This insane housing market.

[DLgal]

I just looked up what a $280K mortgage (that's the $350K house with a 20% down payment) would be at current rates--$1,364/month. Around here the property taxes on a $350K house would be close to $12K/year, so another $1K/month = $2,364/month without house insurance, utilities, etc. That's nearly half the take-home pay. Add in a couple of kids, and this is quite a bunch of money.

It sure is, but I assure you, it's do able. Until very recently, we were paying 50% of our take home in rent alone. Utilities and bills were another $1200/month. We have 2 kids and live in southern CA.

Where the heck do you live that property taxes are 3.5%? Also, though, taxes are based on the assesed value of the house (land + "improvements") and not on the actual price/value of the house itself. My sister's house is worth $1.5M but her taxes are on an assessed value of $850,000. There is no way a $350,000 house will pay $12,000 in taxes.

 

[mickman1962]

Try living in NY

 

[Miffy]

Try living in NY

^^^This. We live in upstate NY. The property taxes here are $34.50 per $1,000 of assessed value, and houses here are assessed on the sale price, although I believe that houses are reassessed based on comps in the neighborhood in following years. I'm not really sure how that works since we just moved here and the house we live in hasn't be reassessed yet. We're currently paying the former owner's property taxes, but they'll go up to match our purchase price in a few months.

 

[GAN]

Try living in NY

or RI

 

[GAN]

I’ve got a nice 2-bed condo valued at $350k …taxes and fees are $900/month(less mortgage). And that’s with me getting a little *help* from the assessor.

 

[elaine amj]

I’ve concluded that asking prices mean absolutely nothing. Every single seller out there is underpricing their house on purpose simply because this is the done thing now. So the only way to know how much to offer is to understand the market or rely on a real estate agent who does. Otherwise you are simply not going to make a competitive offer.

Our agent advised us to price at $399k with the expectation of $500-550k. That’s just the current situation so there’s no point in worrying about asking price. It has zero bearing on reality. For reference, I live in a LCOL city that used to have a depressed housing market. My house was worth $160k or so 5+ years ago.

I’d like to move to a similar house with a different layout at about the same price. I really, really don’t want to pay more for housing than I currently pay. But with the crazy real estate market, have concluded it’s just not a good time for us. We are in no rush and it seems we’d do better in a slow market vs the current hot market. It would be a gamble now whether we sell first or buy first.

 

[Miffy]

I believe "asking price" now means "start the bidding here."

 

[DLgal]

I believe "asking price" now means "start the bidding here."

It's like Ebay's reserve price.

 

[longboard55]

My house is worth one million and property taxes are $3500. Thank you California and prop 13. Somehow than never gets mention in the California bashing articles

 

[DisneyHardin]

My house is worth one million and property taxes are $3500. Thank you California and prop 13. Somehow than never gets mention in the California bashing articles

That's great. I didn't realize that CA had capped property taxes like that. Mine are very reasonable here in KY too. Our house is valued at about $275,000 and our taxes were about $2000 this year.

 

[TipsyTraveler]

I believe "asking price" now means "start the bidding here."

I once saw an episode of International House Hunters where that’s the standard way it was done. I’m pretty sure it was Sweden. Sellers posted the minimum price they would accept for their house and people made offers for that much or more.

 

[Miffy]

That's great. I didn't realize that CA had capped property taxes like that. Mine are very reasonable here in KY too. Our house is valued at about $275,000 and our taxes were about $2000 this year.

I am going to cry now.
ETA: But it's great for you, and my tears are purely selfish and not jealous!

 

[Miffy]

I once saw an episode of International House Hunters where that’s the standard way it was done. I’m pretty sure it was Sweden. Sellers posted the minimum price they would accept for their house and people made offers for that much or more.

I occasionally see the British Escape to the Country, and in some counties, the house prices are set out in a similar way--"offers starting at xxx pounds."

 

[longboard55]

We just had one down the street go up with preview sign. What is this why not list it and get full coverage. Should be a illegal

 

[tvguy]

I am going to cry now.
ETA: But it's great for you, and my tears are purely selfish and not jealous!

California property taxes are 1% of what you paid for the house. The amount of that tax can go up no more than 2% a year. Voters passed this law in 1978. One of the reasons, long time homeowners......senior citizens.......found that their annual property taxes were more than they paid for this houses. How on earth are people who needed 30 years to pay off a house coming to come up with the same amount of money or more every year in property taxes? That was before housing prices went nuts here.

 

[dvcgirl67]

It sure is, but I assure you, it's do able. Until very recently, we were paying 50% of our take home in rent alone. Utilities and bills were another $1200/month. We have 2 kids and live in southern CA.

