Don’t be an idiot.

I was watching House Hunters yesterday and it featured a couple that was looking to buy in the greater Seattle area. The couple had recently moved from Texas and their goals was to buy a house within 45 days of arriving. I like House Hunters, but I hated that couple.

Multiple times during the episode the couple would make a comment like “Well in Texas the layouts aren’t like this.” or “In Texas, this house would cost half the price and be twice the size.” Guess freakin’ what Todo. YOU’RE NOT IN TEXAS ANYMORE.

I get that house prices in Texas are insanely cheap compared to the West Coast. I also get that New York prices are unbelievably high compared to Seattle. People, what are the three rules of real estate? Location, location, location. Regardless of what you might want to believe, WHERE you buy a house DRASTICALLY affects the value of said house. Your house in Texas costs $200,000 because fewer people live in Houston (per square mile) than Seattle. And fewer people (per square mile) live in Seattle, than San Francisco. Increased Demand = Increased Price.

Not too long ago, I blogged about our recent experience visiting some Seattle Open Houses. The three houses we viewed we’re all price around $400,000, incredibly small (like 2bd/1bth 1,300 sqft), and built over 60 years ago. Needless to say, $400,000 in Seattle buys you a very mediocre house that will likely need some major updating.

While many left constructive criticism or helpful hints, some readers provided worthless comments like “In Arizona houses are like $240,000. If I were you, I’d be looking for something more in that price range.”, “Wow, $400,000 for that? Can’t you get something nicer?” And….

Look at what you can get in your price range in XYZ, TX (where I live).

http://www.redfin.com/somerandomhouse

I think you need to see what you can get in other locations before you decide to spend that much money there.

Would you tell someone wanting to live in New York to consider moving to South Dakota just because house prices are cheaper? Would you tell someone looking for beach front property in San Diego to cap out at $500,000? No. That would be dumb. Just like it would be dumb to suggest I move to a city (or community) where I DON’T want to live, just so my house can be nicer/cheaper.

I get it if you just can’t relate, I really do. I get that if $400,000 in Texas buys you a McMansion, you might be shocked that it buys you a shack in San Francisco. Shocked is fine, but simply saying “find something cheaper” is useless. Cheaper real estate will always exist, but we looked at houses in Seattle because we wanted to LIVE in Seattle. Funny how that works, huh?

 

33 thoughts on “Don’t be an idiot.

  1. Hubby and I were saying the SAME thing when we watched House Hunters International this weekend… a woman from TX wanted to move to Cognac, France to take a teaching job, and was shocked that what she’d pay for a home in TX basically nets you a small space in France… do these people not do any form of research first? Thank goodness she didn’t want to move to Paris where real estate prices are through the roof! The whole show would’ve been of her fainting!

    I know we could buy a newer detached home an hour away for less than what we’d pay in our current city (where we live and work) for an older townhouse… but since Hubby and I have zero desire to commute 2 hours/day (and that’s in nice weather), we don’t even entertain that area when we talk about buying our next home.

  2. You should look in Oregon. West Coast location, dirt cheap real estate, highest crystal meth production per capita.

  3. My wife and I love HGTV and House Hunters. However, I’m amazed at how naive or clueless the people that go on that show are. I’d love to see the numbers from the participants on the show to see who is still making payments and living in the house they picked. They often pick a house over-budget, or far from work just because of some little detail like granite counter-tops. They number of people that want “move-in ready” makes me laugh. There’s no such thing when buying a home as no work!

    That’s why I love Propety Brothers! Fixer uppers are the way to go for best bang for a buck!

