Affording a House
Dec. 25th, 2005 08:57 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
livingdebI once read somewhere that it's no more difficult to buy a house today than it was in the 'fifties, but it seems like it because we're expecting more from a house.
As a person who lives in a house built in the 'fifties, I have a relatively good perspective on this issue.
My house is much smaller, though more centrally located than the newer houses. It's cheaper to air condition and maintain, but in return I don't get the walk-in closet, separate laundry room (just a washer connection in the kitchen and laundry lines out back), or the 1.5-2 car garage (depending how big your cars are). The smaller square footage is really only a problem if you have a lot of space-consuming hobbies, such as:
* ballroom and other dancing
* carpentry/woodworking
* photography with tripods and lightboxes
* sewing
* quilting
* computer repair
* collecting (books, cars, collectibles)
* cooking
* jewelry making (casting)
* house guests
* space-intensive games
Yes, each one of these hobbies belongs to Robin or me or both.
Other friends also like to have space for:
* children
* large parties
* swimming
* pet ownership
When I bought my house, I could afford it only with a roommate, although I could go without a roommate if necessary for reasonable stretches by not adding money to my savings (besides retirement) and by putting off charitable contributions. Now that I've had the place for almost ten years with a fixed mortgage, and now that I've gotten a couple of big raises, I could afford it alone if necessary, and it will be paid off in just over seven more years, which will make it even more affordable.
Still, I really, really am wanting more space.
I'm writing about this topic because two people I know have recently brought up the subject of affording a house and how people do it.
Here's how I did it.
First I went to college. Then I got relatively low-paying jobs anyway. I paid off my student loans, then saved up for and got a car, then saved up for a house. When I had an extremely minimal down payment saved ($5,000 in 1996 in Austin) I started looking around to see what was available. I saw an ad claiming that you could have a house for the same cost as rent. I was paying $395/month at the time for a good-sized one-bedroom place. So I knew the real estate agent couldn't do it, but I called her anyway, just in case I was wrong. (And if I wasn't, she might re-word her ad.) But really, there aren't any one-bedroom houses (or not many anyway), so it's not a fair comparison.
I found out that you can almost get a condo for that amount, plus condo fees. I looked into it. The condo fees were too out of control for my tastes (at one place they went up $200/month for six months because they got sued), so I said nevermind.
Then the real estate agent asked if I wanted to see houses in my price range. I said, "No!" Then I said, "There are houses in my price range?" I was a approved for a loan of $60,000 (plus $3,500 in closing costs) and the median price in Austin at the time was $100,000.
I had four requirements: 1) affordable to me, 2) convenient to my workplace (a college campus near downtown), 3) solid foundation, and 4) big living room. Most houses she showed me were too far away or in too much disrepair. One was only 700 square feet, too small. Unless it's laid out well. Finally I agreed to look at that one. It had two tiny bedrooms, a tiny bathroom, a tiny kitchen, without room for a kitchen table, and which could not even be remodeled to have a dishwasher, a large living room with skylight, and a one-car garage. It had beautiful wooden floors, and the windows in the living room and kitchen helped it feel spacious. It was in good shape and had character. A campus shuttle route went right past it. And it was $60,000.
I decided to make an offer. But first she had two more properties to show me. One was too far away. The other was bigger and better than the 700-square-foot one and offered for $64,000. I thought that if I used my extra $1,500, I could afford to pay $61,500 for a house, so I offered to pay that, and the stove with the for-sale sign on it had to stay with the house.
My offer was accepted. Then my bank decided to give me a loan for the whole $61,500, so I got to have a little extra cash after all.
Always make sure you have extra cash! I used mine (the $1,500 plus more I saved up) for a refrigerator, curtains, a new roof, and weatherizing the house within the first months.
I was single at the time and attracted mainly to computer geeks. I figured if I eventually married a computer geek, he would have more money than me and want to live in a nicer place. I decided that would be fine with me. I could keep my place to rent out to college students and move into a nicer place with him. Meanwhile, I would live in this perfectly fine place with roommates and could do so indefinitely if I never got married.
This plan totally worked except for the part where I marry someone richer than me. (Although even after my large raises, I'm still making less than virtually any other college-educated person (including my boyfriend), so it could still happen.) I got pretty good roommates and so had no problems both being happy and being able to afford the place.
In the 'fifties, I guess I would have been more likely to be married younger, raising a couple of kids while hubby worked too hard. The kids would be in the other bedroom. Maybe with bunk beds. If they were of different genders, then we might feel we needed to turn the study into a separate bedroom at some point. We might have a doggy in the back yard. I'd sew the kids' clothes in the living room, but have to put everything away each night.
