The golden triangle

Those in business, particularly the product development side, like know about the golden triangle:  resources, features, time.   The real estate version is:  price, location, features.  That is the hardest thing to come to terms with when buying a house.  It doesn’t help that there are several other dynamics in the market like competitors (other buyers) and inventory availability.

We started looking more in earnest late last year.  Before then, I was definitely keeping an eye on the market but wasn’t fully comfortable with buying yet.  A lot of that had to do with our moving around so much.  Also, as first time buyers we were bound to go at a slower pace.  The market of prior years didn’t really lend itself to well considered buying given the competitiveness for the better places.

One unfortunate side effect of looking at listings for nearly 3 years was a level of burn out and paralysis had begun to set in.  Too much information can as paralyzing as too little.   Hence creating a framework for a decision is important.   

First we set some boundaries.

Price.  Our plan was to say as close to historical averages of income to price as possible.  Modern convention had people buying at ratios of 5x or more but that seemed simply insane.  Further, we also wanted to use only one of our incomes in the calculation.  Lots of reasons but it boils down to:  flexibility in career & freeing up income for other investments and activities.  

Location.  This was a bit harder.  What area is right for you is pretty personal.  Obviously location and price do have a strong link in real estate so picking target neighborhoods had to match our first criteria.  We don’t have kids, nor plan to, so schools don’t matter.  We do like a walkable area, but much of Austin fits that pretty well.  At the end of the day, a lot of it was about how we spend out time and where our social life interactions occur.  We like our friends and want to see them often, so that was a big factor.  Reasonably close to a lot of things is important especially since the cost of driving (cost, time, carbon) is so high.  

We ended up focusing on Hyde Park, Brentwood / Crestview, Allandale, and to lesser degrees adjunct areas like French Place / Cherrywood or Windsor Park.  Places like Highland Hills, Travis Heights, and Barton Hills are very attractive for many reasons but rarely shook out when considering other factors so they seemed less likely as viable ares for us.  

Setting boundaries on price and location help a lot but in many ways the easier part.  The hard part is when they start to become at odds with what you want in a house (aka the Features).  Defining priorities is critical and seemingly impossible at times.  That will be the topic of the next post.

1 comment July 22nd, 2008