So after living in an apartment for a number of months, we set out to find a house. We had been looking the entire time we have been in the apartment and I would say that we focussed most of our energy on looking at houses like the one we previously put an offer. Something like 3000 square ft, 4 bedrooms, three baths, large yard, etc. Houses like that (nice houses anyway) are quite expensive. And at that price point, we had to really look at the cost savings of renting. Due to house price appreciation over the last few years, a lot of housing in the area we want has become unaffordable. Or at least, we would have very little wiggle-room after making our mortgage. Not desirable. Miki's desire for a house to own had been greater than mine. I am definitely blinded a bit by all of the economic news. Housing prices seem to have nowhere to go but down for a long time. Gas prices have become very expensive and that also translates into increased home heating and cooling expenses. Living in a big home is becoming very expensive. And during the time we have been in the apartment, I think Miki and I both wised up to a trend a bit before it becomes mainstream. We both realized we had become a bit brainwashed into the American idea that you must always "move up". Meaning you have to get a bigger house, take on more debt, get nicer stuff. Well, in our case where we both work with fairly predictable income levels going forward, this probably means we are priced out of big houses in the best neighborhoods and forced to move farther away to get "the house".
But Miki and I realized a few things ...
- After being in the apartment that is all of 1,200 square feet, we really do not need excess rooms. It is wasteful and causes you to be less responsible for keeping track of what you have. In our old house, we had two or three areas of the house that were barely used. Even as the kids get older, I think they would be barely used.
- We LOVED Caraway Elementary. And this school would be considered pretty close-in ... not really the 'burbs like Round Rock or Georgetown or Buda. Even though we were not a big fan of the houses at first, they grew on us over time.
- Location is so important. We want to be close to our jobs if possible. It will afford us so much more time with the kids and savings in terms of gas prices and car mileage.
- Rent vs. buy. I fall on the rent side. Miki on the buy. I think in much of the country, renting is much more affordable and even for us, it would have been a better move financially, but I think we made an exceptionally wise (and this is a bit unusual for us as we have made unwise decisions as well) decision. But the place we bought makes so much sense.
We bought a small place on Tanbark. It is not the house we thought we would have bought when we started looking, but here is a list of reasons why it makes so much sense
- We needed a house. Apartment-living has been great but is not a long-term solution for us. We need a yard for the dogs, a 2-car garage, etc.
- Rental houses in the neighborhood we want are very few. We found one that would have been ok and it cost about $1595/month (with some furnishings). So that was our benchmark in terms of price. But even if we had rented it, the interior is not new and we would have wanted something more.
- The house was a bit on the cheap as far as current pricing and the location is great. 2.5 minutes drive to the kids school. Less than a mile from my office when our company moves (hopefully later this year) and only 7.5 miles for Miki. The great thing is that I have always had the longer commute and I usually take the kids, so this really frees me up. When I move offices, I will have about an additional 6 hours a week where I won't be sitting in my car on the roads.
- Miki's new job. Miki moved from Dell to MSDF which is a much better job with more stability than Dell so for the first time we felt like Austin will be the place where our kids spend their entire school years. Up until now, we had always toyed with the idea of moving.
- We can remodel to make the house what we want. With a rental this is not an option and we really wanted to do this.
- The place we got is shaded, only 2,236 sq ft and has a small yard. No wasted space, energy efficient. MUCH less expensive than our last house.
- House is very well built and a one-story plan which we loved.
- Interest Rates for mortgages are low and low-down payment options are still available. These, I am sure, will be much harder to get. Inflation is really skyrocketing right now and rates are bound to go up. So the house becomes a good hedge against inflation with little down and a low rate. The price of the house is only about 1 times our annual income so we are in incredibly safe territory even if one of us stopped working. Our mortgage payment ended up (at 6%) being $1587/month which is what the rent of the other house was and if you consider renters insurance and homeowners insurance to basically amounting to about $40/month more for homeowners ... the main difference you are looking at each month is property taxes and maintenance. Now, those costs are significant. About $550/month in taxes currently and whatever maintenance ends up being ... but then we are also making payments against principal and there is some federal tax savings. And, when we finally move into the house, we can remove some expenses of ours such as the two storage units we currently rent ($270/month ... inexplicable). In a few years, we end up ahead significantly even with minimal appreciation in value.
- Being close-in, I think the trend will be to move closer in and that should protect us against price depreciation at least somewhat.
- Our last house could have been considered the nicest house in a so-so neighborhood. Our new house is probably middle of the road in a neighborhood that is fantastic with lots of future potential.
So when all factors were considered, even in the face of potentially continuing falling house prices country-wide, this house made a lot of sense. The remodel starts this week. Should be interesting.
