Chasing the American Dream - Owning a Home

[Gan]

Just read an article about the cost of homes on the west coast (California) as well as how the fancy places are selling in Manhattan... and I must say wow. My family (Dad's parents) has a home in San Diego that was originally purchased for under 50K which has now been appraised at this year for a hair over 600K. I heard that a starter home in San Francisco is close to a million (under 2K sq.ft. and 1 level)... but I dont have any proof.

Have these people gone insane? I remember living in Denver for a year and thought folks were insane there asking for as much as they were asking for a starter level home. The girl who cut my hair said she was moving to Wyoming so they could afford to buy a home.

I guess I've got mixed emotions about this. On one hand, its the economy stupid, and as long as folks are willing to pay for it then its got a market. On the other hand... who in their right mind would pay so much for a home?!? I live in a relatively low cost area as far as property cost per square foot since we have a lot of land in Texas its cheap... but, I just dont see spending that much on just a home. I guess its mostly a matter of disposable income of the family and the utility value of location/features of home being considered for purchase. Talk about sticker shock. My family income is quite comfortable with both myself and wife working. It will only grow as the wife completes her masters degree in nursing and I grow my client base and tenure with my current company... which will hopefully result in greater investment opportunities and so forth.... but I still dont think I could spend the money that they are discussing in the articles regarding CA housing or Manhattan living.

California Housing Costs Article:
http://money.cnn.com/2005/07/07/pf/california_homes.reut/index.htm

Manhattan Home Pricing:
http://money.cnn.com/2005/07/01/real_estate/manhattan_market/index.htm

Housing Costs by State/Area matrix:
http://money.cnn.com/pf/features/lists/hpci_data/index.html

[Edaarin]

I reached the conclusion that I'm not going to be able to afford to live in Northern Virginia when I graduate.

So...I guess I'm heading anywhere that's not New York, LA, or NOVA. It really does suck that you need a household income of $200,000 to afford a modest house. I can't even imagine what people do in LA, so I feel for you there.

[Hassassin]

As an experienced California Real Estate professional, I might as well comment on this topic. The price of housing in California increases continually (and will always increase) because of the simple equation of supply and demand. Many people want to live in California, despite the traffic. It has beaches, mountains, deserts, weather, entertainment, jobs, etc. Also, because the house prices have skyrocketed over the last five years, most current owners do not want to sell to upgrade into a bigger house. The reason for that, is property taxes. This creates a seller's market, for the lack of people moving out of homes they currently have. In fact, the average Californian refinances his/her property every 3 years. So they get the money, without having to pay a capital gains tax, for selling their house at a profit from it's original cost.

As the population of the United States grows, and California in particular (which it will continue to for many many years) the prices of houses in California will only be greater. My suggestion would be to purchase in the Las Vegas area, or inbetween Vegas and Los Angeles. Those areas will continue to rise, and right now Las Vegas is the fastest growing real estate market in the country.

If anyone has any questions about real estate, mortgages, or anything of the sort. Feel free to PM me and I will gladly help you in any way I can.

[Gan]

Good info to know. I like the idea of refinancing in order to milk out the capital gains, but every 3 years? Damn, that means the appreciation must be sick, especially to outweigh the cost of refinancing (dont know how CA RE laws are regarding loans/financing/etc).

I've got a good friend looking into real estate between LA and LV... but he doesnt expect any realization from it for at least 20 years which is a little long term for my investment tastes. If he stays the course though, he'll probably make bank on it if he chose the right areas.

[Warriorbird]

Quality long term investments can be very scary. My grandfather tripled his wealth. Took him twenty years, but he pulled it off in grand scale.

[Edaarin]

Took 20 years...?

General rule of thumb is you can double your wealth in 72/x years, where x is whatever return you're earning. 8% => more than quadrupled wealth in 20 years.

[SpunGirl]

The LV real estate market is crazy, Hassasin is right. Jake and I bought our condo in Sept for 145k... it's in a nice area (Green Valley/Henderson) and has some nice upgrades, like solid oak cabinets and granite countertops. The unit next door, which does NOT have nice upgrades, just sold for 180k last month.

We'll probably sell it in the fall of '06 to upgrade to a house (hopefully with a pool), because we should be ready to take on home-maintenance issues by then. But even if we make 100k on the sale of our condo, the price of the house we want could be more than 50k than what it's selling for now.

The bitch is, because of our jobs, we *can't* just pick up and move to a cheaper market to get the house we want. My advice, Ganalon, is to buy and own as soon as you can. Our condo isn't hugely different from an apartment, but the nice bit is that I don't feel like I'm flushing our payment every month.

