Austin
Sponsored by

Who are the folks buying the $650K+ homes?

25,855 Views | 146 Replies | Last: 3 yr ago by thirty-two
evan_aggie
How long do you want to ignore this user?
AG
I realize that I may sound like an "old", but there are a few things I'm not fully understanding about what's happening with the Austin housing market.

I realize people are flocking here in the droves...I get that, and yes I do understand many come from areas where houses are $600K-1M already. However, Texas has higher property taxes than most because we don't have state income tax. The property taxes in a lot of Austin central neighborhoods is ~2.5%.

I took a drive around east Austin between 10th street and 28th+, and couldn't believe how many homes we found listed at $600+. Then we went over to Barton Hills and Bouldin Creek and found other crazy prices for smaller homes. Who is it that is buying these houses?

20% down on a $700,000 house with a 3.9% 30 year note + 2.5% property tax still results in a $4100/monthly payment. I thought I made pretty good money, but after all of my 401K contributions and savings funds...that would eat up the majority of my take-home pay. Are all of these folks successful business owners, doctors, lawyers? I'm pretty sure we are in the top 7-8% by house hold income. I know the housing market for $600K+ homes are not limited to top earners like that, so what gives? Folks just plunking more dollars into their home?
chipotle
How long do you want to ignore this user?
Quote:

I realize people are flocking here in the droves...I get that, and yes I do understand many come from areas where houses are $600K-1M already.


Lot of folks in my area from cali. Probably used the money from their home sales to pay cash and buy the home out right.
evan_aggie
How long do you want to ignore this user?
AG
Not everyone can be from Cali though...can they?

I see a lot of younger folks buying on the east side.
512Ag
How long do you want to ignore this user?
AG
Most of the Central/North Central Austin folks I know are lawyers, engineers, and tech people. A handful of lobbyists. All but one are Texans. Most of them are dual income families with two high-income earning spouses. These are just the ones who have bought recently. I do think there's a lot of west coast money in East and South Austin right now, though, for sure. There definitely was back in the mid-2000s when I lived in Cherrywood.
evan_aggie
How long do you want to ignore this user?
AG
I suppose I wouldn't have an issue assuming my wife continued to work, but with kids on the horizon (hopefully), I don't see myself being super comfortable on one salary.
Keeper of The Spirits
How long do you want to ignore this user?
AG
Almost everyone in our area in dual income and most are dual incomes over 100k I'd guess. Lawyers, Doctors, NPs, PAs, Accountants, and tech, and then people who have lived here for 20 years and watched their home go from 160 to 600k who want to stay in the area and all of the sudden have 500k in their pockets, and Californians and East Coasters
fig96
How long do you want to ignore this user?
AG
We bought about a year ago and I've wondered this myself.

My wife and I are both midcareer, making decent money in stable jobs and not in a bunch of a debt, but we'd need to massively increase our salaries to be able to afford a lot of the houses we looked at (and we're not talking about ridiculous houses, just the areas they were in).

I realize some folks make more money and that's totally fine, but I find it hard to believe that THAT many folks are making that much money.
SteveBott
How long do you want to ignore this user?
AG
Evan not much help on why pricing is what it is other then that is the market and folks are willing to pay it.

I will say your tax rate while technically correct it is somewhat high. I would factor 2.0-2.2% for Austin city. Not much help on total payment since you have not included homeowners insurance in your numbers so it will be a wash.

There is a reason that 200-225K here in Round Rock get multiple offers in days. Most over list. And that is not buying much more then a starter home. I have seen my tax value go up 10% per year for 3 years running and expect the same in 2018. Thanks Austin!
Mookie
How long do you want to ignore this user?
AG
Most of those folks aren't buying their first home and are not putting 20% down. Equity from prior home is the diffeeence maker. If you bought in Austin between 2009 and 2014, you definitely have 6 figures of equity to move toward a 600k house.
evan_aggie
How long do you want to ignore this user?
AG
You'd be surprised how much the younger generation leverages. Or maybe you wouldn't....

wadd96
How long do you want to ignore this user?
AG
Even if that wouldn't eat up the vast majority of my take home pay (excluding the wife,) I wouldn't do that... it's just not my style. I'd still go with my plan.

Build on our land, keep the house modest, and then look to see when neighbors are selling more land...
All the God's, all the Heavens, all the Hells are within you.
evan_aggie
How long do you want to ignore this user?
AG
Land anywhere near central Austin can be $200k-$300k for a small lot.
wadd96
How long do you want to ignore this user?
AG
Not looking small lots... Big acreage. Rural land.
All the God's, all the Heavens, all the Hells are within you.
MouthBQ98
How long do you want to ignore this user?
AG
That's why I live in Paige and commute an hour each way every day. The drive sucks but hard to beat country living.
SteveBott
How long do you want to ignore this user?
AG
Heard you had a great mortgage guy on that 10 acres.
Mookie
How long do you want to ignore this user?
AG
You're right unfortunately!
expresswrittenconsent
How long do you want to ignore this user?
wadd96 said:

Not looking small lots... Big acreage. Rural land.

What a strange post on a thread about homeowner demographics/housing prices in central/east Austin.
MPython43
How long do you want to ignore this user?
Riding the Austin real estate wave has been our experience.
Early/mid 30s now, but bought our starter home with a 15 year note and 20% down in '08.