**
And now it's time for me to finally learn to do an LJ-cut. I almost deleted all of the following, but it might be interesting to someone.
Let's do a little comparison between my house and modern houses. By modern houses, I mean houses built in the last 20 years or so in my part of the country. Specifically, I'll refer to two houses of relatives and three houses of friends.
Square footage - Mine: almost 1000 square feet. Theirs: approximately double.
Bedrooms - Mine: two small bedrooms, one with a small closet and one with a medium-sized closet, plus a study with a small closet which could be converted to a bedroom. Theirs: one insanely large bedroom with one or two walk-in closets and two fairly small bedrooms with medium-sized closets. All have wall-to-wall carpeting and ceiling fans. Okay, that's because I added ceiling fans to mine.
Living room - Mine: one regular-sized living room. Theirs: one or two regular-sized or large living rooms or lofts (one of the five has only one large living room).
Dining areas - Mine: one tiled breakfast room attached to the kitchen, separated from the living room by a bar/buffet area countertop thingy. Theirs: One carpeted formal dining room attached to the living room and one tiled breakfast room attached to the kitchen. Two also have bar areas with their own sinks and glass shelves. Two of the kitchens have islands.
Bathroom - Mine: one full bathroom with pedestal sink, medicine cabinet and good sized linen closet. Theirs: Two or 2.5 bathrooms, one in the master bath, and one or 1.5 accessible to all. The sinks (two in the master bath) have countertops around them and storage under them, but they don't all have medicine cabinets and linen closets.
Laundry areas - Mine: washer hook-up in the kitchen plus laundry lines outside. Theirs: Small laundry area (generally no room to put up an ironing board), generally between the kitchen and garage. (In between the fifties and now, the laundry areas were in the garage.)
Car areas - Mine: one-car driveway. Theirs: a two-car driveway with a two-car garage, though the two cars generally have to be small if they are both going to fit.
Yard - Mine: medium-sized front yard and large back yard with three-foot chain link fence, a large concrete patio, and a small concrete fish pool thing. Theirs: medium-sized front yard and medium-sized back yard with six-foot privacy fence. One has a pool, hot tub and deck, four have small concrete porches. All six of us have grills in the back yard (I think).
Location - Mine: About five or six miles from downtown. On one campus shuttle route, one good bus route, and a couple of nearly useless bus routes. Good access to a major highway, except for all the ramps they've destroyed. Theirs: On an edge of town or in a suburb or in a far away suburb. One is on a decent bus route, all have good access to a major highway. One of the areas is a place where they are actually adding access ramps to highways.
Payments - Mine: $700/month plus repairs. Theirs: $1100/month for the one rental. The selling price of the others I'm not sure about, but it's about double what mine was.
As a person who lives in a house built in the 'fifties, I have a relatively good perspective on this issue.
My house is much smaller, though more centrally located than the newer houses. It's cheaper to air condition and maintain, but in return I don't get the walk-in closet, separate laundry room (just a washer connection in the kitchen and laundry lines out back), or the 1.5-2 car garage (depending how big your cars are). The smaller square footage is really only a problem if you have a lot of space-consuming hobbies, such as:
* ballroom and other dancing
* carpentry/woodworking
* photography with tripods and lightboxes
* sewing
* quilting
* computer repair
* collecting (books, cars, collectibles)
* cooking
* jewelry making (casting)
* house guests
* space-intensive games
Yes, each one of these hobbies belongs to Robin or me or both.
Other friends also like to have space for:
* children
* large parties
* swimming
* pet ownership
When I bought my house, I could afford it only with a roommate, although I could go without a roommate if necessary for reasonable stretches by not adding money to my savings (besides retirement) and by putting off charitable contributions. Now that I've had the place for almost ten years with a fixed mortgage, and now that I've gotten a couple of big raises, I could afford it alone if necessary, and it will be paid off in just over seven more years, which will make it even more affordable.
Still, I really, really am wanting more space.
I'm writing about this topic because two people I know have recently brought up the subject of affording a house and how people do it.
Here's how I did it.
First I went to college. Then I got relatively low-paying jobs anyway. I paid off my student loans, then saved up for and got a car, then saved up for a house. When I had an extremely minimal down payment saved ($5,000 in 1996 in Austin) I started looking around to see what was available. I saw an ad claiming that you could have a house for the same cost as rent. I was paying $395/month at the time for a good-sized one-bedroom place. So I knew the real estate agent couldn't do it, but I called her anyway, just in case I was wrong. (And if I wasn't, she might re-word her ad.) But really, there aren't any one-bedroom houses (or not many anyway), so it's not a fair comparison.
