House shopping

[zahc]

Ever since I got a Real Job I've been semi-shopping for houses, mostly because I don't want to pass a good market by. But then again I want to me completely sure the market has finished bottoming before I buy a house. I only plan to live there 5 years, 10 at the most.

I'm looking around the Richardson, TX area, to avoid a long commute. Many of my collegues live up north 30min or so, to get newer, bigger houses for the same money, and sit in rush hour traffic for an hour+ each day.

In one of the close-by suburban areas, 150k buys you a house built in the 60s or 70s, on a small lot. Anything less, you are looking at very small, bad area, or structural problems.

Here in TX, they build bizarrely compared to what I'm used to in the midwest. Houses are commonly built on a slab. Nearly all the ones built on a slab have a criss-cross crack on at least one wall from foundation settling. Some of them worse than others, but never are they uncracked. I don't know how big of a deal this is. Other houses have some kind of pier-and-beam construction commonly used in the midwest for corncribs and chicken houses. You can literallly look in the crawl space vents from outside and see the subfloor underneath the house, all the way to the other side. The side walls on these houses seem to have fared better and I like how you can run plumbing and wire underneath.

Anyway, the prospect of buying a 1200sq ftish, older home on a small lot for $150k is something that's only stomachable if the market isn't going to put me upside down right after I buy it, or if a cracked wall/settling foundation isn't a real depreciation-increaser. I make 75k a year gross (wife works, but not counting on it) and have 15k in the bank, no car loans. Buy, wait, or save more?

[Brad Johnson]

You gotta pay to live somewhere.  Might as well be building some equity while you're at it.

Brad

[zahc]

That's the thing I've been thinking about. I pay $750/mo rent including random bills, but not electric. And that's money right down the drain. BUT, I also have no responsibility.
If I had a house, I would be on the hook for taxes, interest, and insurance to mitigate my new responsibility, all of which adds to hundeds of dollars per month which is also money right down the drain, in comparison. After I got done paying all that, the rest would go into equity, sure, but would it? Only if the market isn't going to slip further. It almost seems like continuing to rent and plowing what I WOULD be putting into a house, into a 401k, makes almost as much sense, minus the fact that I wouldn't have an nice house and a garage in the meantime. It kind of boils down to how good of an investment housing in my area is right now.

[BMacklem]

Although I can't speak from personal experiance....my sister recently bought a house via an auction for $60k.
It looked like a great deal on the surface, but due to it's being an auction it was "as is" and before she could move in she had to do some major stuff like drill a new well. You see the well that was on the property was originally inside the basement, and the pump went out, but due to local ordinances, it was grandfathered in (as long as it kept working that is) but the moment she needed any work done, she had to drill a new well to the tune of $20K outside, along with replacing a cracked window pane in the garage, painting the garage, and a host of smaller items inside that ran up a sizable chunk of change.

Basically what I'm saying is you may never really know what you are buying, unless you really know what you're looking at, or pay someone a LOT of money to stick their nose into the houses' every nook and cranny.

If I ever manage to figure out how to pay for it, I plan on building a house so I know EXACTLY what I am getting into, also so I know where all the cracks might come from so I'm not surprised about some little corner of a roof joint that managed to leak down behind a section of dry wall until there's a ton of rot and problems that's actually been there for years.

[Headless Thompson Gunner]

Pretty tough to beat $750 a month for housing costs.  

Once you factor in taxes, insurance, utilities, upkeep, and all of the other indefinable expenses that come with home ownership, even a relatively inexpensive $150k house is liable to cost you a lot more than continuing to rent.  This is especially true if you plan to leave in a few years.  If nothing else, the transaction costs alone are likely to eat up 8% of the value of any home you buy.

That said, I don't know what the housing market is like down in TX, but you might be able to come out ahead if you can snatch up a good property at a distressed sale.  Risky, though.

[roo_ster]

zahc:

I live in Richardson and can give you some hints about owning a house in Richardson.  PM me with contact information if you want.

[Azrael256]

I live in Plano.  My mother lives n Richardson.  I grew up in Dallas.

ALL houses here experiene foundation settling.  Pier-and-beam houses are easier and cheaper to repair when they settle, but they also tend to experiene more frequent cosmetic cracking in the walls.  Slabs are, overall, more stable, but are more costly to repair when settlement causes problems.

The old rule of thumb about looking for soil pulling away from the slab is nonsense.  Topsoil fill behaves differently from the clay under the slab.  You need a plumber's probe to do even a cursory examination.  Coring and measurement with a compu-level or a bubble tester is the only way to really know.

All new foundation work is guaranteed for life by any halfway reputable repair outfiit, and that includes shim adjustment.  It's actually handled by a state-administered insurance fund.

Ask for an engineering report on any house with a repair.  If the owner has lost it, the repair company will have it.  The state considers this very serious business.

And soaker hoses.  Buy them and ring the slab.  Better yet, add a sprinkler zone to do it for you if you can.  It's not roket sience, just a lot of digging.

[RaspberrySurprise]

I wish I could find houses for sale around here from the sixties or seventies, a good number of them around here are from the early 1900's

[charby]

Buy a duplex/fourplex and rent out the other units and try to live for free or on the cheap in one of the units.

