Why would people buy condos/SFH in Texas?

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North Texas Cajun
Posts: 184
Joined: Sun Jul 02, 2017 8:56 am

Re: Why would people buy condos/SFH in Texas?

Post by North Texas Cajun » Sun Feb 11, 2018 11:45 am

runner540 wrote:
Sun Feb 11, 2018 8:18 am
scfr wrote:
Sat Feb 10, 2018 10:11 pm
Where are you getting 2.6% as the property tax rate? I live in Texas and my overall property tax rate is 1.6%. (And a quick Google search says that the average in the state is 1.9%.) Six different entities levy a tax where I live. Five of those six entities offer exemptions, so I pay tax to those entities on less than the full value of my property. I applied for the Homestead Exemption the same day I closed on my house.
All the Dallas properties I've seen have 2.7% rates (tax/assessed value).

Is it possible that you haven’t looked at all the properties?

According to this website, property taxes in Flower Mound and Highland Park are only 2.08%. In University Park, only 2.11%. In Westlake the property tax rate is 2.13%. These are four of the most desirable parts of the Dallas Fort Worth metro area.

Here’s some other low tax rate suburbs:

Lewisville - 2.08%
Grapevine - 2.29%
Plano - 2.18%
Rockwall - 2.21%

I have cherry-picked the lowest suburbs. But some of these are large suburbs, and some are close to many thousands of jobs.


https://www.davedowns.com/dallas-property-tax.php

essbeer
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Joined: Sat May 09, 2015 6:23 pm

Re: Why would people buy condos/SFH in Texas?

Post by essbeer » Sun Feb 11, 2018 12:12 pm

Smorgasbord wrote:
Sun Feb 11, 2018 12:35 am
Here's a more apples to apples comparison in the same building.
Buy for 200k plus $700/month condo fee, and ~$300 a month property taxes.
http://www.har.com/5150-hidalgo-street- ... e_29326995

Rent for $1800-$2,000 a month:
https://www.zillow.com/homes/for_rent/H ... ect/15_zm/

Unless I was expecting increases in property values to vastly exceed inflation, I'd probably take the rental.
To me that seems like a pretty decent price. You are getting back 6% in rent after fees and taxes. With the homestead exemption you'd get back more than that. Houston is the fastest growing metro over the last decade, so rent appreciation is very likely. Because of the high HOA you get a multiplier effect on rent increases -- 10% increase in rent will be like a 20% increase in profit. If you believe in thinking of your home as a negative bond, that seems like a really good bond.

runner540
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Joined: Sun Feb 26, 2017 5:43 pm

Re: Why would people buy condos/SFH in Texas?

Post by runner540 » Sun Feb 11, 2018 1:50 pm

North Texas Cajun wrote:
Sun Feb 11, 2018 11:45 am
runner540 wrote:
Sun Feb 11, 2018 8:18 am
scfr wrote:
Sat Feb 10, 2018 10:11 pm
Where are you getting 2.6% as the property tax rate? I live in Texas and my overall property tax rate is 1.6%. (And a quick Google search says that the average in the state is 1.9%.) Six different entities levy a tax where I live. Five of those six entities offer exemptions, so I pay tax to those entities on less than the full value of my property. I applied for the Homestead Exemption the same day I closed on my house.
All the Dallas properties I've seen have 2.7% rates (tax/assessed value).

Is it possible that you haven’t looked at all the properties?

According to this website, property taxes in Flower Mound and Highland Park are only 2.08%. In University Park, only 2.11%. In Westlake the property tax rate is 2.13%. These are four of the most desirable parts of the Dallas Fort Worth metro area.

Here’s some other low tax rate suburbs:

Lewisville - 2.08%
Grapevine - 2.29%
Plano - 2.18%
Rockwall - 2.21%

I have cherry-picked the lowest suburbs. But some of these are large suburbs, and some are close to many thousands of jobs.


https://www.davedowns.com/dallas-property-tax.php
Yes, I'm aware that each municipality has its own rate. My point was that 2.6% is not an insane assumption: it's actually quite close to actual for one of the largest cities. I was referring to the city of Dallas, which have a 2.7% rate. For everyone's reference, here's a good list:
https://www.davedowns.com/dallas-property-tax.php

Freefun
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Joined: Sun Jan 14, 2018 3:55 pm

Re: Why would people buy condos/SFH in Texas?

