COMMENT OF THE DAY: THE UPPER LIMITS OF INNER LOOP RENTS “The reason the inner loop is ‘soft’ is simple math. A tiny apartment is now something like $1,200 per month. Meanwhile, my mortgage on my inner-loop house is just over $1,300.” [me, commenting on Where Rents Have Dropped]
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So true. My patio home is just over 1500sqft and my mortgage is right at $1100/month. I do have to add taxes which apartment renters don’t have to include, but that makes it $1500/month.
I’d like to know where these houses/homes are that have sub-$1,500 mortgages, and what kind of down payment was required to get such a mortgage.
Because, quite frankly, I don’t think that they compare very favorably with the more expensive apartments.
Hey,
Mine is in Cottage Grove which is off of TC Jester at I-10 (north side of the freeway).
My house is a patio home that shares a driveway with 7 other homes. It’s gated and no homes share common walls. There are two other homes with my floor plan. Three of the homes are about 1900sqft and two are 2300sqft.
The final sale price (I got to chose upgrades and finishes) was about 180k. Initially I did an ARM at 6.25% for the full price. Now I refinanced for 30-year fixed at 4.5%. The house is now 4 years old.
There are plenty of homes in this are where if you actually put the recommended 20% down, you can easily have a low mortgage payment. Many homes in the area currently range from $190k to $275k with several in the $350-400k range. The higher priced ones have about 3500sqft with 4th floor rooftop decks.
I love the location because it isn’t far from my office on 290. Uptown, Downtown, Midtown, Montrose, Upper Kirby, and the Heights are very close. Memorial Park is right across the freeway. All the new eateries along Washington Avenue are just across the freeway.
That’s all from my little area of Houston.
As for comparing to the luxury apartments around. I have stainless steel, granite, marble, slate and hardwoods included.
I closed in Feb of 2005 which was during the height of all the real estate business but it was at the early stages of Cottage Grove changing. Since my closing of 2005, I would say at least 150 homes were added to this neighborhood. Maybe more. I think I got in before the neighborhood itself got hot. With that said, there are still plenty of homes in the $190k-275k range. With a good down payment (%15-20), you can easily get the sub $1500 mortgage payment. I got it with %100 finance and now a fixed rate.
Are you kidding me? A patio home in Cottage Grove and a high end apartment on Memorial Dr., in Upper Kirby or the Museum District are NOT comps; simply not in the same market in today’s reality. Buying a home in Cottage Grove is still speculative, sure it will likely be good someday but try selling one now for what you paid in under 180 days and your buyers better have that 20%. The reason they aren’t comps: people that live in high end apts in the loop want upgraded finishes, but don’t have the down payment or have the down payment and don’t want to buy in Cottage Grove! The luxury apartment market was soft two years ago when people such as yourself could buy in Cottage Grove w/o a down payment.
Back to the math: today’s reality is that a 250k sales price requires a 50k down payment and your cash out is $1,600 per month with a cost of $1,100. If you have the 50k and want to invest it in Cottage Grove, godspeed. My perspective is that most people either don’t have it or want a better “in the loop” location and see a better use for that 50k.
Yeah, but your $1300/month house likely doesn’t include all the amenities a Class A apartment does, like a massive pool, fitness center with high end equipment, theater, etc. Oh, and you have to pay your taxes and maintain your house, too.
There are arguments both ways, but simply comparing monthly payments is misleading at best.
I used to just off W. Dallas in Montrose in a 3-story Perry townhome. Mortgage+taxes+insurance was under $1300 a month, if you roll the tax benefit in there, it is a far better deal than a high end apartment is.
Ugh, Perry himself could pay me $1300 a month and I still wouldn’t live in one of his fundamentalist monsters.
Until the socialists/marxists are driven out of office by the voters possesing common sense as well as coginitive reasoning abilities, financing a home will be a very difficult proposition for most on-the-cusp buyers. There are emerging market neighborhoods like Cottage Grove (my wife and all her friends used to refer to it as Garbage Grove…. her husband 1.0 grew up there… I am husband last.oh), but you used to be able to say that about Rice Military for that matter, where I live now, and even though some of these marginal neighborhoods offer discounted price points, financing difficulties abounding in the current real world are propelling inner-loop buying in most cases above significantly above what kjb is describing. I’m usually very lock-in-step with much of his logic, but I differ here. Once financing difficulties are again driven by capitalism instead of socialism, real estate prices may still be depressed, but who knows. Timing will be key on that one, and the more impeccable one’s credicks beez, the moe bettah yo financin terms beez. I bought a new house in Rice Military within a few months of when kjb bought his, and have lived in the general area for more than 25 years, but right now is a very tough time to try and buy a house, unless you have impeccable credit, which is what we all aspire to have, but not all of us achieve or maintain. Needless to say, if you plan prudently, you can own your own casa for a very similar price instead of renting inside the loop, but you could’ve most likely said that for many years, especially when you’re willing to live in an “emerging neighborhood”. I wouldn’t have bought where I bought, if everything around it hadn’t been renovated already. That being said, I still have issues with a crazy bastard that lives nearby (in an old wood frame dilapidated house) with obvious mental issues when I walk my dogs by on their leashes. Mental illness exists in many forms, in many places.