We might even keep the condo as a rental property if we can afford it when we're ready for the house.

-K

[Wezas]

Edaarin you just missed the cut-off for buying affordable houses in NoVa. I bought my house (2 floors, big yard) in Fairfax about 3 years ago. It was $275k (mortgage payment is about $2,000-ish for 30 year fixed). And I need to refinance to bring it down.

Most recent estimate done on the house (using real estate agent & recent sales in the neighborhood) put it at about $400.

Most of the people I know are moving out to Ashburn and places further away from the beltway. And they're buying townhouses.

[Makkah]

Thank God I live in the dirty dirty

[Wezas]

I'm regretting not buying a townhouse. Less yard to deal with and less $$$$ problems.

Plus my boss's Alexandria condo went from $280k to $400k in 2 years.

Condo.

[Jazuela]

Yeah the market's sick around here too (though not quite to the extent, it's still pretty proportional).

We bought a condo 18 years ago in a town neighboring New Haven CT. I think we paid 97k for it. When we finally got sick enough of condo life (sharing your walls and ceiling with other people, UGH), it was during the nasty recession. We barely got back what we owed from the buyer: a whopping $59k.

Fortunately the market was equally icky for houses, so we were lucky to find our current house for around $160k. A half acre, wooded, fenced-in corner lot with a modest ranch-style home circa 1958 in one of the nicer middle-class neighborhoods of another town that borders New Haven. 3 bedrooms, 1 bath, all very small but the living room's pretty big and it's got a solid oak kitchen and sun room. We're planning on expanding one of the bedrooms to turn it into a master suite and some day go through the drudgery of installing central air, but otherwise it's sufficient for 2 people to live in comfortably.

Comparatively, the house across the street doesn't have a basement (none of the houses on -that- side of the street have basements, they're built on old swampland that's turned to flood-risk sand). That house is in better condition than ours, but it's got around the same square footage and a much smaller lot, it isn't fenced in, and it isn't a corner lot. It just sold this past year for $195k. Another house, even smaller on an even smaller lot with tiny rooms in the neighborhood, JUST sold for $219k 2 weeks ago.

If we were to sell our house now, we'd probably get around $250k. Only problem is, we'd have to pay more than that to buy anything similar or better in the area, and we're not moving til hubby retires from his job in another 12 years.

You never know what's gonna happen with real estate. Could be by the time we're ready to sell, we won't get what we paid. Or we might get a million bucks for it if things keep going at the current rate. It's a gamble. Best bet is to buy what you intend to live in, because you intend to live in it, and not worry -too- much about market values or investment purposes. That way, no matter how much or little you paid, how much or little you get when you sell, you'll know you enjoyed living in your home and that's what will matter most.

[theotherjohn]

Originally posted by Makkah
Thank God I live in the dirty dirty

true.

for the prices they are throwing around I could upgrade from my 4 bedroom to the 15 bedroom, 2 pool with tennis court little house outside the ATL

[Gan]

Average price per square foot inside the city limits of Houston is around 90 to 100$ per square foot. Travel outside to the suburbs of Houston and it drops to 75 to 90$ per square foot. There are a few select areas inside the city limits (River Oaks, West University, Memorial, and a few others I'm sure I'm leaving out) where the pricing jumps but thats due to the 5 acre lots and homes over 10 bedrooms.

We're currently debating on adding onto the house we have, selling and buying a larger home in the suburbs, or keeping our existing home as a renter and buying out in the suburbs. There's no rush yet with only 1 child, but as we plan for an addition then space will become a necessity if I'm going to maintain an office from home.

The nice thing is that because housing costs here in Houston are such as they are, we can have those options to consider.

[DeV]

Originally posted by Wezas
I'm regretting not buying a townhouse. Less yard to deal with and less $$$$ problems.
That's what I'm looking to purchase right now. I've been debating between a house and a condo for a little while, but I've come to the conclusion that a townhouse would be perfect for us right now. Plus with getting a new puppy I'd rather him have a full yard, but not so huge it'd be a bitch to take care of all season.

[Gan]

We owned a condo for almost 8 years. I loved the maintenance free aspect of it...

I hated having neighbors sharing a wall/ceiling/floor/etc. I also wanted a larger garage for my wood working tools, so a house we bought when we moved back from Denver. And with the addition of a child, we wanted a house for the space and yard.

I imagine that some day a long time from now we will consider a condo again, not now though.

PS - Condo/Townhome markets arent as lucrative here as they are in the east/west. My dad moved from San Diego back to Texas and doubled his original cost on his condo with 6 years of ownership when he sold. In Houston the appreciation is around 4 to 5% a year depending on the location... or was when we sold ours.