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Buying A House In Austin? Here’s How Much You Can Afford

By Richard Archer

Austin is the cool place to be these days, but the housing market in “the music capital of the world” is triple digits H-O-T!

But stay tuned… because we are going to share some smart ways to calculate “‘how much house can I afford in an in-demand city like Austin?” 🤔

BUT FIRST… A FEW FACTS ABOUT OUR IN-DEMAND MARKET 🔥

Home prices in Austin have spiked nearly 10% in the last year. It’s getting expensive for those who want to put down roots and get their own piece of Austin real estate.

The average home value right now in Austin is just over $360,000, and the median listing price is $379,000. (1)

With our market as hot as it is, it is more important than ever to have a solid grasp of how much house you can really afford before you sign on the dotted line.

Ten years ago we saw what happens when too many people get caught up in the rush and end up in over their heads. 👎🏻

WHY ONLINE CALCULATORS DON’T SHOW THE WHOLE PICTURE 🙈

So, how do you know how much you can really afford in our incredible city? Some people think using an online calculator is a great way to crunch the numbers.

However, a calculator in and of itself is not sufficient. A calculator’s purpose is to determine “how much of a mortgage you may be able to obtain.” But just because a lender is willing to give you a mortgage doesn’t necessarily mean you can afford it or you should get it.

There are a few other critical goals and lifestyle items to consider first…

WHAT ELSE DO YOU WANT BESIDES A HOUSE?

Just because you can technically “afford” a mortgage payment doesn’t mean it’s the best choice for you right now. It’s important to take long-term goals into consideration. Taking on too hefty of a mortgage will limit funds for your other goals, making them harder to achieve.

Do you want your children in a private school? That will reduce how much money you have to put toward a house payment on a monthly basis.

Do you want to retire early or travel often? An online calculator doesn’t know that. Using an online calculator to determine the mortgage size to take on could make it challenging for you to fulfill your dream of becoming financially independent or seeing the world.

While the online calculator is a good starting point, it is an oversimplification. It’s important to look at the big picture of your life to see how owning a home fits into your other goals and priorities.

ARE YOU REALLY SURE YOU WANT TO BUY? 🏠

Owning a home is an important milestone in our American culture. How important is it to you personally, though?

Many young people purchase homes because that’s what’s supposed to come next after starting a real job and getting married, and before the kids start coming. Too many people purchase a home on autopilot and don’t take the time to even consider if it’s what they really want in life.

FINANCIAL COSTS

Contrary to popular belief, owning a home isn’t right for everyone. It isn’t always a good financial move. There are so many expenses that come up when owning a home it’s impossible to list them all.

It goes all the way from big-ticket items like HVAC and a new roof to little things like backflow testing, shower curtains, and tree trimming. Do you know how much it costs to replace outdated brass faucets?

If you look at Zillow’s website, it will tell you that the mortgage for a $375,000 house would be about $1,463 a month. (2) You look at that number, see the picture of the pretty house with all of its curb appeal, and think, “That’s cheaper than my rent. I’m in!”

But that number doesn’t include taxes. And it doesn’t include insurance. It doesn’t include the HOA. Or any of the myriad of expenses mentioned above. Once all of the expenses are laid bare, many people decide that it just makes more financial sense to rent rather than buy.  

LIFESTYLE COSTS

Even if you have the money, owning a home might not fit your lifestyle. Are you sure you want to stay in Austin long term? If you change your mind, it’s much easier (and cheaper!) to pick up and leave if you rent instead of own a home. Homeownership serves as an anchor that many people appreciate while others loathe.

Even if the nomadic lifestyle holds no appeal for you, you may not want to be anchored quite yet. If you’re still building your career, being anchored to a house could keep you from pursuing a promising job opportunity elsewhere.

What happens when you have kids? Will you want to be closer to the grandparents (and free babysitting)? Are you satisfied with the schools in your neighborhood, or will you want to move to a better district? If that’s too far in the future, you may not be ready to make a commitment yet.

YOU DON’T HAVE TO FIGURE THIS OUT ALONE  🙌🏻

When you own a home or are thinking about purchasing one, it’s challenging to anticipate all of the different expenses that will crop up or the different factors that need to be taken into consideration.

You simply don’t know what you don’t know.

I love to come alongside people who are right in your position and give them a leg up. I understand the stress and anxiety that you are facing as you approach making the biggest purchase of your life. It can be daunting.

But, it doesn’t have to be. Partnering with an experienced financial professional can help lift the burden from your shoulders and help lower your stress knowing you are making the right choices for YOUR life and values.

If you’re considering buying a house in Austin, give me a call first.

We can review your goals and priorities, see how home ownership may fit in, and find a price point that will make ALL your dreams possible, not just home ownership!

Schedule a 15-Minute Introductory Call with Me



About Richard

Richard Archer is a financial advisor and the President of Archer Investment Management with more than twenty years of industry experience. He specializes in providing comprehensive financial planning and investment guidance and personalized care and attention to executives with complex compensation and families pursuing financial freedom. Along with holding a Wharton Bachelor of Science in Economics and a Texas MBA, he is a CERTIFIED FINANCIAL PLANNER™ certificant and a Chartered Financial Analyst®. He combines his advanced industry education and knowledge with his genuine care for people to provide clients with an exceptional experience. To learn more about Richard, connect with him on LinkedIn or visit www.archerim.com.

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(1) https://www.zillow.com/austin-tx/home-values/

(2) https://www.zillow.com/homes/for_sale/Austin-TX/29486978_zpid/10221_rid/350000-400000_price/1385-1583_mp/3000-_lot/30.7076,-96.913147,29.877564,-98.657227_rect/8_zm/