Why was real estate in the West Loop so cheap up until ~8 years ago? (Houston: transplants, sale)

[clutchcity]

What changed? The western portion of the Loop has always been considered the "nice" part of the city. Yet, in 2010ish, you could still find a reasonably priced single family home in Montrose, for example, for less than $275k and it'd be less than a 10-minute drive to your oil & gas job downtown.

[lhafer]

Word got out that Houston was “cheap” and had affordable housing. In comes a lot of people from California and other well off smteansplants who bring a lot of money to the table.

People notice the trend of transplants and start raising the prices of their homes when selling. What might not seem like a good deal to us because we have lived here for a long time, seems like a great deal when people come from crappy little homes costing way more than they should. They have the extra cash to pay. And so the trend begins.

[jfre81]

Originally Posted by lhafer

In comes a lot of people from California

....who have no idea what to pay in a normal real estate market.

The result is Houston is now no longer that good of a value, for what you get (and I don't mean just your house and lot, but the environment you live in) unless you come from a place like that.

[aero100]

As I recall when I was looking to buy in the area in 2008 a 1200-1300 sq foot 2 bedroom bungalow in Montrose was running about $325,000 on the low end of the scale in the middle of the housing crash.

Anyways, supply and demand. They aren't making more Montrose, people want to live there, a certain percentage of the population can afford it, and the city's population overall is increasing. Not all transplants either, plenty of dual income engineers/med professionals/oil people or folks with help from wealthy families that will shell out $500K+ for those homes.

[lhafer]

Originally Posted by aero100

As I recall when I was looking to buy in the area in 2008 a 1200-1300 sq foot 2 bedroom bungalow in Montrose was running about $325,000 on the low end of the scale in the middle of the housing crash.

Anyways, supply and demand. They aren't making more Montrose, people want to live there, a certain percentage of the population can afford it, and the city's population overall is increasing. Not all transplants either, plenty of dual income engineers/med professionals/oil people or folks with help from wealthy families that will shell out $500K+ for those homes.

Not saying it’s all transplants who buy overpriced homes. But I would bet that the transplants started the trend - and because houstonuans still want to live in those desirable inner loop areas - they now have to pay those higher prices.

[aero100]

Originally Posted by lhafer

Not saying it’s all transplants who buy overpriced homes. But I would bet that the transplants started the trend - and because houstonuans still want to live in those desirable inner loop areas - they now have to pay those higher prices.

I agree with you that transplants were certainly a significant part of it. Partially because they are fueling growth and as you say many are coming in with a lot of cash from a home sale in other appreciating markets.

Along with the transplants though there were really big bonuses also putting cash into the pockets of competing buyers when oil was over $100/bbl. So I'd say its a mix of multiple factors.

[dkag]

Originally Posted by clutchcity

What changed? The western portion of the Loop has always been considered the "nice" part of the city. Yet, in 2010ish, you could still find a reasonably priced single family home in Montrose, for example, for less than $275k and it'd be less than a 10-minute drive to your oil & gas job downtown.

Very simple. Rates have been dropping/stayed very low since 2010 up to last December. Low rates make monthly payments cheaper which increases demand (increases number of people able to afford 275K house). Increased demand pushes house prices up. Has nothing to do with Californians... anything wrong with Houston it's those Californians.. As rates go up home prices will start dropping as people won't be able to afford a payment.

Also you can't compare prices in 2010 in the middle of the downturn that followed housing bubble of 2008 to now.

[snackdog]

Montrose was slowly getting cleaned up but at some point hit critical cleanliness. 20-30 years ago it was considered dangerous as hell and crawling with deviants.

The aging (and mind opening) of the Boomers with empty nests has created a migration from 4 bedroom homes in the suburbs to town houses in the inner loop closer to entertainment and restaurants.

[HookTheBrotherUp]

Originally Posted by snackdog

Montrose was slowly getting cleaned up but at some point hit critical cleanliness. 20-30 years ago it was considered dangerous as hell and crawling with deviants.

The aging (and mind opening) of the Boomers with empty nests has created a migration from 4 bedroom homes in the suburbs to town houses in the inner loop closer to entertainment and restaurants.