Right, but I know you've mentioned on a few threads in the past that you guys are a military family with your husband close to a military retirement. So having that nice military pension coming with many working years ahead for you guys before "traditional" retirement puts you in a different category. I'd feel much more comfortable stretching to that really high number of 50% if I knew my family had 15-20 years of working years ahead of me...with a military pension kicking in immediately...plus the income from a new career post military retirement. And that's not even counting what a military family can invest in the TSP...etc.

When DH and I met in our later 20s in the mid 1990's...together our income was roughly 110K. I looked up 401K max contributions back then...it was 10K. We always maxed that out, so not counting company match say our taxable income was 90K. Rough estimate net...75K. Probably closer to 70K after other things like health insurance...etc. So...$5,833 a month. Our rent back then for a 750 sq ft one bedroom apartment in the Silicon Valley was $1,700...so about 30% of our net income. We had no kids then...no kids now. That allowed us to save more...like maxing out Roths back when we still qualified. But no way we would have felt comfortable spending close to $3,000 on rent or a mortgage knowing that we would never have pensions and understanding that even with our incomes going up over the years...with standard inflation, we'd need millions of dollars to retire comfortably. I'd never want to spend that much on a mortgage in particular...just knowing as a homeowner that something *always* comes up.

I just think it's a different calculation to a certain degree. A career in the military can mean accepting a lower income for level of experience/expertise for those 20+ years...in exchange for the perks that come later....and deservedly so. Our calculation has always been that we'd need one million dollars for every $40,000 of retirement income that we desired. Over the years we've trained ourselves to live on far less than we earn....and saving/investing it. We've seen people in our family who didn't follow a similar plan, and while nobody is destitute, things have been tight financially for a bunch of them....and we didn't want to end up like that. We're having to help one set of parents financially (since 2014)... and with no kids of our own...we can't end up in that boat because we can't dial up our non-existent kids at "1-800-SEND-$$$". .

Also, I'd just say in general that right now I would not buy a house in a lot of these markets. In many markets values have doubled in the last 2-3 years, and while most experts are saying that we won't see a drop in values like we did back in 2008-09....we're certainly not going to continue to see prices rise at current rates. I wouldn't be surprised if we do see a smaller drop in values, followed by a much lower rate of appreciation in the next 5-10 years. What we have now is not sustainable...and in that way, it does resemble 2008/09 to a degree. While there wasn't a lot of unscrupulous lending this time around, there has been a ton of impulse buying due to the pandemic...and stretching of budgets to do so. And I've read a few "we regret buying" articles recently in the WSJ, NYT and WP.

 

[Memorymakerfor4]

We moved to one of the nation's hottest housing markets this fall, paid $30K over asking, and according to listing prices have already made that up. I'm thankful to be in a position to buy though, SIL and her husband are having a baby and they just can't afford to buy anything that's worth living in. First time homebuyers really have my sympathy right now, at least we had the cushion of increased value on our previous house to soften the blow.

 

[trvlgirlmq]

I closed on my new house Monday. Moved due to a job transfer. I never thought I would pay this much for a house! I did new construction in a subdivision. When they appraised the house before closing it came back $3000 over what I am paying so that is something. In the end I went $100,000 over what I wanted to pay for a house but everything in my original price didn’t meet my needs (my mom lives with me and she needs a first floor en-suite). I love the house and I am ready to be out of this noisy apartment. Saturday can’t come fast enough.

 

[TipsyTraveler]

I wanted to update on the house I mentioned in my OP, the one that went up for sale on my street and had people lining up to see it. It closed at $115k over the asking price which puts it $400k over what we paid for our house less than two years ago. The houses in my neighborhood are all largely comparable to one another, this house is not exceptional in any way, and I cannot believe someone was able to justify spending that much money for it. I am in stunned disbelief.

 

[LuvOrlando]

It sure is, but I assure you, it's do able. Until very recently, we were paying 50% of our take home in rent alone. Utilities and bills were another $1200/month. We have 2 kids and live in southern CA.

Where the heck do you live that property taxes are 3.5%? Also, though, taxes are based on the assesed value of the house (land + "improvements") and not on the actual price/value of the house itself. My sister's house is worth $1.5M but her taxes are on an assessed value of $850,000. There is no way a $350,000 house will pay $12,000 in taxes.

In Pa property taxes are split up between municipalities and billed separately so it's Township and County in spring with School Taxes in the Fall so the individual bits are very low. For me it made things easier to absorb plus, compared to NY (where I am from and worked) and NJ (lived there a while and have family) the taxes are comparatively very very low and seldom reassessed (at least where I was) keeping things very affordable for people who have been in their homes a long time.

Taxes, insurance and possible flood ins are front and center right now as we look for our next place.