  4. It’s obviously not helpful, but that’s the way people deal with things. Yeah, they might have done their research, and know on some level that the housing market is different, but seeing is believing. It’s like that kid Phoebe on the Magic School Bus. “At my old school, things were like THIS…”

    Trying to make sense of a new place mostly involves comparing it to where you have been before. Where I’ve recently moved, there’s tons of housing developments with multifamily homes very closely put together all exactly the same with almost no trees. It really sends my mind for a loop just because it says so clearly, this is not like home. Much of the housing stock in the Northeast where I grew up is much older and individualized and doesn’t have that cookie cutter feel in the same way. The TV show gets to take advantage of these people moving to a new place and will exploit those reactions. Because you’ve lived in the Seattle area growing up and for awhile now as adults, you have a pretty good idea of what you’re looking for and what is available, where, which gives you a big advantage over someone just arriving in the area for the first time.

  5. I agree with your entire premise/rant here (which is why I look at a home as an expense), but in Texas it’s a supply issue. There could never be enough demand in Texas. A thousand people move here everyday, but we have too much flat land, cheap labor and materials, and an endles supply of developers looking to cash in on this.

    Texas is awesome, but some people let that fact go to their head. Besides, it’s hard to think about other States when the nearest one is 500 miles away. Hey, at least they are giving Seattle a try and helping to increase demand there. Helps your home values.

    All of this just makes your point for you though. Home value from state to state is out of your control mostly. Just buy the dang house you want, where you want. Just make sure you can afford it.

    • PT,

      I think he was calling out me and Kevin @ Thousandaire on this one.

      I don’t know about Kevin…but- yes- I was totally bragging! Even our egos are bigger in Texas!

      Don’t misunderstand though…I am perfectly aware of the differences in prices from state to state, country to country and even the differences you find county to county right here in North Texas.

      But since Ninja picked on me…I’m taking my GI JOE toys and going home!!! *stomps away with tears in my eyes*

  6. I’m living in Texas right now, but I have no delusions that the housing market elsewhere will be as “cheap” as it is here. In fact, I’m kind of amazed that couple was so naive about how much it would cost to live, well, ANYWHERE else. I’m sure it will be a big shock if/when we ever look to move outside of Texas, but I can’t imagine not getting the house/city you want just because you’re looking for something more in line with the market you left!

  7. I also think that the mindset of different geographies are different. If you live in a large city, you typically don’t look for single-standing homes, because the vast majority of the market is condominiums. While we aren’t in the market to buy a home yet, the notion of not having a single-standing home with a yard took me a while to get over (I was raised in a small town where there were few apartments and NO condos). Texas, even the big cities, are very much house areas – but not just any houses (as you pointed out) – McMansions (everything’s bigger in TX, right? *rolls eyes). The Seattle mindset I’m sure is different, just as the San Francisco, Chicago, New York, and DC mindsets are all different.

    For a cross country move (or even a move to a city that’s different from your own), I would say it’s best to rent for a bit to learn the area and what you really want/need. Attend open houses, scour the Internet – do your research, essentially – before buying. That’s a big commitment to make.

  8. I can see why you are frustrated by these types of comments – but the fact remains, people *do* pick up and leave a particular area and move to areas with cheaper cost of living – and one reason *is* that house prices are lower in that area. So it is a valid piece of advice, even if it doesn’t apply to your situation, where you are aware of other options but are choosing to live in a high priced area.

    It’s also human nature – a friend of mine moved out of California, to Texas. When I talk to him, especially when he comes to California to visit, he spends a good deal of time reiterating how *cheap* it is in Texas for housing – he knows good and well that I’m NOT moving to Texas (as a Canadian, I would not do well in a red state, and I don’t do guns) – but he feels the need to *defend* his choice to leave this area and move elsewhere, to those of us who have stayed 🙂 He wants to move back, but financially he can’t justify it – so he talks up the good points of his choice.

  9. I love HH too, but living in LA, I never get over the shock and envy I feel when I see people buying huge homes lets say in Kansas City…but then I remind myself that I have great weather and live 1/2 to the beach…a trade-off I guess. Still, what I wouldn’t give for granite counter tops and crown molding. Actually at this point I’d just take a dishwasher!

