How much house should we buy?

[soupcxan]

If it were as simple as stainless steel and granite, this would be an easy fix. The price problem is due to (a) location and (b) space. There are not a lot of neighborhoods that accomodate both our commutes. Adding an hour a day to each of our commutes is 10 hours a week or 500 hours a year. That's a lot of wasted time, not to mention the stress of Houston traffic. And within those neighborhoods, most of the homes are well under 2k sq ft. We want more like 2300-2500 sq ft but the old homes aren't that big, and the new homes are +3k, so the price is jacked up.

Yes, if you live in the Houston suburbs you can easily get a modern 3k sq ft house for $300k. But there is no suburb that works for both our commutes.

Yes, plenty of people live in unrenovated homes from the 1970s (most people in the world live in much less). But cooking is a hobby and cooking in an original 1970s kitchen is no fun. And DW is not interesting in using a 1970s bathroom that has 40 years of built-up crud.

Yes, you can buy a narrow 3 story house for $400k. We're living in one now. We're right on top of our neighbors and we hear them all the time (despite no shared walls). And we're tired of having to go up and down the stairs for every single thing. Use the bathroom, get your cell phone, get your car keys, carry the groceries, change the laundry, change your clothes, check the mail, etc. Cooking a meal on the grill requires 4 or 5 round trips on the stairs. I thought this was no big deal until I had to use the stairs 10-20 times a day. And our parents are getting to the point where they do not navigate the stairs so well when they visit.

Rents increased 17% in Houston last year. No idea if this will continue in 2013 but wouldn't bet against it. And long-term we want to own so we can make the place our own.

Agree there are some bubble-like qualities to the RE market here if you want to be reasonably close to the city. So resale value is a definite concern.

I agree $600k is a LOT of money for a Houston home and this is orthogonal to early retirement plans.

[Accidental Retiree]

Quote:

Originally Posted by bondi688 soupcxan Which specific area of Houston are you looking at? I found some rather nice houses at much below the 400-450k range you are budgeting, although I have now decided against moving to Houston at this time of my life. Both houses are listed at < $400000

Gorgeous! These look like either the Spring/Humble/Woodland area, or what you can find down in Pearland, sans all that pretty greenery. Where did you find these?

It has been a long time since I lived in Bellaire, but I, too, am having a hard time visualizing a $600k house in Houston. I first thought of the Galleria area, or River Oaks, and I know there must be expensive areas; I figure they must be inside the 610 loop. But I am just guessing from long ago memories.

Commuting. Blah. An SF Bay Area resident, I understand not wanting to commute.

[bondi688]

soupcxan
Since this is an ER forum, the decision of how to balance the hassle of commuting vs paying more than you would like or can afford really depends on how long you two plan on staying at the jobs, wouldn't it? And will one plans to retire much sooner than the other? That will play into your calculation. The world is not perfect and will cater to all your desires, so you have to choose which is the less bitter pill. Would the commute be more unacceptable to you than what you are going through in off hours than living in a place you sound like you absolutely hate. I have relatives who commute everyday from CT or LI to go into Manhattan to work. Their commutes are longer and likely more stressful than commuting from the suburbs in Houston, but to them, those efforts were worth it.

[bondi688]

Accidental Retiree :

You are right, they are in Spring, specifically, in the Champion Forest, Memorial Northwest areas. Those houses will easily cost 4 to 5x more in the areas where my relatives are living in CT or the Long Island.

[Katsmeow]

Quote:

Originally Posted by bondi688 Accidental Retiree : You are right, they are in Spring, specifically, in the Champion Forest, Memorial Northwest areas. Those houses will easily cost 4 to 5x more in the areas where my relatives are living in CT or the Long Island.

This is actually very funny. In my earlier post I said:

Quote:

When DH and I were newly married and looking for a house we looked for houses in our price range (this was about 20 years ago) which was about $220k at the time. Near where I was living at the time (Galleria area) for that price you could have a nice townhome or you could have one of those older, updated houses that was 2000 SF. We ended up buying closer to where DH worked (north side) and bought a 5 bedroom, 3800 SF house under construction which we were able to customize. The negative was that I had an hour long drive to work.

The 5 bedroom house we ended up buying was indeed in Memorial Northwest. It was a lovely house but we did move closer in after several years because it was a PITA for me to get to my office (in the Galleria area in Houston). For both Memorial Northwest and Champions Forest you aren't really all that near to a major freeway so it took a good 20 minutes to wind my way to HWY 249 before making my way to work.

Based upon the price range the OP is talking about something in the 1960 area - which is where those houses are - is probably an hour to an hour and a half commute each way for one or both of them.

