere.

Edited March 2, 2011 by TheNiche

[samagon]

To expound a bit on Marksmu's generalization, homes built in the late 70s to mid 80s may not be the best built. This was Houston's boom town years, and houses were being thrown together as quickly as the concrete dried. There are some custom built homes that are well constructed during every generation, but the combination of a boom period and lax standards make this a dicey time for homes.

Homes built in the last 10 years under City of Houston codes are going to be fairly well built. The wind standards, as well as energy efficiency codes required in Houston homes will get you a house that will withstand 115 mph winds and a 14 SEER AC unit. You'll also get some fairly stout insulation. Homes built in the ETJ may also be built to Houston code. Homes built in the county have much less regulation. Outside of Harris County, it drops even more. Montgomery County, for instance, pretty much only checks the sewer hookup...and that's not the county, but the MUD inspector. In these areas, you are really on your own. A good house inspector is critical. At least in Houston, someone checked on the builder. Not so in the county.

Also, beware of aluminum wiring, best to read up on it, or have someone that knows more about it explain, I just know it's generally bad news.

[lockmat]

I still need to go back and thoroughly read the link Niche sent me on mud/pud districts, but right now Northgate Crossing (the neighborhood inside the fork of 45N and Hardy, and also just across the freeway from Springwoods Village (SWV)) has taxes that are out of control (3.58% right now and as high as 4.05% in 2005) but they have really good offers/incentives on new homes right now.

It looks like they have two MUD districts. On HCAD one is listed as a MUD and the other a UD. My question is this, do MUD districts ever combine with new neighborhoods? I'm wondering if they could end up combining with Springwoods Village. It seems like right now their taxes are so high because they don't have a large tax base to pull from. The n'hood is basically almost built out, so they don't have any future tax base unless they do combine with SWV. As my previous post stated, tax rates can go up and down, but this one seems to just stay up and doesn't look like it would trend downward for a very long time. So yeah, the basic quesion is do they ever add on a new development to their MUD?

[TheNiche]

I still need to go back and thoroughly read the link Niche sent me on mud/pud districts, but right now Northgate Crossing (the neighborhood inside the fork of 45N and Hardy, and also just across the freeway from Springwoods Village (SWV)) has taxes that are out of control (3.58% right now and as high as 4.05% in 2005) but they have really good offers/incentives on new homes right now.

It looks like they have two MUD districts. On HCAD one is listed as a MUD and the other a UD. My question is this, do MUD districts ever combine with new neighborhoods? I'm wondering if they could end up combining with Springwoods Village. It seems like right now their taxes are so high because they don't have a large tax base to pull from. The n'hood is basically almost built out, so they don't have any future tax base unless they do combine with SWV. As my previous post stated, tax rates can go up and down, but this one seems to just stay up and doesn't look like it would trend downward for a very long time. So yeah, the basic quesion is do they ever add on a new development to their MUD?

I don't recall ever encountering that, but it does not seem implausible. What is very common, however, is that a MUD with excess capacity or easily-expanded capacity enter into an agreement to provide services to its neighbors.

It did occur to me, however, that the northern parts of Harris County are increasingly shifting to surface water pumped from Lake Houston as part of an effort to prevent further subsidence. Therefore, their financial circumstances may be dissimilar from most MUDs in the Houston area.