Sunday, February 25, 2007

Try Before You Buy

This post was an idea that my wife threw at me for the blog and I thought it was a great idea. In case you haven't read the welcome message it briefly discusses that we're renting in different areas before buying. In an urban environment when people move many look for houses in the new city they're looking at moving to. They find one they like in a decent area and buy it. Aside from the recent real estate market downturn in many cities that was a decent plan but carried a few risks, for example: may buy in an area that is not the best, the area they purchase in may be hard to sell. In a rural environment a piece of property can take a long time to tell, even real estate that is in the best of shape. The reason is there are fewer people wanting to migrate to that environment and the ones that do are often rich buyers looking for vacation property (IOW upscale property or the wonderful 'cabin in the woods') or they're in the lower income ranges so if you price your property too high you price it out of reach for people that might want to upgrade in that area.

Here is a comparison of two cities in my area:
Elgin Texas: Year 2000 median household income: $38,750
Austin Texas: Year 2000 median household income: $42,689

Although the ~$330/month in income difference may not seem like that big of a deal when looking at the higher property taxes of Austin keep a few other items in mind.

Elgin Texas: Year 2000 median house value: $75,200
Austin Texas: Year 2000 median house value: $124,700

So if a person in Elgin wants to move up they're probably not going to have as much cash to put down so if there income hasn't kept pace with 'city folk.' Also the unemployment in smaller cities is higher.

Elgin Texas: Year 2000 unemployed: 5.3%
Austin Texas: Year 2000 unemployed: 4.4%


Plus the fact that people in smaller towns (where they commute to larger cities) are probably spending 50% or more on their monthly gas, higher prices for local items due to less competition and the list goes on and on.

These are just a few things to keep in mind but living in the area will give you a much better perspective if the changes in lifestyle are something you are interested in. We also are getting much more for our money renting in the country than in the city. Currently we're living on 5 acres with the approval of the landlord to keep chickens, sheep, rabbits, etc. where getting that same approval in the city (if it is even legal) is much more challenging. So for $750/month we get all of that where finding a house rental for $750/month in Austin would usually involve an area that has at a minimum occasional gunfire.

Are we trying to discourage you, no, however if you rent and decide you don't like it you can easily go back to the larger metro area without the bondage of a country property mortgage or your cash tied up in a place you're not living at.

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