  10. I’ll acknowledge that I still struggle to accept the fact that housing prices in Maryland are so high compare to where we lived in Indiana and we moved here 5 years ago. You couldn’t buy a studio apartment here for what we paid for our house in Indiana. The flip side being that I make about 3X more money out here. So, as shocking as it is, thankfully, salaries are typically in line with housing costs.

  11. I agree with your overall point. However, I am in Texas and I take exception to the fact that you say less people want to live in Houston. BS!!! The population of Houston is 2,099,451. It is the 4th largest city by population in the US per wikipedia. Seattle on the other hand is the 23rd largest city by population and has only 608,660 people. To say, “Your house in Texas costs $200,000 because fewer people want to live in Houston than Seattle,” is simply false. There are a plethora of other reasons why housing is more expensive in Seattle, but population isn’t one of them.

    http://en.wikipedia.org/wiki/List_of_United_States_cities_by_population

    • Sorry population density is what I was referring to. Seattle has 7,361 people per square mile, whereas Houston’s population density is 3,623 people per square mile (Seattle is twice as dense)

      More people packing in to Seattle = Higher house prices.

    • Brandy, you might want to check out the population density of Houston and Seattle. I would have to agree with Ninja on more people want to live in Seattle than Houston.

      Houston, TX: 3,623/sq mi
      Seattle, WA: 7,361/sq mi

  12. Actually, I would recommend that some people move to where housing costs are less if their HCOL area is compromising their financial health. I have friends who’ve been scraping by in NYC for years, and they’re unable to save one dime because they’re too caught up in living somewhere “awesome”.

    I’m really glad we moved to Kansas City because while it’s not as close to the beach as our old home in Georgia, and it doesn’t boast a huge airport, the pay is better AND the housing is cheaper. We made our move as part of our financial strategy. Honestly, though, I don’t want anyone to realize what a gem we have here in the midwest/plains so that it remains a cozy cow town with a couple million rather than a huge metropolis. We have almost everything that larger cities have without the inflated prices (and i’ve lived all over the country, including the DC area, south Florida, out west, New Orleans, and the mid-south). I find that people who are downers about it haven’t actually experienced life outside of a coastal city or are just snobs in general.

  13. Hey, Ninja, I feel for you. Entire books are written about “moving to Hawaii”, and we hear those sentiments all the time here. You’re dealing with the “Paradise Tax”.

    Our best homes have been the worst purchasing experiences. The places that almost nobody else can figure out, or the places that almost nobody else wants. Filthy house (but good floorplan). Seller had messy pets (but we can kill the fleas and clean the mess). Lousy maintenance (but minor DIY). Horrible decor (but we can paint). Rude realtors and unreasonable sellers (but we’re the best offer they have).

    Unfortunately this process takes up to a year and a hundred open houses before you find “the one”. The good news is that by then you know exactly where & what you want and you can leap on it (like, well, like a ninja) and have your offer in the next day.

    You guys have it figured out. You’ll find it. In Seattle. And you can always vacation in Kansas or South Dakota…

  14. Great post, and SO true! My husband and I bought in the DC metro area a couple years ago, and we paid $300,000 for a brick duplex built in 1947 with 2 bedrooms and 1.5 bathrooms… around that same time his sister bought a mcmansion with a pool in Kansas for like $250,000. I don’t know how many times we’ve said “If only we could have bought a house in Kansas…. but then we’d have to live in Kansas!”

  15. Location is huge! I have an aunt who bought a 2BR 1BA house in a small town in SC for less than $20,000. My sister lives in that same neighborhood and pays $175/month in rent for a 2 BR 1BA house. My husband and I have a house in a bigger town 20 miles away from that: a 3BR 1BA that cost us $92,500.

    Hubby and I recently moved to Franklin, TN for a job (yep, we’re trying to sell the house in SC), and since this is a much wealthier area, the housing prices are anywhere from 200-500 grand. But before we moved, we did research on apartments/housing near work to make sure we understood what kind of money we were talkin’ and that the pay rate was enough for us to meet or exceed our expenses in both states. We also did research on the area to make sure we liked it (is it a huge, densely populated city, with small apartments, and not a patch of grass for the dog to pee on? We don’t want a place like that. Franklin isn’t like that at all, so we’re happy here.)

