Four years ago, I helped a friend in Austin find a home to buy in the Dallas metro area.
Dallas was cheaper than Austin, where he rented an 800-square-foot apartment for $1,400 a month. The rise of remote work allowed him to move anywhere.
It was an eye-opening experience for this lifelong New Yorker because we normalized the astronomical prices we pay for housing here. Shopping in Dallas was like going back in time.
Maybe you’re one of those people who reminisces about what houses in New York cost thirty years ago, and wish you had bought more, or not sold what you had. “If only we had bought that fixer-upper that cost $600,000. It just sold for $6 million!” my wife once said. (We couldn’t afford it then anyway.)
I remember house hunting in 1993, when one-bedroom co-ops in Park Slope cost just $75,000 and three-bedroom condos in landmark brownstones cost $220,000. Everything is now about eight times more expensive.
But in Arlington, Texas, homes in late 2021 traded for what they did in New York City in the early 1990s. My boyfriend was on a tight budget, had no savings and owed thousands of dollars on his credit cards, so I tried to get him to 793 square feet with one bedroomrecently renovated with stainless steel appliances, for the ridiculous price of $85,000.
The mortgage payment, insurance, property taxes and homeowners association fees would have been $782 per month. The apartment also had a swimming pool. It was so cheap that I thought about buying it myself.
But my friend had delusions of grandeur that had landed him in his dire financial situation at the age of 56, despite being gainfully employed and having no family to support. He wanted a better place, with more resale value, even though he expected he would never sell it.
In early 2022, he lost a number of bidding wars between $130,000 and $150,000. Without my knowledge, he ended up offering $195,000 (which he couldn’t afford) for an apartment in North Dallas, a “nicer” (read: wealthier) neighborhood with “better” schools (even though he had no children).
Fortunately, the deal fell through because the Biden administration’s new rules for Fannie and Freddie required the apartment to have more money in reserve than before.
I talked some sense into my friend, who then bought a similar unit in Arlington for $128,000. His mortgage, property taxes and insurance today amount to $793 per month. For the first time ever, he was able to save for retirement without repeatedly raiding his 401(k). He has since paid off his credit cards and put away $67,000.
He was able to achieve life-changing financial and housing stability because homes in Arlington are so cheap. Clearly, Texas is different from New York City in many ways, but it is notable that Arlington has created low-cost housing without rent control or subsidies. It allowed developers to easily build simple three-story complexes.
The state that most famously did the opposite, California, now has such high housing costs that many of its non-wealthy residents move to Texas.
But there is a sad ending to this developing story: The places in Texas are banning apartment development by adopting some of the same restrictive rules that have made California (and New York, for that matter) homes so expensive, like Jay Parsons recently explained.
I hope state lawmakers manage to stop them before they learn California’s lesson the hard way.
What we’re thinking about: Mayoral front-runner Zohran Mamdani has said he was making just $47,000 a year when he signed his first lease for his $2,300-a-month, rent-stabilized apartment in Queens. “I was looking for an apartment that I could pay for myself,” he says told the New York Editorial Board. He left out that landlords typically require tenants’ annual income to be 40 times the rent when signing the lease, which would have been more than $90,000. How did he get the apartment? Send your guesses to eengquist@therealdeal.com.
Something we learned: Of the 191,000 apartments built in the past decade that received city subsidies, only about 3 percent had three or more bedrooms, according to the New York Times reported.
Elsewhere…
Gov. Kathy Hochul signed a law Thursday that, in her words, “prohibits collusion using rent-setting algorithms.” The Real Estate Board of New York had asked Hochul to make some chapter changes to the bill, S7882/A1417-B, but she did not do so.
However, the measure did not appear to be a high priority for REBNY because it would not outright ban software programs that help landlords price their rents. Assembly sponsor Linda Rosenthal had has already amended the bill.
The bill’s summary states that the legislation “prohibits a person or entity from knowingly or with reckless disregard facilitating an agreement between two or more property owners or managers not to compete with respect to rental properties, including by operating or licensing any software, data analysis service or algorithmic device that performs a coordinating function… between such owners or managers of homes.”
Closing time
Residential: The highest housing deal recorded on Thursday was $4.75 million for a 3,443-square-foot condominium unit for sponsorship sale at 323 Bergen Street in Boerum Hill.
Commercial: The best recorded commercial deal was $20 million for a 27,020-square-foot auto body shop at 127-48 Northern Boulevard in Corona.
New on the market: The highest price for a home that came on the market was $29.5 million for a 12,250-square-foot townhouse at 11 Gramercy Park South. Adam Modlin and Andrew Nierenberg of the Modlin Group have the listing.
— Matthew Elo
#Daily #Dirt #House #hunting #time #machine