-C

[HankB]

Here in TX, they build bizarrely compared to what I'm used to in the midwest.

Agreed - the standard of workmanship is pretty low, even on very expensive (> $1,000,000) homes. And I miss having a basement.  

Houses are commonly built on a slab. Nearly all the ones built on a slab have a criss-cross crack on at least one wall from foundation settling. Some of them worse than others, but never are they uncracked.

Lots of areas in Texas are prone to soil movement - there's a whole neighborhood down around San Antonio that's falling apart.   http://www.kwtx.com/home/headlines/82638727.html

I'm just west of Austin, and my home was built in '96. Other than a few hairline cracks in corners and such thanks to poor sheetrockers and cheap sheetrock compound, my walls are OK;  dig down past the "sandy loam" the builder put down for the lawn and you hit caliche. Dig down a few more inches and you hit solid limestone. Not much leeway to shift, short of a major earthquake.

BTW, the absolute BEST solution I've found for patching cracks in your plaster is some stuff called Krack-Kote. I found it when I was still living up in the Midwest, and used it with great satisfaction. It doesn't seem to be sold here in Central Texas, but I ordered some from the company ( http://www.tkocoatings.com/krack-kote.html ) and it works just as well now as it did years ago. It won't solve a shifting foundation, but several hairline cracks I patched are still gone several years later.

[Azrael256]

Newer houses around here are definitely shoddy, particularly in the rapidly built suburbs. 

I live in a 30 year old development.  One of the neighbors had a major plumbing problem, and the restoration company was astounded by the workmanship being up to par.  They don't see that much anymore.  After about 1990, whih covers most of the northern suburbs here, it's all duct tape and bubble gum.

One of my friends at work lives in a 5yr old development where half the residents are suing the builder.  They didn't monitor the concrete mixture, so they have foundations that are coming apart in fist-sized chunks.

[Monkeyleg]

I think every house in our area has a cracked concrete driveway (and thus probably cracks in the concrete foundation). That includes the home of our next door neighbor, who's a civil engineer and had his house custom-built. If he has large cracks in his drive, there must be something with the area, rather than poor construction.

From what I'm told, foundation repair isn't cheap, and it makes a mess of the interior of your home.

You should figure on a minimum of $5000 a year for repairs (furnace, roof, foundation, etc). You may not need it every year, but you'll be shelling out $5K, $10K or $20K sometime soon.

[MechAg94]

If you want to avoid some of the responsibility, you could look for a townhome where a lot of the structural and roof is covered by the management company.  The issue there is the cost is near what a house would cost and you pay an extra $200 a month maintenance fee.  If you don't want to mess with it, that might be worth it.

I have been in my current house for 4 years and had no serious issues, but you do need to find someone to inspect and check out the heater and A/C.  I just had to buy a new refrigerator also.  I also really don't expect my A/C to hold out more than a few more years.  You do end up with a lot of extra expenses with a house.  I just paid up my home insurance (my windstorm insurance is higher down here), and my property taxes are about 2 to 2.5% which is likely average to low in Texas. 

On the other hand, I have owned for 7 years now and my loan amount is over 30K less than my home value.  $750/month for rent ain't much, but I doubt it gives you a very big place.  My house is a smaller one in a better neighborhood.

[zahc]

$750/month for rent ain't much, but I doubt it gives you a very big place.

We have about 900sq ft I think, two bedrooms. The houses we've been looking at in the 150k range aren't terribly bigger, basically the same thing plus a garage, better kitchen, and small yard. I really like the neighborhood our apartment is in too; right across the road from older people in 250-400k houses puts us in a pretty peaceful neighborhood. All in all, I think it makes sense to stay here, but we are approved for 4.5% fixed mortgage...I just don't want to pass up a killer market and kick myself later.

[cassandra and sara's daddy]

for yoo youngins that don't realize how good 4.5 is  my first fha was in the late 70's and was 11%  have paid 14 on a second   i really like my new 4.5

[Headless Thompson Gunner]

It doesn't matter how discounted the price is.  If you don't need/want the product, it ain't a good bargain.

[cassandra and sara's daddy]

i've always needed a place to live  hada choose who would profit/invest that money spent towards it.  decided i wanted it to be me.  plus its the only investment i have thats gov subsidized

[roo_ster]

We have about 900sq ft I think, two bedrooms. The houses we've been looking at in the 150k range aren't terribly bigger, basically the same thing plus a garage, better kitchen, and small yard. I really like the neighborhood our apartment is in too; right across the road from older people in 250-400k houses puts us in a pretty peaceful neighborhood. All in all, I think it makes sense to stay here, but we are approved for 4.5% fixed mortgage...I just don't want to pass up a killer market and kick myself later.

4.5% fixed 30 or 15 year?  Is that 4.5 the APR?

[Brad Johnson]

but we are approved for 4.5% fixed mortgage...I just don't want to pass up a killer market and kick myself later.

Buydowns? Points?  Local lender? Internet lender?  Are you fully approved with an accompanying Good Faith Estimate or is it a pre-qualification based on punching some numbers into a web page? 

4.5 is a very good rate right now, but only if the admin fees are reasonable.  If you aren't comfortable reading the Good Faith Estimate, I would be glad to take a look at it for you.

Brad