We Can’t Afford Our Home Anymore!

[ExFlyBoy5]

I think you may have seen a unicorn.

Our TX property taxes have increased every year over the last six and are up more than 20% from where they were in 2016.

No doubt. I took a look at the taxes from our house in San Antonio (lived there 2006-2012) and they have increased 46% from 2012 to 2021 (5.1% a year). The history shows (back to 2005) that there was ONE year that was cheaper...2009 and nothing but increases since then.

Our current home has gone up 20% from 2008 to 2021 (1.54% a year).

 

[old medic]

We bought ours at $3.71 a SqFt, but needed some work... LOL we are up to about $10 SqFt so far.

 

[Another Reader]

That is impressive and almost unbelievable. I mean it is believable since its California...but a little insane at the same time.

In 33 yrs stocks should double at least 6 times as well, which means your physical home's asset minus expenses is almost keeping up with some of the best performing stock portfolios.

Diversification into a number of rental properties and the stock market created more total wealth, but the house was one leg of the stool... and don't forget the real estate was leveraged!

 

[Luvdogs]

We bought our house 30 years ago, now worth about 3X as much.

But I also bought a condo to rent out in 2013 for 45K. Worth over 200K now. And it's only about a half hour from our home so that shows the differences in appreciation in a small geographic area. (suburbs vs close to a city)

The condo originally went for about 50K in 1985, went up to about 150K in 2007 and there were several units there that went for about 25K in the years following that.

 

[Chuckanut]

If my home burned to the ground today and the insurance company offered me the choice between paying to rebuild it or writing me a check for the same amount , I would have to seriously consider taking the check, selling the land, and moving someplace else.

The cost of housing in my area is so high that I could easily buy an equal if not better home for less money and probably pocket about 25% of the funds to spend on Blow That Dough activities. Besides my children are moving out of the area because they can't afford to buy here. Any place they move to would be significantly cheaper than here.

Hmmm.... I seem to be talking myself into moving even if the place never burns down.

 

[aja8888]

We bought ours at $3.71 a SqFt, but needed some work... LOL we are up to about $10 SqFt so far.

When did you buy at these prices? 1949?

 

[audreyh1]

Sorta tongue in cheek.

The house we bought Summer 2019 was a little more than we wanted to spend, but we’re happy we bought it.

Current estimates today are 40% higher than we paid, actual home sales in my neighborhood confirm we could definitely get that much if not more based on actual current comps. [Our old house up north has not appreciated nearly as much, good for us - but speaks to actual affordability]

So if we were relocating today, there is NO WAY we’d look at this house or this neighborhood!

I am sure there are others here with even more extreme cases, hence the thread.

We don’t plan to sell so no issue, but it is an odd thought, we really wouldn’t buy this house at this price today.

But if we’re in a housing bubble (probably) it’ll be affordable again one day (soon).

But the way it works - you sell your house to buy another one if you need to, so in many cases it works out relatively speaking.

Congrats on buying your house before a large appreciation!

 

[Andre1969]

I paid $630K for my place back in September 2018. Redfin thinks it's currently worth about $767K and Zillow thinks it's worth around $775K.

At the time, the mortgage company made me put 25% down, because of my income. Even though I had enough invested assets that I could pay cash for the house several times over, their main focus was income. Their rationale was that investments can get wiped out. Yet they seem to forget that people can lose their jobs, too.

Anyway, I only make about 9% more now than I did back then, so I'm sure they'd still want an extra big down payment. But, interest rates are lower now, too. When I bought the place, the $472,500 I financed was at 4.75%, and the monthly payment for P&I was about $2,465. I don't know what rates are now, but my current mortgage is 2.875%. I could finance about $594,000 at that rate and the payment would be around $2,465, as well. So, I guess if I was buying this place today, I might still be able to get in with about 25% down, and the monthly payment would be around what I was paying in 2018, before I refinanced.

But, looking at it the other way, if $472,500 is the most they'd qualify me for, I'd have to cough up another $135K on the down payment.

I'd be able to still afford this house, if I was buying today. But, I have a feeling I'd be hesitant, at the price.

 

[PatrickA5]

Houses in my area usually chugs along at 3% increase per year. Even during the housing bust, prices went up. We'll never get rich on our house, that's for sure.

Having said that, even here prices went up 20% - 25% last year. New houses have gone up even more. Home builders are backing out of contracts mid-build because they know they can sell them for more.

