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?
Dee,
ReplyDeleteMaybe 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.
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.
ReplyDeleteChances 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.