Wednesday, December 21, 2005

I've recently done a little reading about houses and the cost of living. I've also looked at a lot of houses that are for sale (see previous posts) and talked with some experienced realtors. Here's some of what I have learned:

* Since 1970, the average size for a new house has gone from about 1500 square feet to 2300. Just within the last year or so, the average square footage of new houses has leveled off and actually gone down a little. Turns out, people are spending as much or more as they ever did on houses. It's just that now, fancy kitchen appliances and high-tech entertainment gear represent more and more of the overall cost.

* At least in Amarillo, Texas a house typically sells for about 97% of the asking price. This holds true in all price categories. My guess is that the initial offer is 5-6% lower than the asking price; the seller says, "No." Then the buyer asks to split the difference, and the two settle somewhere in the middle.

* On this the first day of winter, a lot of folks who live in cold and not-so-cold areas are wondering what it will cost to heat their homes until it gets warm again. Meanwhile, roughly half of all the energy used in the U.S. is wasted. Evidently, a lot of lights and TVs are left on when not being used. For some people, wasted energy doesn't feel like money out the window. But it is. So go turn off that light that you don't need to have on right now.

* One of the first things I notice about a house I "look at" is the smell (good, bad, neutral). One realtor told me that pouring a little vanilla extract in a pan and putting the pan in a warm oven gives off that mouth-watering smell of a bakery. Sounds like something worth a try. This reminded me that one of my greatest memories goes back to the time when my mom made roast and potatoes and carrots (was an onion in there?) almost every Sunday. The aroma would fill the entire house, and it was wonderful. I wonder what it smells like in heaven. What's the sensory experience of the aroma of Christ?

4 comments:

Dee O'Neil Andrews said...

It's been really amazing to me (and Tom) for a long time where all the money is coming from for all the people to buy all the huge homes they are buying and filling up with loads of furniture, high end appliances (as you point out), electronics, etc, etc.

Everywhere we go we see the same thing in town after town after town, especially around the more urban areas. Granted, it's not the same at all in small towns and rural areas. But it's just staggering to me that homes are so large and so costly, yet there seem to be no shortage of buyers.

WE don't have that kind of money - never have, never will - even though we've worked hard and gotten plenty of education and I can't figure out how these people are MAKING all that money. Or are they all in deep debt? Or both?

Frank Bellizzi said...

Dee,

Maybe you've seen the debt consolidation ad where the guy has everything and says, "How do I do it? I'm in debt up to my eyeballs!"

Michele and I drive used cars and have virtually no consumer debt. We can't buy much beyond the basics either.

If we were 10s of thousands of dollars in debt, it would look like our income was much higher than it is.

Dee O'Neil Andrews said...

You are absolutely right, Frank. And, around here at least, that has come back to bite a bunch of people who took out "interest only" mortgages (which is the most ridiculous thing I've ever heard of) to buy humongous homes costing upward of a million dollars, in some instances, down on Lake Ponchartrain and close by.

Those "mansions" on the lake and over along the water on the Mississippi gulf coast are now history - demolished to the point that you cannot tell they ever exisited. It's absolutely stunning and amazing to see the power the wind and the waves and the water had on man's creations built of concrete and steel and other seemingly inpenetrable materials.

When I first saw it, all I could think of was Solomon's warning that all was vanity and that those who built their houses on the sand had, indeed, lost them.

If you and Michele have the chance to come down this way, it is very enlightening, I'll have to say. All that has transpired down here in the past four months has only served to strengthen my faith and greatly increase my awe at our living God and His power.

James said...

From my perspective, having been a first time home buyer a couple of years ago, the problem is the difference between what the mortgage company tells you you can afford and the what you can afford in reality.

Chances are, the amount of house you can actually afford ranges from 10-30% lower than the pre-approved number. That 10-30% covers utilities when they spike, savings, emergency funds, etc. The full value the mortgage company gives you almost guarantees every last dime will be squeezed out of your bank account.

And my two cents on interest only mortgages, if you don't understand the principle behind how the loan works... you shouldn't be buying a house. If you do understand it, and you still get one, then you are probably trying to live dangerously above and beyond your means. Honestly, the only good reason for interest only is if you are in real estate and flipping the house in short order.

Financing and credit is nice to have and useful at times... provided you are fiscally responsible with money. I usually live by a couple rules.

1. If you charge it, make sure you can pay it off before interest accrues.
2. If you finance it, you better be able to cover at least 2 extra payments per year.
3. If it's going cause you to start counting pennies, stretching between paychecks, and cutting back on necessities, it's not worth buying.