 

[W2R]

I love my present home (my "Dream Home") and wouldn't move if I was offered a billion dollars for it. How 'bout that? I know, pretty stupid, huh. But what would I do with that money? I already have enough to support the lifestyle to which I am accustomed.

My Dream Home is just a 1500 sf 2/2 brick house built in 1965 on a 50x120 lot, with a detached garage, in a convenient, quiet, and unpretentious neighborhood. It's not elegant or perfect. But it's the home I have always wanted, and not only that, the mind-boggling truth is that it's immediately next door to Frank's home, just 20 feet away. Mine's the one on the left. In the 7 years since I moved to this Dream Home, a simple dirt path gradually has been worn through the grass in the back yard, from his back door to mine.

Nothing could persuade me to abandon that wonderful feeling when I open my eyes each morning, and see my dream home all around me. And then, when F comes over a few minutes later with breakfast and coffee for me? I feel like I am in heaven.

In my view, my house is not just another investment. It's a framework for the rest of my life.

 

[statsman]

But the way it works - you sell your house to buy another one if you need to, so in many cases it works out relatively speaking.

DW wanted to move to where our kid had relocated in 2016 (Central Texas). Our kid really wanted us here too. So, we moved in late 2018. Our kid just purchased their first house late last year, and they are a 10 minute drive away. It indeed has worked out well for everyone involved.

 

[ExFlyBoy5]

I love my present home (my "Dream Home") and wouldn't move if I was offered a billion dollars for it. How 'bout that? I know, pretty stupid, huh. But what would I do with that money? I already have enough to support the lifestyle to which I am accustomed.

My Dream Home is just a 1500 sf 2/2 brick house built in 1965 on a 50x120 lot, with a detached garage, in a convenient, quiet, and unpretentious neighborhood. It's not elegant or perfect. But it's the home I have always wanted, and not only that, the mind-boggling truth is that it's immediately next door to Frank's home, just 20 feet away.

Nothing could persuade me to abandon that wonderful feeling when I open my eyes each morning, and see my dream home all around me. And then, when F comes over a few minutes later with breakfast and coffee for me? I feel like I am in heaven.

In my view, my house is not just another investment. It's a framework for the rest of my life.

Eloquently written, W2R!

I have to agree 100% on the "not just another investment"...a lot of people live in a house, whereas I much prefer to live in a home. It isn't perfect and there are lots that are better/worse...but for us, it's damn near a 10/10. Although, if we were offered a billion bucks for it....well, we would be out yesterday.

 

[Ian S]

Sorta tongue in cheek.

The house we bought Summer 2019 was a little more than we wanted to spend, but we’re happy we bought it.

Current estimates today are 40% higher than we paid, actual home sales in my neighborhood confirm we could definitely get that much if not more based on actual current comps. [Our old house up north has not appreciated nearly as much, good for us - but speaks to actual affordability]

So if we were relocating today, there is NO WAY we’d look at this house or this neighborhood!

I am sure there are others here with even more extreme cases, hence the thread.

We don’t plan to sell so no issue, but it is an odd thought, we really wouldn’t buy this house at this price today.

But if we’re in a housing bubble (probably) it’ll be affordable again one day (soon).

We bought our new house in May 2019. According to Zillow, it's appreciated 68%. Our old house has increased too but was considerably less to begin with. Today we probably wouldn't be looking in this area at all. We'd likely have stayed put and updated the old house while kicking our selves that we hadn't made the move when we had the chance!

Maybe things are slowing down but latest house for sale two doors up from ours went to pending just 4 days after listing.

 

[Dtail]

We are up ~50% in 2+ years. Not sure if we would buy it now at these prices.
However we have limited 3% max yearly tax increases and it is usually less than that as other properties in the hood have lower taxes.
No plans to move unless forced to due to age related reasons.

 

[Midpack]

But the way it works - you sell your house to buy another one if you need to, so in many cases it works out relatively speaking.

Congrats on buying your house before a large appreciation!

Understood. There are two cases, I didn't make it clear in the OP:

• If your home value increases 3X, and the area you relocate to is also 3X, it's actually a wash (your example).
• If your home value increases 40% (in 2-1/2 years), and you relocated from an area that's seen a 15% in home values, you're ahead on paper.