Whoa up, CK. You’re all over the highway here, and I’m not following you. Are you saying these socialists are making real estate prices “significantly above what kjb is describing” ? Or that they are making prices “still depressed” ?
And is the socialists who are preventing people with lesser credit from getting loans, or is that the capitalists?
Lastly, how would a scarcity of financing propel prices upward?
Skipping from naming groups here, loose credit to either un-credit worthy individuals and companies is what got us into this mess.
I know the tighter credit market is making purchasing a house harder, but that’s a good thing.
The reality is that it is still pretty easy to get a mortgage if you have a credit score above 700. Even buyers with upper 600s can still get financing. The problem that exist now and in the recent past is that US government is the largest holder of mortgages. Which means when people default, the rest of us are paying. The large banks that have mortgages on the books are in securities (constantly called toxic assets in the news). The most of the rest are held at Fannie and Freddie. Good banks are actually happy to lend to low risk buyers right now since these mortgages actually help their books look better.
Lending institutions left and right are still lending and are still granting all the mortgage products they gave before, they just through out the silly federal rules that forced them to lend to high-risk people. Technically they are breaking federal law doing this, but they know now they won’t get prosecuted for this because of the recent housing collapse.
Fannie Mae has been buying mortgages since 1938, and was a privately held company between 1968 and last year, when the government nationalized it and Freddie Mac to prevent their collapse. Until their nationalization, the government didn’t really hold that many mortgages (except through Ginnie Mae).
Not that the government isn’t at fault for at least some of what is happening–the past two administrations pushed to promote home-ownership for poorer (and less credit-worthy people) through various means including tax breaks for builders and developers, the Fed kept interest rates too low after the 2001 recession, and regulation of the mortgage industry was shockingly lax.
But back to the subject at hand, comparing an inner loop house or condo with an inner loop apartment is tricky–first, all neighborhoods are not equal (obviously!). Second, even if you are in the same neighborhood and have the exact same amount of space and the same amenities, and pay exactly the same (even with the tax advantage figured in), it’s still not the same to rent and to own. When you own, you are gaining equity and end up with a very different emotional relationship with your home as when you rent. I’m not saying one is better than the other–I’m just saying it complicates any attempt to simply compare the cost of a mortgage with a the cost of rent.
RWB is approaching another valuable point on this.
Some people prefer renting anyway. It’s flexible and a different lifestyle. In Houston we generally have the assumption that renters want to be buyers and our low housing cost provides the path pretty easy.
I know lots of people that are in their 40s and 50s and still rent. It’s all they really want and they like it. They actually could afford a house. They don’t want to spend the time that house requires or pay someone else to do the things a house requires.
“I know lots of people that are in their 40s and 50s and still rent. It’s all they really want and they like it. They actually could afford a house. They don’t want to spend the time that house requires or pay someone else to do the things a house requires.”
Right, and likewise many people will own a house that doesn’t have a pool or is not in their ideal neighborhood because they want to have that sense of ownership and the security that comes with it. Their house is their bank, so to speak.
These different preferences are hard to put a dollar value on!
The reason they aren’t comps: people that live in high end apts in the loop want upgraded finishes, but don’t have the down payment or have the down payment and don’t want to buy in Cottage Grove!
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What you really mean is some prefer image more than anything else and Cottage Grove doesn’t have the image that Midtown or Museum District or other “high end” areas in the Inner Loop do.
“I have, therefore I am.”
Some just like others to know they are spending $1,500 a month for a one-bedroom box at the “right address” and of course then don’t have the down payment for something because they’re spending $1,500 a month for a one-bedroom box at the “right address.” In other words, some just like the “image” of being rich. Even though they’re really not. And won’t be as long as they pay $1,500 a month for a one-bedroom box.
It’s all in the comparison. My house with taxes, insurance and mortgage is $1800 per month, which is why I’m getting ready to sell it. Add the fact that it’s an old, drafty house in the Heights and you can tack on $200+ in utilities each month rounding it out to an even $2k. That doesn’t count the repairs that are inevitable in an old house.
When I started calculating living in a one-bedroom even in the Heights, I realized I would cut my expenses almost in half and remove all maintenance costs.
Oh, and I didn’t even mention my $4,400 tax refund I got this year. That essentially lowers my mortgage to something like $1,000 a month.
I never, ever, got a refund while renting.