11 News: Houston area home prices down, foreclosures up (homes, neighborhoods) - Texas (TX) - Page 4 - City-Data Forum

professorsenator · 03-19-2008, 11:28 AM

Quote:

Originally Posted by jimboburnsy

Why buy a lived-in house and pay for someone else's improvements and appreciation when you can buy brand new for less down the road?

This is one of the main reasons that housing is cheap in Houston, but appreciation in value is modest at best in most suburban areas. Most urban centers in the U.S. have very different housing economics than Houston--their entry prices are higher but opportunities for asset appreciation are greater.

Having lived in both situations, I like the non-Houston model better. But then again I have a higher than average income and that means that affordability in a place like Boston (where I am now) is not as big of an issue as it is for many others.

The Houston model makes it easier for lower income folks to first get into a house but it's tougher to have their house become a financial "nest egg" that provides for upward mobility. The Other City model makes it easier for homeowners (most of them middle income and up) to have their house be a "nest egg" for upward mobility or upon retirement, but it's tougher to buy the first home, especially in a good area. Since I can easily afford a good home, I'm not worried about entering the market. My home has been a great investment and when I choose to move up or retire I will be able to "cash out." If I was in a Houston home, my affordability is effectively the same (yes, I could get a bigger house in Houston but I can a buy a good house in a good location in either place) but my cash out ability is much more constrained. Thus, the Other City model is more favorable to folks like me in the long run.

I discuss this not to dis Houston, but to point out that the Houston model is not the be-all, end-all that some suggest it to be, and that there are advantages to the Other City approach that Houstonians often overlook.

tstone · 03-19-2008, 11:36 AM

^^ Housing inside much Houston isn't always a nest egg either. You hear a lot of bragging that goes like, ''My house doubled in value after 10 years.'' Which is the same as saying, "I get a 7% rate of appreciation, not adjusting for taxes, insurance and mortgage interest." And there is one case on this board where the person lost money overall in Bellaire over the course of 20 yrs. He/she can't be alone here.

And as the article says, both the core and the burbs are experiencing this foreclosure and price-plunge phenomenon. City dwellers and suburbanites are both fooling themselves if they think their area is not affected.

jfre81 · 03-19-2008, 12:05 PM

Quote:

Originally Posted by tstone

Which is the same as saying, "I get a 7% rate of appreciation, not adjusting for taxes, insurance and mortgage interest."

And what about inflation?

tstone · 03-19-2008, 12:43 PM

Oh yeah, forgot that one.

To sell up Houston to people you have to phrase it like this:

''Inflation is now creeping on 7%, but you should be financially ok in the long run because this great, inner-loop house doubles in value every 10 years!!!''

Sounds so much better than saying, "You'll be chasing your tail as long as you're here."

LSB · 03-20-2008, 12:54 PM

Thanks everyone for all of this information. We have a home for sale in the Clear Lake area (on the water, gated community). It has been on the market since Oct and we are getting desperate and considering leasing it out. But I am worried that it is not just the market but may have to do with our realtor who has been awful! We have moved out of the city so I do not always know what is going on with our house or with the Houston market. Would it be a mistake to lease it right now? Do you think that the market will improve this spring/summer?

tstone · 03-20-2008, 02:10 PM

I'm in the northern extension of Clear Lake and the houses in our area seem to be selling relatively fast from what I notice. There are no foreclosures around us and people have been around for awhile. I'm not on the water but closer to Ellington which may have something to do with it. Insurance is getting crazy expensive, even in our area. It could be your realtor sucks; I don't know. I've dealt with more bad than good in the past. Though leasing may be a good idea but I wonder how much of your monthly payment + insurance + tax + HOA you'll recover from a tenant. Our neighborhood leases in the $1500-2000 range and they are rare to find. When you do see one, the 'for lease' signs stay up for months and months, and they're usually priced $100-200 cheaper per month than if you bought. Though $1000-1500 leases in other neighborhoods fill up all the time. Something tells me your gated house is out of both of these leagues.

King Koopa · 03-20-2008, 02:13 PM

11 News just countered that story yesterday. They had one up showing how Houston is the best place in Texas to be during this "recession".

professorsenator · 03-20-2008, 02:17 PM

Quote:

Originally Posted by LSB

Thanks everyone for all of this information. We have a home for sale in the Clear Lake area (on the water, gated community). It has been on the market since Oct and we are getting desperate and considering leasing it out. But I am worried that it is not just the market but may have to do with our realtor who has been awful! We have moved out of the city so I do not always know what is going on with our house or with the Houston market. Would it be a mistake to lease it right now? Do you think that the market will improve this spring/summer?

In the era of realtor.com and the million other online house hunting sites, blaming ZERO interest on your realtor sounds dubious to me. With no interest whatsoever, my guess is that it's priced too high. Even a house with lousy curb appeal and dated/dirty interior will get lookers if it's priced enticingly.

One of the flip sides of the cheap housing market in Houston is that selling at a good price is often tough. But keep in mind that ANY house can be sold if you price it right.

Jezer · 03-20-2008, 02:22 PM

One of the main things that became apparent living in a large 1990s house in Houston was the energy costs.

The house may well be relatively affordable, especially by UK standards, but having single glazing and large windows led to an electric bill of over $600 in August 2005 to keep the interior at around 75 F.

Energy costs are even more now. Double glazing- not sure if you call it that- was incorporated into the building code in 2002.

Solar panels- what about them?

Sorry if this is off topic.

tstone · 03-20-2008, 02:29 PM

FYI, electricity rates have gone down year after year since we were about 1 year deep into deregulation. They did spike up, but they dropped fast as the competition got more fierce. That is, if you shopped around. If you didn't shop around (or you have bad credit), you continue to get hosed to this day. In 2005 I was paying about 14 cents/kWh. Now I'm at 11 cents until March of next year. It hasn't been this cheap since 2001.

Though whatever you were paying that house must have been large indeed! Mine has never been above $200 and it's a 1990s house (2200 sq ft). Has those crappy windows I'm about ready to replace with something good. Why they aren't standard around here I will never know.