Why are many cheap homes in Katy lately (Houston, West: real estate market, foreclosure)

[observer]

While looking at the internet recently, I noticed that there are many homes in the Katy area that are considerably cheaper than say, 1 year ago. Most of the homes that are listed cheap are not the newer ones. Most of them were built between 1975-1983. However, similiar homes when on the market 1-2 years ago were going for more. It seems as if anyone wanting to buy an older used home can really get a good buy.

Last summer when I visited the area and did some research there were not as many "affordable older homes" like there is today. Not that they were expensive last year, but it seems as if there are more homes and more homes listed at a lower price as opposed to a year ago; older homes in the years I mentioned above.

[ayannaaaliyah]

Possibly because of all the new construction. Which being in the construction industry, new is not always better. But many buyers think that newer means better and that newer comes with less problems, which is so not true. Nevertheless, I also think that the sub-prime crisis is having an effect on the housing market overall. I don't see a huge difference in pricing from last year, maybe a slight decline, but nothing major like some other cities/towns are experiencing.

[poodlestix]

I also think some of those buyers have gotten sick & tired of the nightmare traffic when they try to commute down Interstate 10 each morning.

[usc619]

Originally Posted by observer

While looking at the internet recently, I noticed that there are many homes in the Katy area that are considerably cheaper than say, 1 year ago. Most of the homes that are listed cheap are not the newer ones. Most of them were built between 1975-1983. However, similiar homes when on the market 1-2 years ago were going for more. It seems as if anyone wanting to buy an older used home can really get a good buy.

Last summer when I visited the area and did some research there were not as many "affordable older homes" like there is today. Not that they were expensive last year, but it seems as if there are more homes and more homes listed at a lower price as opposed to a year ago; older homes in the years I mentioned above.

Why buy old when you can buy new? I would rather have a home with the latest and greatest technology ie; energy efficent, stone elevation, granite tops, recess lighting, ect..... The two main reason my wife and I didn't want to buy used is beacuse we did not want to inherit someone else pest problem ie; termite, roaches, mice, ect... A lot of people do not have a pest program set up with their home (I think is foolish) and given the climate we live in that can be a big mistake. the second is newer homes are built more energy efficent than older home, I don't think I have to point out how important that is.

[jd433]

Hello,
I Have To Agree. I Just Bought A 2200 Sf Single Story Older Home (1977) In South Katy/cinco Ranch Area For 105k. I Couldn't Believe It. It Was A Foreclosure But Still I Thought That Was A Very Good Price.

While I Was Looking I Also Bidded On A 2200sf Home With A Pool For 95k And Lost To Someone Paying Cash. Right Now Is Time To Get Them While There Hot.

I Guarantee You This Wont Last For Long, As Soon As This Subprime Mess Cleans Up Those Homes Will Go Back To Where They Were In The 120k-140k Range.

Also Don't Pass Up On Katy. With The I-10 Improvements Nearing Completion In The Next 2 Years And All The Developements In The Energy Corridor It Has A Bright Future.

[professorsenator]

This is one of the major downsides of the oft-repeated "low housing costs" shtick that Houston boosters and apoligists talk about. Those who buy new homes in the 'burbs often see very little real (i.e. above the rate of inflation) appreciation in the value of their homes. This depends to some extent, of course, on the neighborhood. But overall, Houston sees nothing like the home appreciation rates in some other parts of the country.

My brother bought a home in H-town 10 years ago in a pleasant neighborhood and he has seen about a 60% appreciation in the value of his home over the ensuing years. The same house bought in Boston would have cost more up front, but it would be worth a whole heckuva lot more now, even after the housing bust.

One of the key advantages of the high priced real estate markets on the east (and west) coasts is that they have, in the long run, shown greater ROI (return on investment) than cheaper markets like Houston. Yes, Houston has lots of attractive homes for under $250K. But they're likely to be worth under $250K for a very long time. And your house could even go down in price if Megalopolis Builders buys another 500 acre cow pasture one more exit down the Interstate and throws up a gazillion new cracker-box houses that will now be competing with your house when you try to sell it.

[Wysiwyg]

what were people thinking when then decided to use 'cinco' to name a location

[DanBosCalTex]

I plan on living in my home for the next 30 years, maybe longer. I am not looking at my house as an investment(but thats nice if it turns out that way) I am looking at my house as a home. My kids are going to grow up there, my grandkids will come and visit me there. I imagine it will double if not triple in 30 years. Houston will be like every other metropolis in time...overpriced.

[flo2900]

Originally Posted by DanBosCalTex

I plan on living in my home for the next 30 years, maybe longer. I am not looking at my house as an investment(but thats nice if it turns out that way) I am looking at my house as a home. My kids are going to grow up there, my grandkids will come and visit me there. I imagine it will double if not triple in 30 years. Houston will be like every other metropolis in time...overpriced.

I agree

[kpoeppel]

Originally Posted by professorsenator

This is one of the major downsides of the oft-repeated "low housing costs" shtick that Houston boosters and apoligists talk about. Those who buy new homes in the 'burbs often see very little real (i.e. above the rate of inflation) appreciation in the value of their homes. This depends to some extent, of course, on the neighborhood. But overall, Houston sees nothing like the home appreciation rates in some other parts of the country.

My brother bought a home in H-town 10 years ago in a pleasant neighborhood and he has seen about a 60% appreciation in the value of his home over the ensuing years. The same house bought in Boston would have cost more up front, but it would be worth a whole heckuva lot more now, even after the housing bust.

One of the key advantages of the high priced real estate markets on the east (and west) coasts is that they have, in the long run, shown greater ROI (return on investment) than cheaper markets like Houston. Yes, Houston has lots of attractive homes for under $250K. But they're likely to be worth under $250K for a very long time. And your house could even go down in price if Megalopolis Builders buys another 500 acre cow pasture one more exit down the Interstate and throws up a gazillion new cracker-box houses that will now be competing with your house when you try to sell it.

House appreciation is great if you already own a house, but for those who don't, it's not good at all.

Real appreciation is not sustainable in the long run, since real appreciation means a real decrease in affordability. New graduates like me will refuse to take jobs in areas with high housing costs. Firms will have to pay much higher wages to attract the same talent, and will thus consider moving out of town to stay competitive. Look at California, for example.

The whole idea that a house can generate wealth out of thin air is bunk anyway. It violates the first principle of economics: there's no free lunch. House appreciation is a "zero sum" game. A house-owner's gain is a first-time-buyer's loss. The real "winners" are the lenders and banks, who make a killing on the huge amounts of interest that must be paid on high house prices. Interest payments are a mis-allocation of resources that could have been used for productive activities instead of just "financing" activities.

Look at population trends. Where are the highest rates of growth? In high-price areas like the Northeast and West Coast, or in the low-price areas like the Sunbelt? It seems that people are "voting with their feet" on which regime they like better.

Don't forget that a house is one of the few "investments" that must be constantly maintained, which costs money. Also, one must pay property taxes on a house. Stocks and bonds do not need to be mowed, re-painted, and repaired. Also, one only pays taxes on those investments if there is a profit. With a house, one pays taxes annually, regardless of whether the price of the house rises or falls.

As for the housing bust, we are a LONG way from seeing the end of it. Prices still have a LONG way to fall before price-to-rent ratios come back in line with historical averages. How much will houses in Boston be worth when prices finally do "hit bottom"?