Richmond, TX · Member since 2018 · 29 posts · 31 votes
So, I'm noticing some good values in the area downstream from the area flooded by the Army Corps of Engineers. Given that it is unlikely they will do that again any time soon, and that mitigation projects are underway to reduce the chance of future flooding, does the community still think this is a no-go area? Or is this still a place where deals could be made?
I think you have to clearly differentiate those areas that flooded previously (Tax day, Memorial Day, etc.) prior to Harvey, and those areas that got hit due to the release of water from the reservoirs during Harvey.
@Jason Bible I seem to remember that you called it in those days/weeks immediately following the event -- great opportunity to buy & hold rental property, but it might take a little time for collective memory to forget about the flooding.
The areas of town with an ARV north of 300k, that experienced flooding, are getting killed. Massive number of HML and PMLs foreclosing, we call it Harvey 2.0. Getting back into the affluent flip market to early.
Now if you can hold 400k+ houses in memorial, they will rise to 1MM in a few years.
@Sid Jones There is a major infrastructure problem with Houston's drainage. One that is, in reality, not capable of being fixed due to the actual costs to remedy it. I have seen estimates as high as $30 billion dollars. On top of that, new construction is removing land that could previously absorb water. Mix in the fact that climate change is occurring, and that we have had 3 consecutive years of flood events (Tax Day, Memorial Day and Harvey). I would proceed with caution.
Appreciate both your insights - and yes, awareness of the time horizon is a big thing vs. the likelihood of future natural disasters is an important consideration. On the other hand, the following law suits against the Army Corps of Engineers would seem to also be pressure on the ACE *not* to allow similar events in the near future. Food for thought.
@Sid Jones I love Houston. Been here most of 10 years and have no plans to leave. But I think you're wearing very rose colored glasses. @Kevin Bazazzadeh is right.
@Sid Jones The DOM of neighborhoods with previously flooded homes are higher than neighborhoods across the highway where no houses flooded and the disparity is growing, not shrinking, as one might expect as the one set of homes have all been recently rehabbed. Buyers are weary of buying in areas where houses flooded, even if the house itself didn't flood. Also, having sign after sign on a street of houses for sale never helps. Houston is still a strong market, but we are helping a lot of clients that were planning on flipping move to a rental strategy. In 10 years, these investors will come out of it smelling like a rose, but not without some heartache on the way.
I think you have to clearly differentiate those areas that flooded previously (Tax day, Memorial Day, etc.) prior to Harvey, and those areas that got hit due to the release of water from the reservoirs during Harvey.
@Jason Bible I seem to remember that you called it in those days/weeks immediately following the event -- great opportunity to buy & hold rental property, but it might take a little time for collective memory to forget about the flooding.
Or you could just build/lift them 4-8 ft in the air like parts of Braeswood. There are some grants being thrown around for lifting, but I have no clue what the requirements are and whether they require need-based, owner-occupied, etc...
I think you have to clearly differentiate those areas that flooded previously (Tax day, Memorial Day, etc.) prior to Harvey, and those areas that got hit due to the release of water from the reservoirs during Harvey.
@Jason Bible I seem to remember that you called it in those days/weeks immediately following the event -- great opportunity to buy & hold rental property, but it might take a little time for collective memory to forget about the flooding.
Id link the radio show I did calling it, but the mods keep taking down my links. I made another prediction, houses that didnt flood, in neighborhoods that experienced flooding would see price reductions. Which absolutely happened.
I was driving around our new office looking for a donut joint. Found one off of 6, 90% of that strip center is still vacant from Harvey. Welcome to Harvey 2.0...
Or you could just build/lift them 4-8 ft in the air like parts of Braeswood. There are some grants being thrown around for lifting, but I have no clue what the requirements are and whether they require need-based, owner-occupied, etc...
you know anyone whos gotten a grant? I've never lifted one. But I hear its an easy $50/ft.
@Mark Sewell I agree, we should differentiate Harvey from the other events, since it is less likely to have a Harvey level of cataclysm year after year vs heavy rainfall in flood prone areas. Based on the individual strategy, it probably will dictate if you move on properties affected by Harvey or not. If you are buy and hold long term and we get hit by another event this summer that causes it to flood, you are probably OK since it bought it at a bargain and can hopefully rehab it with insurance and still keep positive or at a small loss. If you are looking at more short term, as @Jason Hirko pointed out, things have been moving slower. If it a Harvey type event happens and you haven't sold the property, then you would likely see a substantial loss of value and may be left holding the bag. Anyone's guess to what the future holds, just have to see if the calculated risk is acceptable.
@Candace S.@Jason Bible FEMA has a grant for increased cost of compliance (ICC), however from my understanding, it is capped at $30K. The houses that were raised near Braeswood were part a $14.8 million package that FEMA had given the city in 2015 to mitigate large future flood insurance claims (Harvey made that laughable).
The supposed cost to raise those Braeswood homes ranged from ~$200K to $400K per property. One of the examples given (Chronicle) said it would cost $369K to raise a house that was valued at $177K. Just getting the ICC money would have only lowered the out of pocket cost to $339K. This only makes sense if you aren’t the one having to pay for it, since the home market value likely wouldn’t increase anywhere near the added cost to raise it.
Also, FEMA has a document that discusses some of the different elevation options for a property based on housing characteristics and Flood Protection Elevation (FPE). However, based on what I am seeing, the only method being used around Braeswood is elevating the entirety of the slab foundation.
@Candace S.@Jason Bible FEMA had given the city in 2015 to mitigate large future flood insurance claims (Harvey made that laughable).
There's a story floating out there than a significant number of houses that were lifted, in response to both tax day floods, that were lifted experienced flooding from Harvey. You're spot on about value. We are considering buying all the thrice flooded properties to AirBnB. Its the only exit that we can afford to self insure and retain future appreciation of the land value. Those lots are not getting cheaper.