FWIW, houses near Westpark Tollway in Fort Bend County were much easier to travel into Houston due to the proximity to a lightly traveled toll road. That commute was about half as long in time as the one to Memorial Northwest.

In short - unless you work on the north side - those subdivisions are difficult for travel into Houston itself for work. There are many other subdivisions that would be better suited that would be much less expensive than $600k but would have much more pleasant commutes depending upon where the OP and spouse work.

[FUEGO]

Any chance you might find a house in one of those "older" neighborhoods that come close to what you want? If the neighborhood is 40-50 years old there is a great chance someone has added on and/or renovated. I live in a neighborhood like that, and there are some real steals here on large houses (2500-4000 sf) that are only priced ~20% higher than the 1800 sf that is much more common (like my house). It may take a while to find the perfect one though if your (or your DW's) tastes are exacting.

I am assuming you know the local area well enough to know that it is impossible to live maybe 5-10 minutes more distant than the high priced areas and find something much more affordable? We have the same "inside the inner loop" pricing phenomenon where I live, and you can go a mile or two away and see prices drop in half without a real decline in neighborhood (in fact often a rise). Land prices for a residential lot drop from $200-300k inside the loop to maybe 50-75k not even 5 minutes up the road (but in a different zip code!). Have you talked to a good realtor or other long time residents in the know? Any up and coming areas that provide a great value proposition that also keep your commutes low?

At the end of the day, I hate long commutes and would probably pay up or live with a smaller crappier house to avoid a long commute. Luckily mine is 10 minutes to the middle of downtown and I only hit a red light or two on a typical day.

[bondi688]

Quote:

Originally Posted by REWahoo I would not buy a $600k house in Texas unless I planned to live in it until they cart me off to the nursing home.

I guess if you buy this house in Dallas, at 135 millions dollars, and according to Yahoo News, the most expensive house in the country, you will not allow them to dig you up until 500 years later.

[cho oyu]

Dealing with some similar thought processes but in a different region of the country, I would toss out the following suggestion: run a couple of scenario calculations and see if they are manageable within your financial and retirement plans.

First, a bad case: what happens if the house drops in price by 20% and it takes a year to sell? Separately, what implications are there in terms of long-term retirement goals when considering total operating costs and taxes for a $600k house vs a rental?

Second, a worst case (not impossible in oil country): what happens if the house drops in price by 50% and it takes 2+ years to sell and one of you loses a job? And, for operating expenses, the same questions as the previous scenario.

If the risks are manageable in both cases, the time to recover from potential financial loss is acceptable, and/or you have defined mitigation plans, it seems like a reasonable gamble to purchase a place in your proposed price range.

Having good financial resources and high human capital at your disposal does give you considerable flexibility in the amount of risk you wish to take in this endeavor. There's clearly no right answer - so best of luck in the decision.

[WestLake]

It's not unusual to see houses for $600K (or more) in desirable, close-in areas of Houston and Dallas. They have a track record of high appreciation.

I know in the M-Streets/Lakewood area (with good schools) of East Dallas they are getting multiple offers. However there are some less fashionable 50s and 60s ranch homes nearby which go for half that price. These are better built than newer homes out in the 'burbs.

I would go for one of those. Less of a commute and you may be able to sell it for a tear-down if need be.

[ronocnikral]

I assume you are talking about the heights area. When we moved in 2009, we bought a 2 story home, about 2000 sq ft on a 25' wide lot for $325k in the heights. while close to our neighbors, one neighbor was rarely home and the other home had a much larger lot, and their garage was between us and the living area of their home. It was nice having all living downstairs and bedrooms upstairs. Our house was newer, only 6 or so years old, but looked like an "old victorian." so we had the best of both worlds.

if concentrated in the heights, have you considered lazy brook/timbergrove? these are older houses, but tend to be remodeled and have regular size lots. Or oak forest/garden oaks which is the same?

You should be able to find something $400k ish that is remodeled...

edit: seems prices have increased a lot since we moved 18 months ago....

[LakeTravis]

It will vary a bit depending on the area of Houston, but in Austin your annual property taxes on a $600K home will run between $15K-$18K.

The two properties we own in this area have a combined value of $630K according to recent appraisals for the purpose of refinance. The tax appraisals are much lower than that and our PT bill last year was still over $16K. We could rent a small home for that.

If Houston is anything like Austin right now, it's a sellers market for sure. Less than 2.5 months of housing stock available, realtors begging for listings, R/E close to downtown appreciating at 1% per month.

Meanwhile, I've got a home on dried-up Lake Travis less than 40 minutes from downtown that has lost 20% of it's value over the last two years due to drought conditions.

