BiggerPockets

Houston is a Bright Spot Amonst Sluggish Housing Recovery

Tuesday, March 01

It’s not news that Texas, and the Houston real estate market in particular, have fared better than most of the nation during the economic turmoil of the last few years.  While Texas home prices appreciated at a healthy pace in the 2000’s, none of it approached the huge increases seen in some of the “bubble” markets around the country.  Of course, it hasn’t been pain-free, as anyone trying to sell a home in Houston can attest.  But, several reports released in recent weeks on Houston’s housing market and economic outlook are continuing to paint a rosy - alebeit cautious - picture.

Clear Capital, a provider of real estate valuations and data, said in its Home Data Market Index Report last month that it expects the Houston-Sugarland-Baytown area to see 3.6% growth in home prices, second out of fifty metropolitan areas included in the report.  Washington, D.C. led the way with a projected 6.5% growth, and eleven other areas, including Dallas-Fort Worth, New Orleans, and Memphis are also expected to make modest gains this year.  Nationwide, though, home prices are expected to slip an average of 3.7%, after a 4.1% decline in 2010.  It’s not hard to see how even the modest growth expected for Houston puts us close to the top of the nation.

A couple of areas for optimism exist in the national picture, though.  First, the roller coaster ride home prices took in 2010 isn’t expected to repeat itself.  Last year, as government incentives encouraged homebuyers in the spring, average sale prices rose 9.7% between March and August, only to fall by 9.4% over the remainder of the year as the tax credits expired and foreclosure sales increased.  Now, as markets shed the after-effects of those tax incentives, prices - while lower - are expected to stabilize in 2011.  Additionally, nearly half of all the price declines predicted in Clear Capital’s report are expected to hit in the first quarter.  In fact, 14 of the 50 markets reviewed are expecting gains in the latter half of 2011.

* Clear Capital Home Data Index: National Home Price Trends (Jan. 2006 – Dec. 2011 Forecast)

Another positive prediction for Houston came from Mike Inselmann, president of Metrostudy research firm, last month.  Speaking of the local homebuilding market, he said he believes it has hit its bottom and is on an upswing.  After a flat couple of years, Inselmann predicted increases in home starts between 1.3 to 6.6% over 2010.  And while he noted that it’s hard to call a little over 1% growth a recovery, again it’s all in the perspective.  “We’re at the bottom,” he said.  “Most non-Texas markets are still searching for the bottom.”

So what’s helping make Houston’s future brighter?  As Alex Villacorta, senior statistician at Clear Capital states, “Understanding which path a given market is likely to follow is dependent on several key factors, but the two clear drivers are local unemployment rates and the prevalence of distressed homes.”  Houston’s percentage of homes sold as foreclosures is around the national average of 26%, but it had a year-over-year drop in January of 2%, a positive sign.  And as for jobs, economic forecasts are predicting over 18,000 new jobs this year for Houston.

With jobs, of course, come people.  Allied Van Lines’ annual moving survey listed Texas as the state with the most net relocation gains (i.e. more people moving in than moving out), a title our state has held for the last 6 years.  And people need homes.  As Inselmann pointed out, 15,000 apartment units were absorbed in 2010, leading to higher demand this year.  Higher demand generally leads to higher rent, and higher rent will send some renters into the homebuying market.

Some of these predictions seem to coming to pass.  The Houston Association of Realtors’ market report showed that total home sales rose in January for the first time in seven months.  Additionally, average home prices increased 2.2%, continuing an upward trend that began in mid-2010.  A single-family home’s average selling price was $196,879, the highest on record for a January in Houston.  While much of the price increases are attributable to gains in the luxury home market, the $150,000-250,000 market segment also saw growth starting in December, its first uptick since last May.  In fact, all home markets saw increases last month, and while we’ll need to see a few more months of growth before calling it a trend, Houston’s market certainly started 2011 on a positive note.

Of course any recovery is tenuous, and factors like oil prices and state budgets will no doubt have an effect.  But Houston is well-positioned to lead the way towards a steady housing recovery.  To quote Mike Inselmann, “The next 10 years are a great time to do business in Houston.”  It’s not a bad time to live here either.

Mortgage rates spike, causing slowdown in applications

Friday, February 11

The Houston real estate market may get a renewed boost this year, as workers in the area are earning more, which could give them the financial flexibility to purchase a home.

Data from the Department of Labor shows that during 2010, the cost of overall wages and salaries in the Houston-Baytown-Huntsville metro area grew by 3.4 percent, while total compensation grew by 3.1 percent.

Both of those numbers were above the national average, and the growth of wages and salaries in the region was the most of any of the 15 metro areas included in the national report. By contrast, salaries in Dallas - the second-best in the South region - grew just 2.5 percent over the same time period, while wages in Miami grew by just 0.1 percent.

For many Houston residents, buying a home may be much more affordable than continuing to rent. A recent analysis by the website Trulia found that it would cost just 13 years' rent in the city to buy a median-priced home - making Houston homes some of the most affordable in the country when compared to renting.

