Houston and Kansas city real estate report

[cbr]

I am happy to be moving back from KC to Houston, but sad to report that I bought a house in KC in 11-2007 to appease my lovely wife.

I hunched, though I had not yet discovered itulip, that real estate had been too happy for too long, and that I should not buy in KC at that time, though trouble had already started and we were getting a 'discount.'

I lost that marital battle.

The KC market is however a lesser bubble than many, and it looks like what was a $302,000 house with $40k in improvements, in 'the' most trendy inner city neighborhood might still be a $290-310k house.

Lots of showings, no offers.... not even low ballers, even though our house is probably in better condition and more movein ready than any of the others.

The burbs in KC however are suffering worse. If YRC, Sprint, the Rail and GM plants die it will be really rough.


Perhaps more interesting is the Houston market; it is still VERY proud of its inner city real estate, (probably a 2-5% INCREASE in prices since mid 2007) but there is a big secret to behold if you bike the city late at night, compared to online real propery searches:

Quick background: The old homes inside the loop are generally not for sale; when they are they are priced minimum $300k for a fifty year old 3-2 on a small lot in average shape; this is flat or even up from 2 years ago.

The nice neighborhoods run $550k and up for old houses.

The new McMansions are $900k+

These prices have not dropped yet; just a beginning of a slight slow down in closings.

Now back to the interesting thing: almost EVERY 'lotbox' (my term for a poorly built but 'fancy' 3 story dual condo erected on the grave of a formerly nice small pier and beam house - typically financed with an ARM and sold to yuppies for $400 - 650k) has a FOR SALE sign on it; and almost all of them are VACANT.

Hundreds and hundreds of them in one small section I have perused. Many are brand new, having never had a move in, and have chain link all the way around them.

And more interesting? They are NOT on har.com, houston's supposedly comprehensive real estate listing.

PS: I am still trying to convince my wife that we should NOT buy another friggin house right now in Houston!

Your comments welcome.

[zoog]

...Now back to the interesting thing: almost EVERY 'lotbox' (my term for a poorly built but 'fancy' 3 story dual condo erected on the grave of a formerly nice small pier and beam house - typically financed with an ARM and sold to yuppies for $400 - 650k) has a FOR SALE sign on it; and almost all of them are VACANT.

Hundreds and hundreds of them in one small section I have perused. Many are brand new, having never had a move in, and have chain link all the way around them.

And more interesting? They are NOT on har.com, houston's supposedly comprehensive real estate listing. ...

Sounds like yet another example of "shadow inventory".

Almost one-third of homeowners (31 percent) said they would be at least somewhat likely to put their homes on the market in the next 12 months if they saw signs of a recovering real estate market, according to Zillow’s first quarter Homeowner Confidence Survey (http://zillow.mediaroom.com/index.php?s=173).

This “shadow inventory” will likely be one of the contributors to a recovery that is more “L”-shaped than “V”-shaped. As sales rise and inventory is cleared off, many homeowners will start to test the waters again by putting their homes on the market, thus keeping supply levels higher than they would be without this pent-up inventory.zillow link (http://www.zillow.com/blog/when-the-bottom-arrives-a-flood-of-shadow-inventory/2009/05/19/)

Even this far into the national decline, there appear to be many people still out there who expect the housing market to turn around soon. I imagine this is especially true in places like Houston (or Kansas City) which did not experience the extraordinary run-ups and subsequent collapses of places like Phoenix, Miami, etc.


Oh another note: Brand-new properties being sold by developers are not always listed with the local realtor-organization-sponsored multiple listing service. If the developers have an in-house agent or are otherwise handling the sales themselves (common, especially for larger builders), they may not always pay the fees to have the properties listed, relying instead on their own advertising, drive-by shopping, alignment of the stars, etc. for potential buyers.

[vanvaley1]

I am happy to be moving back from KC to Houston, but sad to report that I bought a house in KC in 11-2007 to appease my lovely wife.

I hunched, though I had not yet discovered itulip, that real estate had been too happy for too long, and that I should not buy in KC at that time, though trouble had already started and we were getting a 'discount.'

I lost that marital battle.

The KC market is however a lesser bubble than many, and it looks like what was a $302,000 house with $40k in improvements, in 'the' most trendy inner city neighborhood might still be a $290-310k house.

Lots of showings, no offers.... not even low ballers, even though our house is probably in better condition and more movein ready than any of the others.