In 14, with lots of equity sold it for ~175% of what we bought it for.

Rolled all that into a house that was 200% the price of first house.

In '16, sold that house for ~150% of what we bought it for.

Rolled all that into a house a bit more expensive than that.
evan_aggie
How long do you want to ignore this user?
AG
I bought my first house in 08 much like you. But problem is that it was in Cedar Park, so from 2008 to 2015, it grew 50%, not 100% or 150% like those closer to town.

I'll never buy far from town again. The drive Became too long and once we have kids I'd prefer to spend as much time at home as possible.
MPython43
How long do you want to ignore this user?
We were and are northwest with those jumps. Starter was in Anderson Mill and now we're in Balcones Village.
thirty-two
How long do you want to ignore this user?
AG
Mookie said:

Most of those folks aren't buying their first home and are not putting 20% down. Equity from prior home is the diffeeence maker. If you bought in Austin between 2009 and 2014, you definitely have 6 figures of equity to move toward a 600k house.
This. We bought our house (NW Hills) in 2012... it was built in 1960 and in original condition. We immediately invested $100k to remodel, and here we sit today, up nearly 40%.

And even after investing in the remodel, our lot is still worth more than the house (according to the tax records).

Crazy times, and doesn't appear to be slowing down.
Copperpot
How long do you want to ignore this user?
AG
We're on our third house and currently live in Central Austin. Born and raised in New Braunfels, but moved to Austin in 2003 after graduating from A&M. Bought our first house in 2005. We've added value to every home, but we've also been very lucky/fortunate to take advantage of the crazy Austin real estate market. We wouldn't be where we're at if it wasn't for the equity we created with our prior homes.

Oh and we're DINKs. That helps too.
Maroon97
How long do you want to ignore this user?
AG
Like a lot of the other posters on this thread, we have benefited greatly from a combination of the central Austin market and creating value with each home. I bought my first home in northwest Austin in 2000 and sold it in 2004 for a small gain, but then bought my first house in central Austin at that time. That was a 1950s house that I did a lot of cosmetic improvements to and sold it for about 50-60% more than I bought it for. Then I was able to buy a central Austin lot and built a house. I sold it after 4 years for double what I had it in. Then I bought a 1950s home and did an extensive renovation (completely gutted) and expansion (almost doubled the size). By the time I moved in, the market value was 30-40% more than what I had in it. So now I live in a house that is way more expensive that what I could afford to buy if I hadn't built that equity in other homes. I will not really be able to cash out until I leave central Austin, but in the meantime it is a good investment for us.
evan_aggie
How long do you want to ignore this user?
AG
I think the key for a lot of folks is that they continued to move up in home sizes, or moved centrally as the market continued to heat up.

As I mentioned: I bought in 2008 a "starter" home. Eventually paid it off, so 100% equity, and sold for 30% gain. Great, but by the time this was all done, the market in central Austin already seemed to be $700-$750k homes at $450-$550/sq ft. Perhaps if I had moved closer and closer to town where I eventually want to be now, I could have caught more of the wave...
who?mikejones
How long do you want to ignore this user?
AG
I've seen all types build at this level and above. Locals and out of towners are building these homes. It's really a mixed bag.
Keeper of The Spirits
How long do you want to ignore this user?
AG
I didn't realize that were any other DINKs our age in Austin!
Potcake
How long do you want to ignore this user?
AG
There are older DINKs than you kids.
chipotle
How long do you want to ignore this user?
googled "DINKs"
MouthBQ98
How long do you want to ignore this user?
AG
Yeah, he was pretty alright.
SteveBott
How long do you want to ignore this user?
AG
better then worthless hey?
HECUBUS
How long do you want to ignore this user?
AG
We're still in our starter home, purchased fresh out of ATM in '91. Middle older broseph was a realtor. He took good care of us and all our friends. Anything we purchased back then would be ridiculous today.

Wanna borrow my TARDIS?
Sandman98
How long do you want to ignore this user?
AG
As much as our values have gone up we're still insulated from the insanity of many places outside of Texas. Modest homes in suburban Denver that would be worth about $300K in Cedar Park/Round Rock go for $500k+. Everyone who didn't benefit from the equity of a prior home is leveraged like it's 2005.

Their property taxes are far lower but they have a state tax.
BBDP
How long do you want to ignore this user?
AG
There are very few homes in Cedar Park worth $300k.
evan_aggie
How long do you want to ignore this user?
AG
I used to live off of Anderson Mill between 620 and 1431. I'd say the average is $350 in that entire area.

The older homes next to Elizabeth Milburn might be less.

A lot of the new construction all along 1431 are worth $300.
TamuKid
How long do you want to ignore this user?
AG
As a 29 year old first time home buying prospect with a growing family... Austin is pretty tough.

To get a decent home (not a starter) in a good school distrct, you're looking at paying 400k+... and that's in Round Rock/Pflugerville area.
It's ridiculous. Almost impossible.

Really stinks. Feels like I'll be renting forever.
 
×
subscribe Verify your student status
See Subscription Benefits
Trial only available to users who have never subscribed or participated in a previous trial.