I found out that you can almost get a condo for that amount, plus condo fees. I looked into it. The condo fees were too out of control for my tastes (at one place they went up $200/month for six months because they got sued), so I said nevermind.
Then the real estate agent asked if I wanted to see houses in my price range. I said, "No!" Then I said, "There are houses in my price range?" I was a approved for a loan of $60,000 (plus $3,500 in closing costs) and the median price in Austin at the time was $100,000.
I had four requirements: 1) affordable to me, 2) convenient to my workplace (a college campus near downtown), 3) solid foundation, and 4) big living room. Most houses she showed me were too far away or in too much disrepair. One was only 700 square feet, too small. Unless it's laid out well. Finally I agreed to look at that one. It had two tiny bedrooms, a tiny bathroom, a tiny kitchen, without room for a kitchen table, and which could not even be remodeled to have a dishwasher, a large living room with skylight, and a one-car garage. It had beautiful wooden floors, and the windows in the living room and kitchen helped it feel spacious. It was in good shape and had character. A campus shuttle route went right past it. And it was $60,000.
I decided to make an offer. But first she had two more properties to show me. One was too far away. The other was bigger and better than the 700-square-foot one and offered for $64,000. I thought that if I used my extra $1,500, I could afford to pay $61,500 for a house, so I offered to pay that, and the stove with the for-sale sign on it had to stay with the house.
My offer was accepted. Then my bank decided to give me a loan for the whole $61,500, so I got to have a little extra cash after all.
Always make sure you have extra cash! I used mine (the $1,500 plus more I saved up) for a refrigerator, curtains, a new roof, and weatherizing the house within the first months.
I was single at the time and attracted mainly to computer geeks. I figured if I eventually married a computer geek, he would have more money than me and want to live in a nicer place. I decided that would be fine with me. I could keep my place to rent out to college students and move into a nicer place with him. Meanwhile, I would live in this perfectly fine place with roommates and could do so indefinitely if I never got married.
This plan totally worked except for the part where I marry someone richer than me. (Although even after my large raises, I'm still making less than virtually any other college-educated person (including my boyfriend), so it could still happen.) I got pretty good roommates and so had no problems both being happy and being able to afford the place.
In the 'fifties, I guess I would have been more likely to be married younger, raising a couple of kids while hubby worked too hard. The kids would be in the other bedroom. Maybe with bunk beds. If they were of different genders, then we might feel we needed to turn the study into a separate bedroom at some point. We might have a doggy in the back yard. I'd sew the kids' clothes in the living room, but have to put everything away each night.
**
And now it's time for me to finally learn to do an LJ-cut. I almost deleted all of the following, but it might be interesting to someone.
Let's do a little comparison between my house and modern houses. By modern houses, I mean houses built in the last 20 years or so in my part of the country. Specifically, I'll refer to two houses of relatives and three houses of friends.
Square footage - Mine: almost 1000 square feet. Theirs: approximately double.
Bedrooms - Mine: two small bedrooms, one with a small closet and one with a medium-sized closet, plus a study with a small closet which could be converted to a bedroom. Theirs: one insanely large bedroom with one or two walk-in closets and two fairly small bedrooms with medium-sized closets. All have wall-to-wall carpeting and ceiling fans. Okay, that's because I added ceiling fans to mine.
Living room - Mine: one regular-sized living room. Theirs: one or two regular-sized or large living rooms or lofts (one of the five has only one large living room).
Dining areas - Mine: one tiled breakfast room attached to the kitchen, separated from the living room by a bar/buffet area countertop thingy. Theirs: One carpeted formal dining room attached to the living room and one tiled breakfast room attached to the kitchen. Two also have bar areas with their own sinks and glass shelves. Two of the kitchens have islands.
Bathroom - Mine: one full bathroom with pedestal sink, medicine cabinet and good sized linen closet. Theirs: Two or 2.5 bathrooms, one in the master bath, and one or 1.5 accessible to all. The sinks (two in the master bath) have countertops around them and storage under them, but they don't all have medicine cabinets and linen closets.
Laundry areas - Mine: washer hook-up in the kitchen plus laundry lines outside. Theirs: Small laundry area (generally no room to put up an ironing board), generally between the kitchen and garage. (In between the fifties and now, the laundry areas were in the garage.)