Lucky for us our case was the second, and we bought a house that cost 156% of the price of our former house - so we've come out way ahead, again on paper. The same phenomena that many from SoCal and several other regions have experienced on a grander scale. I am sure there are others who've had relative value changes work against them, sadly.

And again, if there's another RE bubble burst, we may all be back to (way) more affordable homes...

 

[pacergal]

We definitely could not afford our house now. We bought at market price 1990 from my folks, who had been unable to sell.
Even in the housing bust, it maintained a good price.
Ever since we bought in this area, each house bought is generally torn down and new ones built, sad to see. Our neighborhood is one of the last ones where most are remodeled. Although lately, we are seeing the house torn down and two new ones built on our larger than normal lots.

 

[FANOFJESUS]

Boy that is a tough question. We have been in our home a long time. The area is not like when we moved in not as good. The houses are much higher so it all makes you wonder. It is close to everything so that is nice. The thing to remember about cities is that they are always changing.

 

[Sunset]

I don't know what ours would sell for today (maybe $600k), but my research tells me that I can't find anything similar in many parts of the country for less than $1m. Prices in Illinois are not keeping pace with elsewhere.

+1
I've been dreaming of moving for a few years, but am starting to think we might not as houses in other places are easily twice ours.

Our home finally is worth more than we paid after 20 yrs. Now it's worth $250K

The only consolation is it was cheaper than renting for 20 yrs and we have freedom to do what we want. (Maybe not cheaper than renting if had invested the $215K).

 

[Montecfo]

Lets see what Q1 brings

Buyers now are shopping amid rising rates. Could cause a spike of activity, but affordability drops. It's Just MathTM.

 

[MC Rider]

We paid $340k back in 2010. Sunk in another $70k or $80k in updates and upgrades. Last month the house next door which is almost the same size and has a pool that we don't have, sold for $916k. Another across the street is a bit larger with no pool, under contract with list price raised to $929k from $875k when it went pending after 10 days on market.


We would not even think of buying in that price range. We are thinking about selling and leaving the big city behind.

 

[RobbieB]

Gotta love Silly Valley... House is worth 6.3 times what I paid 33 years ago... Most of the original owners or early second owners could not afford to buy here or anywhere else in the area at this point.

Hehe, I live out here in the Central Valley and the house is worth over 5X what I paid 33 years ago.

 

[Walt34]

There is no way we could buy the house in the D.C. area that we sold at retirement in 2002 and we knew that would happen when we sold it. And it'd be a stretch to buy the house we're in now in WV, to the point that I doubt we'd do it.

 

[Golden sunsets]

We closed on a new home to us on 12/30/21. We will close on the sale of our current home (of 30 years) next Monday, 1/31/22. We had to buy first (all cash offer) and then sell in order to stand any chance of getting the new home in this crazy market. Our old home is 3000 SF and 30 years old and our new home is 2700 SF but much newer, at 10 years old. So not too much of a downsizing. We essentially bought the new home for the same price that we will sell the old home -$900,000. The way we look at it, we either paid too much for the new and sold the old for too much, or both deals were at a fair price. Either way it's a wash.

 

[pjigar]

We paid $340k back in 2010. Sunk in another $70k or $80k in updates and upgrades. Last month the house next door which is almost the same size and has a pool that we don't have, sold for $916k. Another across the street is a bit larger with no pool, under contract with list price raised to $929k from $875k when it went pending after 10 days on market.


We would not even think of buying in that price range. We are thinking about selling and leaving the big city behind.

Do it while greater fools are plentiful! We sold our primary home last year and moved to our vacation home in the country. We left some money on the table but a bird in hand is worth two in the bushes. I am selling one of the rental (which has a low ROE) this year too.

OP,

I always compare the house price to the personal income. We historically bought our houses at 2.2, 2.5, 1.7 and 1.3 times the personal income at the time we bought them. The last one we sold was at 2.4 times income. My income has outpaced the median income but I still would not buy the house at the price we sold. People who bought from us paid over 4 times their income!

 

[pjigar]

Eloquently written, W2R!

I have to agree 100% on the "not just another investment"...a lot of people live in a house, whereas I much prefer to live in a home. It isn't perfect and there are lots that are better/worse...but for us, it's damn near a 10/10. Although, if we were offered a billion bucks for it....well, we would be out yesterday.

I feel this way for our current home. First of all my brother and I built it with our bare hands. And it has all the land that can support the endless hobbies I have. Quite, beautiful and the city is just 20 minutes away.