I moved to Houston as a teenager in 1980, back when the legal drinking age was 18. Anyway, I did not have a car right away, so I had to use the bus, and I still remember going down Louisiana on a Metro bus because my TEMP employment agency was in the Esperson Building, and I had to go there to pick up my checks.

Midtown was not what you see today, not by a long shot. Lots of old houses falling apart. There were some huge houses which were probably mansions in their days, but were run down. I wish I had the opportunity to see what the insides looked like, the stair wells were huge, and lots of wood work, and fireplaces. They've all been smashed to splinters thanks to Houston's lack of preservation laws.

Some days I'd have to switch, and go down Elgin/Westheimer, and Montrose could be described as 'El Montrose'. I'm sure there were all kinds of people, but what I saw the most were Latinos, most likely Mexican's in those days.

I remember when Lower Westheimer began to emerge as "the place" to be at night, lots of bars, crusing, and tons of people walking around, it truly was a pedestrian zone back then. You could still have open containers back then too, so lots has changed.

I will always think Houston made a very bad decision to shutdown the cruising scene, and clamp down on the bars. Some of it was for safety reasons of course, but though no proof, some of it was designed to target the Gay community, at least that is how I saw it.

Every major city has its area that people flock to... Chicago, New York, Los Angeles, Miami, all have zones where everyone wants to be. Houston missed the opportunity to let Lower Westheimer evolve into one of those zones by adopting strict ordinances on traffic, noise and targeting businesses that the city leaders deemed "offensive". Just imagine what could have been.

Anyway, Montrose did gentrify, mainly the area between Montrose Boulevard and Midtown. For a while Midtown was a large Vietnamese community and it was reflected by all the streets having both English and Vietnamese street names no the poles. The Vietnamese eventually left the area to China Town on Bellaire... and there was a thriving Chinatown on the east end of Houston, and there is still a little left, but not much, they also went to Bellaire.

The Latinos from Lower Westheimer/Montrose also left, and of course more than half of the Black community in the Fourth Ward.

Gentrification.

People have started to see the benefits of being central to everything, and so 'supply and demand' kicks in. A neighbor of mine owns property in Montrose, and he once owned two lots next to each other in Montrose. There is one house on it, with a huge pool, garage, etc. The house is valued between 1.5 and 2 million now. My neighbor brought both properties, with houses, in 1981 for $25K a piece!

I never would have considered myself a kind of an urban person, my wife and I married and lived in Katy and began our family. We loved it there, huge house, nice people in the grocery stores, everyone just kind in general. However, as our kids began to get older and have after school activities, we could no longer make it from the Kirby area to Katy near Katy Mills Mall and take them to their events, so we knew we had to move in.

It took a while, but we finally found a place that needed fixing, we saved the house from being demolished and retrofitted with two four story monstrosities. This was in 2012. We paid 258K for the house and lot, but really, the house was worthless, it was the dirt which was expensive!

Fast forward to today, and just the dirt now is about $500K! Yes, you heard right. Houses inside the block can fetch anywhere betweek 400-475K, and houses on corners even more, 500K+ because they can fit three monstrosities since there is more driveway space.

Anyway, sorry for the long post, 'just wanted to give you some history on the prices of the 'hood'!

[LocalPlanner]

I think the price situation described by the OP was pretty uncommon by 2010 - Montrose and the Heights were already getting relatively expensive (for the quality of the homes) by the 2000s. However, the mega-boom from 2011 to 2014 sent it into the stratosphere - the combination of the rapid growth in highly paid young professionals w/o kids and urban-minded empty nesters changed those areas forever, not to mention all the other west-half-of-inner-Loop areas like West U and the nearly complete redevelopment of Rice Military.

The OP doesn't understand how truly cheap the now-trendy areas were in the early to mid-1990s. Suburban folks thought anyone who bought a home in the Heights or Montrose was off their rocker - who would buy a home in a "war zone" that was only destined to sink further into urban despair (meaning lower income Hispanic and Black neighborhoods)? To be fair, those areas had gotten rather rough.

Even the upscaling of Bellaire in the late 1990s surprised a lot of people - it had previously been very middle class at best.

You have to understand that whole idea of "desirable urban neighborhoods" was pretty unknown by the early 1990s, most folks thought the future was in the outer suburbs - the further away from the city and inner suburbs, the better.