Nerve Endings Firing Away

2. The homebuyer tax credit makes buying a house more affordable.

Not necessarily. Just because you got an $8,000 tax credit toward the purchase of a home doesn’t mean that you actually saved $8,000. In areas where there is strong demand for housing and the supply of new housing is limited — including the Washington metro region — tax credits may result in the bidding up of home prices.

[Source: 5 Myths about Homeownership]. This short and interesting article on popular myths on homeownership puts things in perspective for potential home buyers; especially pertinent to us since we just made the plunge to get our first home. Firstly, the point that I quote about is true of College Station. It has a strong demand for housing and the supply of new housing is limited. This report on the housing market [PDF] as of May 1, 2007 although dated is still relevant. As you see, the total demand far outstrips the sales units under construction (for rentals, supply meets demand). The in-migration of high-skilled workers (professors and research staff) to the town is strong due to the presence of Texas A&M University. The investment crowd also has a significant presence as parents buy homes/condos during their kids’ tenure at the university (they sell or lease out units after they graduate). The majority of the homes sold fall under $200,000; the price somewhat tempered by the presence of the city of Bryan.

Surprisingly, the older homes in town tend to be more expensive than newer ones simply because of the now-cliched adage, location location location. Homes located near the university or within the older boundaries of the City are expensive and if you must find a home suited for your budget, you must be willing to drive five more minutes down south on Hwy.6. But don’t drive out too far to the Indian Lakes and Coves at Nantucket subdivisions where the homes are palatial and prices can touch a million. If you drive west, you still may get what you want at the price you want but then be prepared to drive down couple of miles even for a loaf of bread. Public transportation in this town is non-existent so if you want to live close to the amenities, you have to rent. Our previous apartment was fantastically located [within walking distance] near shopping, a public park, coffee shops, bars, restaurants, mall, and close yet not too close to the highway. Unfortunately, homes are older and more expensive in that neighborhood.

Coming back to the question of the tax credit saving money myth quoted above, it is valid if you are purchasing your home ONLY to avail yourself of the savings. Before the tax credit was extended couple of weeks back, we avoided rushing in to making our decision. The extension merely sweetened the deal for us. Are home builders gaining at the expense of home buyers in College Station? I think not. Why? I’ll keep that for a later time.