January 4, 2007
Hot Real Estate Listings: Life Beyond the '04
For those of us who have tasted the good life--spending some part of our residency in the '04--the idea of living anywhere else in the city can induce sweaty palms and a sincere doubt about the viability of social life beyond Polvo's and bud-induced trips to Homeslice. In recent years however, the popularity of this neighborhood has driven up prices to the point that buying is significantly more expensive than renting, creating a financial vs. lifestyle dilemma for those looking to make the move from renter to homeowner. In this edition's column, we check out three centrally-located houses for under 200K that have decent potential and room for your Moog, too. So kick off those Fluevogs and get ready to be your own landlord!
 603 W. Odell St - $199,500. 1,215 square feet. Also built in 1955. This 2/1/1 is located just blocks from the planned Crestview Station, which will house one of the last stops on the commuter rail enroute to downtown. There are hardwood floors in several of the rooms, a detached garage/art studio/hydroponic greenhouse-to-be and the potential for some nice, natural light throughout (should you choose to free yourself of the institutional window covering look). At less than $170/sq. ft, you can own this house and make your yearly pilgrimage to Coachella. |
 6711 Grover Ave. - $170,500. 1024 square feet. Built in 1955. This 3/1 is a Crestview cottage that has a nice (albeit cracked) porch and a wood paneled room that will make Granpa and Nona feel right at home. The good news: a five minute walk could land you at Genuine Joe's for coffee, the Little Deli for delicious sandwiches or LaLa's Little Nugget for year-round Christmas decor and $1 domestic cans. The bad news: your property probably abuts the future commuter rail track. Good news: refer to proximity to cheap beer and Christmas cheer described above.
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 912 Pequeno - $195,000. 776 square feet. Built in 1948. 2/1/1 located just off Koenig and Burnet. Nice, mature trees on the lot, and the year built would indicate that you might find some hardwoods, even though they are not specifically mentioned. Located in a neighborhood that is a mix of old Austinites, students and professionals and just down the road from the Brentwood Park and Pool. Additionally, a short bike ride will get you to Ginny's Little Longhorn for cheap pool and a regular Heybale fix, if you don't want to make the haul to the Continental Club anymore. But, let's get down to the real juice on this place: the towels taped around the headboard in the bedroom indicate this house is overflowing with gettin' laid karma. Nothing has more social cache than getting laid...not even an '04 address.
Photos from Justin Cox, Marathon Real Estate, Sellstate Signature Realty and Coldwell Banker Green-Mills.
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From this commuter rail station, you can ride twice an hour (as long as it's rush hour) to the Convention Center, and then switch to a shuttle bus to actually get to your office. Hooray!
195,000 for a 776 sq ft house? After closing costs and property taxes you're still looking at $1000+ a month mortgage w/ property taxes, not including the high energy bills from a not-so-insulated old house... and of course the maintenance costs of an aging house...
home ownership's fun and all...but it costs way more than ya think it will...
LOL - thinking $195K is expensive for a house in Austin is hilarious. Get out of the city - Cedar Park sounds like the place for you.
Who said anything about 195k being expensive for a house in austin? The point of the main post is that renting is a better deal than buying (at least if live in the "'04", if you're one of those people who defines themself by a zipcode...whatever makes you feel special i guess...). But once you fully price out these so-called "affordable" tiny fix-me-ups, turns out that renting is still a better deal. And then you've got a landlord to fix your leaky roof instead of you. I suppose you could hope that your house would appreciate in value, but how much more valuable will a 50 year old 776 sq ft crestview house really get?
amusing how austinist only seems to have recently discovered that there is a world outside the "'04", what with mentions of crestview and the occasion note of what those crazy east siders are up to. maybe they'll discover the other 90% of the city one day...
following current market trends in austin, you will make money off that 195k crestview house, including covering closing costs, but it won't be a ton and it won't be right away. Housing prices are still appreciating, and close-in real estate is leading the pack. But it won't be like the last 4 years were. If you're flipping houses, no, that small place isn't worth it. but if you're looking to stay in a place for a few years, and you factor in the deductible mortgage interest, buying is still a better bet than renting, even with cost of repairs factored in.
amusing how austinist only seems to have recently discovered that there is a world outside the "'04", what with mentions of crestview and the occasion note of what those crazy east siders are up to. maybe they'll discover the other 90% of the city one day...
I believe there was a hint of sarcasm under the author's lines that 78704 was the 'it' zip code. She chose to focus on another area of town (Crestview, yes, and Highland), as that's likely what she's aware of. As you have lived all over the city, you could choose to add to the conversation by mentioning other areas that have nice neighborhoods and are also affordable.
And I would like to understand how renting is a better deal than buying.
Renting is a better deal than buying whenever the monthly price of a house dramatically exceeds the cost on the market to rent a similar house. In many parts of the country, this scenario has been in effect for quite a while. Arguably true in certain neighborhoods here, too. (Note: I said "dramatically" exceeds; i.e., the rent should be no more than a bit more than what it would take to cover the interest/taxes part of the mortgage payment).
M1EK, could you give an example?
As some one who recently bought a very nicely remodled home in 78704 (albeit South of Oltorf) for $182/sf, I can definitively say that if you look around for a good deal you can buy for less than you can rent.
Also, keep in mind that you can deduct your mortgage interest payments for tax purposes (meaning that you effectively get back a percentage of what you pay in interest -- which is nearly everything you pay during the first few years -- equal to your top tax bracket), and you are gaining equity in something that you can hopefully sell for more than you bought in a few years.
If you think you're going to get rich by flipping a house fast, you're probably going to be disappointed, but if you want to live in the house and hold it for a few years you should buy if you can afford a down payment.
Personally, I think whether to buy or rent depends a lot on what tax bracket you are in - if the government is effectively paying 28-35% of your mortgage interest and property tax, buying probably makes sense. If it is only 10-15%, renting is probably a better option. The market seems rent-friendly in Austin, but I think that reflects a realistic expectation of appreciation, so the renting/buying decision should be based on personal circumstances, not the belief that you are more intelligent than everyone else in the market.
Austinist focuses on close-in neighborhoods because those are the neighborhoods/lifestyle I am interested in. Erika has added diversity to the column and I think she is doing a great job expanding my otherwise narrow horizons. I think the majority of the houses I have posted have actually been in '02, not '04, but I like '04 and think there are a lot of opportunities there, despite massive recent appreciation. That said, I'm happy to look at any neighborhoods that people suggest.
Bob,
If your mortgage payment is $1500 a month, and only $100 is principal today, the remainder being property taxes and interest; even with the tax deductions, you're still out a minimum of $1400 a month (shrinking gradually over time as the principal portion of your payment rises). If you can rent a similar house for $1400 or even $1600 a month, you're coming out ahead in the short-term. Remember you don't need to pay to maintain your rental house. No A/C repair bills. No roof repairs. Etc.
Things to remember are that as shilli notes, it's a tax DEDUCTION, not a credit; so you only really get back whatever your marginal tax rate is (28%, 15%, etc.) _AND_ the real benefit is only that marginal rate times (total deductions minus standard deduction) since you could have claimed the standard deduction anyways.
IMHO, we are clue to a mid-term top in these central austin properties rather than in the middle preparing for a new leg up. This boom has run its course, and now even crappy 700 sq ft shacks cost $200k (with a nice 5k-6k in property taxes). Meanwhile, the same shack probably rents for $900.
Is the job market better here now than in 2000? No, it isn't. Yet, these houses cost 50%-100% more just based on pure speculation.