I'm not sure how "undervalued" we are at this point when you factor in property taxes, insurance/transportation costs, etc.

Diggity said:

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I'm not sure how "undervalued" we are at this point when you factor in property taxes, insurance/transportation costs, etc.

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Not trying to be rude, but where else have you lived?

The thriving hotbed of Omaha, NE count?

My point is that a "nice" new house in suburban parts of Houston starts around $500K these days. Throw in 3.5% property taxes, HOA, insurance,etc. and you realize it ain't near as cheap to live in Houston as it used to be.

If that is "undervalued", I would like to know what the true cost to live in the middle of nowhere should be?

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Diggity said:

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The thriving hotbed of Omaha, NE count?

My point is that a "nice" new house in suburban parts of Houston starts around $500K these days. Throw in 3.5% property taxes, HOA, insurance,etc. and you realize it ain't near as cheap to live in Houston as it used to be.

If that is "undervalued", I would like to know what the true cost to live in the middle of nowhere should be?

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Fair enough.

Those costs are everywhere though. Even with high property taxes in Texas, which I despise, the overall tax burden is not a lot different. You think they don't charge HOAs fees and high insurance in Oakland? Or Anchorage?

The major cities in Texas, even with the add on fees, is extremely undervalued compared to most major cities in the US


FYI- When I moved to Vegas in 2009, it cost me over 1k to register three cars.

I've always heard homeowners insurance in the gulf coast is some of the most expensive in the country. Auto insurance also up there.

You also have to compare average income amongst the major cities if you have an apples to apples comparison.

I think many folks are stretching to their limits right now to afford home prices, so I have trouble seeing how that makes us "undervalued"

Diggity said:

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I've always heard homeowners insurance in the gulf coast is some of the most expensive in the country. Auto insurance also up there.

You also have to compare average income amongst the major cities if you have an apples to apples comparison.

I think many folks are stretching to their limits right now to afford home prices, so I have trouble seeing how that makes us "undervalued"

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Agreed with the last sentence, but they have been doing that in other parts of the country for decades.

I don't think, once you take everything into consideration, that doubling the home values in the major metro areas in Texas would make it a more expensive place to live than most of the major population centers in the US. That's why I think it is undervalued.

We'll just have to agree to disagree there

I bleed maroon said:

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Just some general commentary - -

% of asking price is a majorly flawed metric. It assumes that every property is priced using a perfect system of comps, appraisals, and true market value. In reality, you can ask whatever you want for a property - in prior "soft" markets, I have personally listed properties for 15-20% over what a realtor assured me was a "proper" listing price before (and got offers much closer to my price), and I have seen listings at well below market value to stimulate a bidding frenzy. It has become fashionable in the current market to use this as a metric (mostly promoted by realtors to get their clients to jump (too?) quickly on a property, IMHO). FOMO is a very real danger in the real estate market, just like the stock market.

That said, the market is overheated, and many of the factors have already been stated above. It WILL cool off, with the primary drivers being increased mortgage interest rates, supply chain improvements in building materials, reopening of the economy, etc. Texas real estate has lagged other regions for quite a while, IMHO, and some catch-up was inevitable, given how our economy is booming. This too will cool off (just wait till the new tax valuations catch up next year).

All I'm saying is don't let yourself get talked into overpaying due to emotions. A few days ago, I personally just bought a piece of raw land just outside Austin in a very "hot" area, and paid 4% less than asking price, for whatever that's worth.

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From above:

"(just wait till the new tax valuations catch up next year)." Nice job, Nostradumbass. After a cumulative total of 20% increase in valuation over the past 7 years (admittedly, I aggressively protest each year), my tax value went up 59% this year. This is with NO renovations or improvements. I, of course, am protesting again, but I am resigned to having several future years of the max 10% annual valuation increase. I can't see that the protest will do more than halve the valuation increase, but we'll see.

Hypothetical here... say you have two houses with equal updates, year built, condition, and sqft(~3,900). Same neighborhood in a north Dallas suburb. The only difference is that house 1 is on .18 acres and house 2 is on .29 acres(corner lot).

House 1 sold in Feb 2021. Is it reasonable, based on current market conditions and the extra .11 acres, to pay 8% more than what house 1 sold for for house 2 today?

We're in the $600-700k ballpark.

Very specific hypothetical there!

What does the CAD say about the delta in land value between the two lots?

agsalaska said:

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Diggity said:

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I've always heard homeowners insurance in the gulf coast is some of the most expensive in the country. Auto insurance also up there.

You also have to compare average income amongst the major cities if you have an apples to apples comparison.

I think many folks are stretching to their limits right now to afford home prices, so I have trouble seeing how that makes us "undervalued"

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Agreed with the last sentence, but they have been doing that in other parts of the country for decades.

I don't think, once you take everything into consideration, that doubling the home values in the major metro areas in Texas would make it a more expensive place to live than most of the major population centers in the US. That's why I think it is undervalued.

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Agree with agalaska. The tax values may make it tough for current home owners, but there are a ton waiting to take their place if they want to sell (from in state and out of state). I really don't see a big drop happening anytime soon.

NTXAg10 said:

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Hypothetical here... say you have two houses with equal updates, year built, condition, and sqft(~3,900). Same neighborhood in a north Dallas suburb. The only difference is that house 1 is on .18 acres and house 2 is on .29 acres(corner lot).

House 1 sold in Feb 2021. Is it reasonable, based on current market conditions and the extra .11 acres, to pay 8% more than what house 1 sold for for house 2 today?

We're in the $600-700k ballpark.

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From my personal standpoint I'd be willing to pay much more for the bigger lot. I think a lot of people feel the same way.

No idea what you mean. Purely made up and is not from any situation we may or may not currently be in.

The delta, hypothetically, is roughly 23k in favor of house 2.

Hypothetical buyer put in an offer on House 2 at 25k over list(650k). No contingencies.
House 2 seller had multiple offers at 50-100k over list.
Expected appraisal is $630k with a generous appraiser.

Crazy market.

Sounds awful

Diggity said:

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I'm not sure how "undervalued" we are at this point when you factor in property taxes, insurance/transportation costs, etc.

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Just to be clarify I never used the word "undervalued"

Do you think it's overvalued? A bubble that's going to pop?

gvine07 said:

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Diggity said:

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I'm not sure how "undervalued" we are at this point when you factor in property taxes, insurance/transportation costs, etc.

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Just to be clarify I never used the word "undervalued"

Do you think it's overvalued? A bubble that's going to pop?

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probably should have quoted Alaska.

I think some of these suburban areas are overvalued for sure. Plans that I looked at 12 months ago for $500K are $600K+. These are relatively cookie cutter neighborhoods with good schools but not super high end.

When you throw in 3.5% tax rate, I would guess a lot of people are overextending themselves to get in these homes.

Do I think there will be a mass of foreclosures? probably not. There will likely be a correction though, assuming lumber prices "normalize" and rates eventually go up. Builders have a lot more room to adjust prices than homeowners.

I don't see any inherent attributes in north Houston that would ever indicate that these cookie cutter homes should be valued at a million plus...as the previous poster hinted at.

Alas, I have been wrong before, and I will be again!