Post by Freefun » Sun Feb 11, 2018 2:12 pm

I think it could clearly be worth it for folks with families or other reasons to have a home. For me, I may need to make some changes. I'm single and have SFH near downtown. I bought too much house because the realtors suggested I get something easier for resell... otherwise I would've picked up a 1 or 2 bedroom place. While I can afford it there's a clear loss of opportunity costs especially considering they're building like crazy here and I can't imagine values appreciating (and if it does them taxes only go up).

As I'm going to retire soon I may look into renting my place out and experimenting with other things- either renting a smaller place or look at locations where I can get a home for less $ (purchase + taxes + maintenance etc.). As I come from the east coast (NY and then Miami) by comparison Houston overall is quite low cost so I'd have to admit I'm saving some money in other areas.

In summary I think ones choice of SFH or not is as much about quality of life as it is about just the money aspect.

North Texas Cajun
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Joined: Sun Jul 02, 2017 8:56 am

Re: Why would people buy condos/SFH in Texas?

Post by North Texas Cajun » Sun Feb 11, 2018 2:18 pm

runner540 wrote:
Sun Feb 11, 2018 1:50 pm
Yes, I'm aware that each municipality has its own rate. My point was that 2.6% is not an insane assumption: it's actually quite close to actual for one of the largest cities. I was referring to the city of Dallas, which have a 2.7% rate. For everyone's reference, here's a good list:
https://www.davedowns.com/dallas-property-tax.php
OK. Perhaps you only meant to write about the city Dallas. But the OP asked why would anyone buy a condo or SFH in Texas. And the comment you responded to - by SCFR - also specified Texas, not Dallas.

I was only meaning to support scfr’s comment that 2.7% is not an accurate rate to use for Texas.

What is often unclear when using the word “Dallas” is whether one means Dallas the city or Dallas the county or Dallas the metropolitan area. The same confusion arises when using the words “Los Angeles”, which also may refer to a city, a county, and a metro area.

Lonestarz
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Re: Why would people buy condos/SFH in Texas?

Post by Lonestarz » Sun Feb 11, 2018 2:30 pm

I work downtown. Downtown proper is absolutely dead after about 6. Sure there are some nice restaurants and various happy hours but if you compare actual downtown to anywhere else between downtown and west beltway 8 you will see sparce it is. After about 7 pm, during weeknights 60% of the people I see out are homeless.

What you find are people who bought several years ago and will rent out for tax/fees plus a markup over their mortgage. You may be able to rent out a house for similar price to what it costs now to buy (still more than the owner paid) but if you plan on renting for another 5 years... you might be able to rent for similar to current purchase price but likely much more than the cost of you had purchased.

In 2 houses in Houston we experienced 34% and 22% appreciation in 7 and 5 years respectively. I don’t expect such huge appreciation unless you want to buy in gentrification neighborhoods but if we are talking about cost of rent vs own you can’t just look at current prices. Even rent vs own calculators have a projected rent/property value assumption.

Also the comment was specifically about Houston. Houston and Dallas probably have similar property tax rates and upper 2% is legit if you wantto live in a city. Texas is mostly rural so state wide averages mean nothing.

North Texas Cajun
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Re: Why would people buy condos/SFH in Texas?

Post by North Texas Cajun » Sun Feb 11, 2018 3:31 pm

Lonestarz wrote:
Sun Feb 11, 2018 2:30 pm
I work downtown. Downtown proper is absolutely dead after about 6. Sure there are some nice restaurants and various happy hours but if you compare actual downtown to anywhere else between downtown and west beltway 8 you will see sparce it is. After about 7 pm, during weeknights 60% of the people I see out are homeless.

What you find are people who bought several years ago and will rent out for tax/fees plus a markup over their mortgage. You may be able to rent out a house for similar price to what it costs now to buy (still more than the owner paid) but if you plan on renting for another 5 years... you might be able to rent for similar to current purchase price but likely much more than the cost of you had purchased.

In 2 houses in Houston we experienced 34% and 22% appreciation in 7 and 5 years respectively. I don’t expect such huge appreciation unless you want to buy in gentrification neighborhoods but if we are talking about cost of rent vs own you can’t just look at current prices. Even rent vs own calculators have a projected rent/property value assumption.

Also the comment was specifically about Houston. Houston and Dallas probably have similar property tax rates and upper 2% is legit if you wantto live in a city. Texas is mostly rural so state wide averages mean nothing.
Actually, Lonestarz, the OP said “Texas” and “large Texas cities”. He used Houston as an example, but it was clear to me he was not referring to just Houston.