Houston real estate: The Benefits of a Sports Town

Monday, December 28

Taxpayers often rally against the construction of new athletic venues. In many cases, millions in public funds are diverted from schools and social programs so that team owners can oversee the creation of revenue-generating sports cathedrals.

Houston, however, features five professional sports teams and has embraced the construction of stadiums and arenas in recent years. And if you are thinking about purchasing Houston real estate, the local sports scene may prove to be an unanticipated selling point.

The NFL’s Texans, MLB’s Astros, NBA’s Rockets, WNBA’s Comets and MLS’s Dynamo call Houston home. The city, whose growth has been fueled by the oil and aerospace industries, has hosted the Super Bowl (2004), World Series (2005) and NBA and MLB All-Star games this decade. Reliant Stadium is also scheduled to host the 2011 and 2016 NCAA Final Four basketball championship.

In short, Houston has quickly become a fan-friendly town. Though few house-hunters would allow a city’s athletic environment to influence their decisions, Houston real estate can only benefit from the availability of first-rate entertainment options.

In 2000, the Astros opened Minute Maid Park. The Astros’ new home features a natural grass playing surface and a retractable roof. Though Houston failed to capture the World Series championship in 2005 by losing to the Chicago White Sox in four games, Minute Maid Park successfully grabbed the attention of the sporting world.

Houston continued to support construction in 2002, by building Reliant Stadium. The home of the NLF’s Texans also boasts a retractable roof. Finally, the Toyota Center opened in 2003. The arena houses the NBA’s Rockets, WNBA’s Comets and American Hockey League’s Aeros. The Toyota Center holds 18,500 spectators.

Houston claims major colleges including Rice University and the University of Houston as well. The city also holds the annual PGA Shell Houston Open at Redstone Golf Club. Past champions include Byron Nelson, Gary Player and Arnold Palmer.

Furthermore, Houston’s favorable climate supports various amateur sports leagues for all ages. From flag football to softball and Little League, the city and its Parks and Recreation Department encourages competition at all levels (www.houstontx.gov).

So those seeking Houston real estate will certainly debate the merits of different neighborhoods and school systems. Sports enthusiasts, however, will also consider Houston’s many teams and athletic venues when making that choice. After all, a city’s athletic environment is of clear value to its overall culture.

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To learn more about the Houston real estate market please visit our website. This post can also be viewed at our other blog site, Houston Real Estate Blog.

INVESTMENT TRAINING CAMP

Wednesday, December 09

If you can hear the whispers below the din of panic, you know that the recent financial and housing collapses have actually created some amazing opportunities for smart investors.  Low interest rates and depressed property values have combined in an environment favorable for long-term gains in the Houston real estate market.

 

It may not be for everyone, but if you're in the right financial position, you have plenty of options.  However, there is a right way and a wrong way to invest, and it's the wrong way that led so many to suffer in the recent housing crisis.

 

Don't think about investing in the Houston real estate market until you've saved up for your nest egg and have held or reduced your expenses to keep it growing.  Your money doesn't work for you unless it's your money.

 

Similarly, don't begin your investment adventure until you've polished up your credit score.  The best opportunities go to those with upfront cash and excellent credit.  Maximize your borrowed capital by making sure you get the lowest interest rates and best terms.

 

It then follows that you should not over-borrow.  The Houston real estate market is continually cycling up and down.  Learn the lessons of the recent debacle, and don't over-leverage yourself to the point you can't survive a down period in the cycle.  If you're smart about it, you won't get rich quick, but you will get rich right!

2M Realty Gives Demographics for Houston Real Estate when viewing Houston MLS

Wednesday, October 28

 

The majority of Houston real estate buyers start their search process on the internet. 2M Realty knows that empowering real estate buyers with as much information as possible provides them the opportunity to make informed decisions. With that in mind, 2M Realty proudly announces the implementation of the Get Local Info tab on its website. This feature is designed to empower real estate buyers with neighborhood information and demographics directly surrounding real estate listings.

"The 2M Realty website enhanced with the Get Local Info feature is an invaluable resource for all Houston real estate customers", said Mark W. Martin, principal broker for 2M Realty. "Our website visitors can now get information for both Houston real estate and the neighborhood where it is located without having to crawl many different websites to get it."

This feature provides detailed statistics and demographic information such as community characteristics, population statistics, financial statistics (average household net worth, median income, etc.), crime rates, weather, climate, and more. It contains local school names, addresses, grades, distance from the real estate listing, and the school website (if available). It also provides a Google Mashup of local amenities like shopping, restaurants, entertainment, churches, health care, and even such things as pet care. This neighborhood information is available to view at all times for all Houston MLS properties anytime it is needed.

To access the Get Local Info tab, online customers simply need to create a free account on the 2M Realty website. Once registered they not only get access to the detailed information for properties in the Houston MLS, they now get access to all neighborhood information and statistics that directly surrounds the real estate listings.