Car areas - Mine: one-car driveway. Theirs: a two-car driveway with a two-car garage, though the two cars generally have to be small if they are both going to fit.
Yard - Mine: medium-sized front yard and large back yard with three-foot chain link fence, a large concrete patio, and a small concrete fish pool thing. Theirs: medium-sized front yard and medium-sized back yard with six-foot privacy fence. One has a pool, hot tub and deck, four have small concrete porches. All six of us have grills in the back yard (I think).
Location - Mine: About five or six miles from downtown. On one campus shuttle route, one good bus route, and a couple of nearly useless bus routes. Good access to a major highway, except for all the ramps they've destroyed. Theirs: On an edge of town or in a suburb or in a far away suburb. One is on a decent bus route, all have good access to a major highway. One of the areas is a place where they are actually adding access ramps to highways.
Payments - Mine: $700/month plus repairs. Theirs: $1100/month for the one rental. The selling price of the others I'm not sure about, but it's about double what mine was.
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no subject
on 2005-12-25 09:33 pm (UTC)no subject
on 2005-12-26 05:48 am (UTC)I do know that the utilities for my house are about double those for my 670-square-foot apartment, partly because I think my neighbors helped heat and air condition my place and partly because they charge for more things in a house like garbage pick-up that must be included in apartment rent. Also my water was paid for at my apartment.
no subject
on 2005-12-26 09:54 am (UTC)It makes me want to move. In my area, your house would go for about $350,000 (depending on the town and the neighborhood). And depending on the town, the taxes would be quite a bit, as would all the extras like trash, water, etc. Add to that the necessity for heat for at least six months per year (usually 7) and the fact that traffic is miserable and parking is prohibitively expensive in the city, it makes me wonder why I'd even consider buying around here.
I've read that while we do have higher salaries around here, the house cost to salary ratio is better almost everywhere else.
Anyway, thanks for sharing!
no subject
on 2005-12-26 11:02 am (UTC)I've started looing in places that I can afford that aren't filled with gun violence or prostitutes on the corners, and it seems that such areas do exist, only with bad school systems. As I am no longer in school, and have no plans on having kids, I don't care about school systems. I think any realtor will be thrilled to hear, "I would like to see houses in Town X", since there are many, many listings for really nice-looking places there, and they don't seem to be selling at all. (I'll have to research the gun thing and the prostitute thing, though I could probably make friends with the prostitutes, bring them hot chocolate on cold nights and we could gossip about the neighbors, but I digress....)
no subject
on 2005-12-26 11:42 pm (UTC)But in my current neighborhood, it would cost about $120,000 or a little more. I think the median price now is $200,000.
For a comparison, the starting salary for Austin teachers these days is $35,000 per year.
no subject
on 2005-12-26 11:53 pm (UTC)I might be in one of those neighborhoods with no guns or prostitutes but bad schools. Now. (Except that we're in Texas, so there are plenty of guns, but they aren't being fired.) I used to hear gunshots once or twice a year, though. I wondered if there were such a thing as lead siding!
I've heard you can get police crime statistics, but they're summarized based on zip code. I was told that if the zip code has a mall in it, the numbers will look worse than if it doesn't.
Another good thing to check out is geologic maps. I'm right on the edge of a 100-year flood plain, which is not ideal. Also, you don't want to reward people who build on fault lines. I'm not sure what geological things are relevant in the Boston area.
no subject
on 2005-12-27 10:16 am (UTC)That's a really sucky ratio, if you ask me.
no subject
on 2005-12-27 08:21 pm (UTC)According to your CNN Money site, the average for Austin-Round Rock is only $167,100. Round Rock is a small town that has turned into a large commuter suburb. It also has a shopping-opolis and a large Dell facility (and probably some other things I don't know about). I know two sets of people living up there.
Yikes! My usual source (http://recenter.tamu.edu/data/hs/trends4.html) gives the same figure. So I exaggerated median housing prices. Bad Debbie!
That makes y'all's ratio even suckier, by comparison. (I could still afford to buy my house now even though I have just this year passed a first-year teacher's salary, but it sure looks tougher in Boston. p_j_cleary seems to be finding some interesting neighborhoods, though!)
The matching teacher figures for bachelor's degree through master's here are $35,080 - $35,900 (http://www.austinisd.org/inside/hr/salary.phtml), except that unlike in Boston, they don't pay more for a Ph.D. than a master's. They pay more for teaching special ed or bilingual education than for getting extra degrees.