The property tax rates vary significantly across the Dallas Fort Worth metro area. Those rates are closer to 2% rather than 3% for a number of suburbs close to where jobs are being created. And some of these lower tax suburbs are large, such as Lewisville-Flower Mound-Highland Village with 200,000 population, and Plano-Allen with 400,000 population. These are not by any stretch of the imagination considered rural areas.

One of the reasons why the big cities of Dallas and Fort Worth are losing big employers to the suburbs has to be the lower property tax rates for employees. This started decades ago when companies such as EDS, Dr Pepper, Frito Lay, JC Penney, and others chose the suburbs. Exxon Mobil and Kimberly Clark are not in low tax suburbs, but their employees can live in such nearby ones. The growth of suburban power continues today as Toyota North America and the Amazon fullfillment center rejected the bigger cities.

Property taxes matter, and large metro areas like Dallas are anything but uniform in that respect.

need403bhelp
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Re: Why would people buy condos/SFH in Texas?

Post by need403bhelp » Sun Feb 11, 2018 4:53 pm

runner540 wrote:
Sun Feb 11, 2018 8:20 am
need403bhelp wrote:
Sat Feb 10, 2018 8:08 pm
FYI, as a Houstonian, med center and downtown are two completely separate areas.

Also I own in med center area (condo), PITI is $1000/month or so (a little less) with $200/month HOA. Someone I know who rents in same complex pays about same total amount. I did buy in 2003 though.
What would the PITI be for someone buying now?
I honestly don’t know as I haven’t looked.

Interestingly, I believe if I bought in 1998 my PITI would have been much less. Properties I considered at the time went up 2.5x in price over that five year period.

slbnoob
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Re: Why would people buy condos/SFH in Texas?

Post by slbnoob » Sun Feb 11, 2018 11:56 pm

I can think of one reason why people would buy in the Houston burbs: lot of inventory and prices are lower than they've been in a few years. I know because I'm trying to rent/sell my house in Katy since I moved out for a new job. So if you must buy one, this is better time to buy than at least summer 2014 I would think.

hookemhorns
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Re: Why would people buy condos/SFH in Texas?

Post by hookemhorns » Mon Feb 12, 2018 1:01 am

I live in Dallas and my effective average property tax rate is ~2.5% after the homestead exemption. There are many areas that are higher. Quoting the rate for Highland Park or UV is laughable since those are very wealthy areas with starting SFH prices of $1mn with many homes in the $2-3mn range - well above the average for Dallas. The other factor to consider is that assessed home values routinely increase 5-10% per year. People love to harp on CA's income taxes, but Texas effectively has a backdoor version of it via property tax.

North Texas Cajun
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Re: Why would people buy condos/SFH in Texas?

Post by North Texas Cajun » Mon Feb 12, 2018 9:43 am

hookemhorns wrote:
Mon Feb 12, 2018 1:01 am
I live in Dallas and my effective average property tax rate is ~2.5% after the homestead exemption. There are many areas that are higher. Quoting the rate for Highland Park or UV is laughable since those are very wealthy areas with starting SFH prices of $1mn with many homes in the $2-3mn range - well above the average for Dallas. The other factor to consider is that assessed home values routinely increase 5-10% per year. People love to harp on CA's income taxes, but Texas effectively has a backdoor version of it via property tax.
Quoting the property tax rates for Plano, Lewisville, Flower Mound, and Grapevine is not laughable. All of these suburbs have property tax rates well below the 2.7% quoted by the OP. These suburbs may be far from the Dallas jobs in the center city. But they are not an outrageous commute to the hundreds of thousands of jobs in Las Colinas, LBJ, far north Dallas, and Legacy business districts. My daily commute from Flower Mound to the Stemmons Fwy offices was rarely more than 30 minutes.

Are the starting prices for homes in University Park really $1mm? Zillow shows a few - mainly condos but a couple of SFH’s - below $600,000.

gostars
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Re: Why would people buy condos/SFH in Texas?

Post by gostars » Tue Feb 13, 2018 12:25 am

A quick glance through University Park shows everything under $800k is either attached (duplex/triplex/townhouse) or wrecked. Anything detached starts around $900k, and most of those get the description of "cottage" which I think is code for tiny and no insulation. $1mm seems pretty accurate as a starting point for something you'd actually want to live in.

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