    Husband gets calls from job recruiters about opportunities all over the U.S. and if we ever consider one of the opportunities, the first thing we do is research the area and find out the cost of living there, the cost of coming back to visit family from there, and what kind of money and benefits the job offers to make sure we can afford/thrive on it. Another thing that we ask/research is the income tax rate of the state. If you can find out the taxes for the county you’ll be living in, that’s a plus too. I get the feeling this isn’t something people even consider because every time we ask recruiters they don’t seem to understand why we’d care about that. :/

    He recently got an opportunity in San Francisco, and because of TN’s lack of state income tax and lower apartment rent (for a bigger, better apartment), SF wasn’t an option with it’s 9-10% income tax rate (this is what we assume from online research…I know it varies, but the recruiter couldn’t give us an answer, so we had to assume the highest). The pay increase San Francisco offered was eaten up by taxes and living expenses, so it made no sense for us to move. We also think our area in TN is more our style anyway.

    We know we have to pay more to live in this area than we would if we lived in the neighborhood with my aunt and sister, and that’s what we want to do. 🙂 If you want to live in Seattle, and not Houston or Little Town, SC, then that’s awesome. I’d rather save up and pay more for a house in an area I like than pay less for a house in an area I don’t like as much or don’t like at all.

  16. I have a friend who is a realtor and he appeared on House Hunters. Interesting thing is that when they start filming, the couples have already picked out their house. The agonizing decision portrayed on tv is just for the camera.

    • Yeah I heard that too. You can always “know” which house the couple is going to pick because it is always the unfurnished house (that’s the one they bought, just haven’t moved in yet). The two furnished houses they look at are just to make the viewer think there are options. Haha, hopefully that doesn’t spoil the show for anyone 🙂

      • Really? I always wondered how someone could sign up to choose between just three properties when people often look at dozens or over a hundred before they buy. It seemed like a pretty risky way to spend a significant chunk of your lifetime income among a very limited set of options!

  17. I stopped watching House Hunters when I read an article stating that it was fake. The article said that often times, the people buying a home in the show have already purchased and they go back and pretend they are about to buy a home.

    I got turned off and stopped watching!

  18. $400K for 1,300 sq ft!?! That is just crazy. I don’t know how people afford houses at those prices. Like you said though, it is all about location. Here on the east coast, I live in a moderately high cost of living area. You really have to look to try and find a bargain.

  19. Well, we just bought a 3000 sq ft house on 1.25 acres in Sammamish for $400,000. I thought it was a pretty good deal. You could just move over here.

  20. You make me smile when you get Bitter. I agree we Texans are spoiled, but the real question is how you budget to pay for those homes.

    Could I get a budget projection you and girl ninja are planning when your income is identical to mine. We have been advised not to do more than 25% take home.

  21. I love when they say, “you were approved for 300k and you have a down payment of 60k, so you can afford 360K house.” How about no. How about you look for one that is less than you max.

  22. I love it when people talk about moving to the DC/MD area and get total sticker shock when they see the prices of houses within the beltway(s). If you want to move where there are high salaries, you’re going to end up with a high cost of living.

  23. Hahaha! This post was awesome! $400K is a lot, but you either want or have to live where you are, so um, people just saying what homes cost where they live is, well, like you put it, dumb. (P.S. the picture that goes with this post made me spit out a little of my water cuz I laughed so suddenly — funny, man)

  24. I live in Texas! SO I understand completely the differences in prices! Texas is extremely cheap, but it’s also not pretty! We have extremely hot summers, and crazy weather! Like when it iced last year for a week during the Super Bowl! Everyone was giving TX bad comments for not handling the situation more efficiently. But then they did not think about the fact that weather never hits Texas with such intensity! We don’t have a nice beach or mountains or a forest. Pretty much what we have is lots of flat land!

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