The other home is currently about 20 minutes from downtown, hasn't seen much appreciation at all (3400sf relatively new construction) but is at the end of an under-construction toll road that, when completed in 18 months, will reduce the commute from driveway to downtown to about 12 minutes. This area will be very popular then.

My point is that even in a hot R/E market there can still be pockets that haven't caught fire yet.

[citrine]

I would buy the 1950's house and have renovations done by Home Depot for the Bathroom and Kitchen. We bought a 1954 home in Central Jersey and for less than 220K and put in 40K of work to update it. Most of the work was done by us in 7 weeks, the rest we are doing as we go along. We were approved to buy a house for $450K, but chose to stay away from that number.
I also agree with balancing your needs and wants. We want to pay of the mortgage in 10 years and retire early.

[soupcxan]

Update: we are close to getting a house under contract in the neighborhood we wanted (i.e. 30 minute one-way commutes for each of us rather than 1 hour) for close to $400k. We negotiated down from mid-$400s. It is several decades old but generally in good shape, although several rooms need updating. I estimate $50k worth of work to be done over the next few years. Similar homes that have been updated are selling for $500k, and this one is larger, so don't think we'll have a problem getting our money back if we need to sell. Still have to get through inspection and appraisal, hopefully no major issues there.

So, will still spend more than I wanted to for an older house, but the location will save us a combined 10 hours a week of stressful, wasted commuting time. And, this will be better financially than buying $590k new construction (which generally seems to be cheaply constructed to my untrained eye).

[W2R]

Quote:

Originally Posted by soupcxan Update: we are close to getting a house under contract in the neighborhood we wanted (i.e. 30 minute one-way commutes for each of us rather than 1 hour) for close to $400k. We negotiated down from mid-$400s. It is several decades old but generally in good shape, although several rooms need updating. I estimate $50k worth of work to be done over the next few years. Similar homes that have been updated are selling for $500k, and this one is larger, so don't think we'll have a problem getting our money back if we need to sell. Still have to get through inspection and appraisal, hopefully no major issues there. So, will still spend more than I wanted to for an older house, but the location will save us a combined 10 hours a week of stressful, wasted commuting time. And, this will be better financially than buying $590k new construction (which generally seems to be cheaply constructed to my untrained eye).

Sounds like a good choice for you, Soupcxan. The saved commute time will be wonderful. Good luck and I hope the deal goes through smoothly.

[heeyy_joe]

Rent and continue to monitor. Do not buy more house than you want or need.

[cjogo]

About 5 miles down the road ..not bad > but we will stay were are :}




Now here is a fixer-upper > this is about 2 blocks from the house above >> 1 bedroom, 1 bathroom, 451 square feet $600k 0 NE JUNIPERO & SECOND AVE, CARMEL, CA Property Listing - ZipRealty

[Gasdoc]

Quote:

Originally Posted by bondi688 soupcxan Which specific area of Houston are you looking at? I found some rather nice houses at much below the 400-450k range you are budgeting, although I have now decided against moving to Houston at this time of my life. Both houses are listed at < $400000

MAN o Man...why do I live in Baltimore?? I would die for either of these houses...and they would both be considerably LESS than I paid for my not-nearly-as-nice pad here.

Others have mentioned it in previous posts, and maybe you answered it and I missed it, but your future plans regarding children should also play into the equation significantly. Yes, you need more house for kiddos....but you also need more cashish if you would like to retire early. I'd just buy one of these 2 houses and be done with it!!!! If you never plan to have kids, spend whatever you want. You're going to kill it financially if you continue to make over 300k/year.

Good luck. You can definitely afford the prices at which you are looking....but its a personal decision. Remember, the more you spend on a house, the more years you have to work. Simple as that.

[eytonxav]

Houston RE must be pretty depressed if you can buy these places at < $400K, as both of these houses would easily be in $500k - $750k range in my DFW burb.

Quote:

Originally Posted by bondi688 soupcxan Which specific area of Houston are you looking at? I found some rather nice houses at much below the 400-450k range you are budgeting, although I have now decided against moving to Houston at this time of my life. Both houses are listed at < $400000

[soupcxan]

Quote:

Originally Posted by heeyy_joe Rent and continue to monitor. Do not buy more house than you want or need.

Sounds good in theory but rents increased 16% last year and I won't be surprised if they do so again in 2013. If this keeps up, in three years our low $2k rent will be mid-$3k. Also, DW is tired of living in temporary space.

[NanoSour]

Nice McMansions! I would only caution to not buy a house that depends on both of you keeping your jobs to afford it. Be prepared for one of you to lose you job as this is what got many families in trouble during the housing bubble. The economy such that it is precarious at best.

600K for a house goes against my grain. BTW, are those the Jones' living next door?