The burbs in KC however are suffering worse. If YRC, Sprint, the Rail and GM plants die it will be really rough.


Perhaps more interesting is the Houston market; it is still VERY proud of its inner city real estate, (probably a 2-5% INCREASE in prices since mid 2007) but there is a big secret to behold if you bike the city late at night, compared to online real propery searches:

Quick background: The old homes inside the loop are generally not for sale; when they are they are priced minimum $300k for a fifty year old 3-2 on a small lot in average shape; this is flat or even up from 2 years ago.

The nice neighborhoods run $550k and up for old houses.

The new McMansions are $900k+

These prices have not dropped yet; just a beginning of a slight slow down in closings.

Now back to the interesting thing: almost EVERY 'lotbox' (my term for a poorly built but 'fancy' 3 story dual condo erected on the grave of a formerly nice small pier and beam house - typically financed with an ARM and sold to yuppies for $400 - 650k) has a FOR SALE sign on it; and almost all of them are VACANT.

Hundreds and hundreds of them in one small section I have perused. Many are brand new, having never had a move in, and have chain link all the way around them.

And more interesting? They are NOT on har.com, houston's supposedly comprehensive real estate listing.

PS: I am still trying to convince my wife that we should NOT buy another friggin house right now in Houston!

Your comments welcome.

What's the hurry? If there's no answer to that then why not suggest to her to rent an 'upscale' house in an upscale area for less than she can purchase the same or lessor house in the same area? That's assuming there are rentals in those area that are available and are reasonably priced.

Or call some major banks REO departments and/or foreclosure magazines, websites, newspapers, etc. that tract defaults and foreclosures and see what you can find that's available now or that might be available in the near future? Would she be amenable to an upgraded and upscale rental for a year or so while ya wait for the 'right' house to hit the market at a lower price?

[World Traveler]

cbr,

You got me curious as to where you were looking in Houston, since I live there.

Are you talking about the area just to the west of downtown, along and in between Allen Parkway and West Gray, and West Gray and Westheimer, up to around Montrose St? There's been a lot of new construction there, starting in the late 1990's, and continuing till housing bust. I do know people that have bought new townhomes in that area. It's also an area where condos and townhomes replaced old homes.

Or further southwest, along Southwest Frwy? Where's there's been some condo builindg, but not near as much as in the above area.

I've been in Houston 35 years, and I can say our housing bust, at least in terms of stand alone houses, doesn't seem to be as bad as other parts of the country. Nothing like the second half of the 1980's.

But it's not good either. A friend who was a real estate agent got out of the biz a year ago, not enough sales to justify cost of the RE licence. On my street, we had one foreclosure last year, and friends recently bought a foreclosure near their home to serve as a rental property.

Houston economy is still very involved in the oil and gas industry. With Peak Cheap Oil facing us, I think Houston real estate may be a good longer term investment, say if you're thinking in terms of 10 years out. If you buy prudently, for a reasonable price, minimally you should be able to sell it at least its cost and maybe also cover the inflation premium. Because we will probably continue to have population growth in the future.

Out where I live in the northwest suburbs, we don't really see lots of For Sale signs. And in the 20-30 year old neighborhoods, you can get a very nice 2600 sq ft house, in a nice neighborhood, for under $200,000.

But you're right about those brand new townhomes and condos near downtown. They are way over-priced, there's been over-building in last 7-8 years.

[plinko]

Thanks for the post. I live in austin, but remember helping a friend find a place two years ago (summer 2007) in houston, and saw a number of the newer 'lotbox' homes you talk about. My take was similar, they're in newly gentrified areas, and while it's nice that they're pretty new inside, we yuppies felt really uncomfortable driving around the area. My friend ended up splitting a 2br apt. with a roomate near the galleria for ~675/mo.

If possible, maybe you should consider some of the burbs (a.k.a. woodlands/sugarland/cinco ranch).

I'm currently in a conundrum where I'd like to find a 1br apt in austin somewhere close to the hip areas, but keep the costs fairly low. While 500/mo would get you a decent area of space close to campus or downtown 6 years ago, it doesn't do jack today. I saw a remodeled "efficiency" today in the south congress / oltorf area, hardly any area to allow for a couch and a queen size bed going for ~675/mo. Living in a town that's currently being heralded by MSM as one of the best places for opportunity right now doesn't help much :P

[World Traveler]

I sure haven't found Austin particularly cheap, in fact rents seem higher than in Houston. We are currently renting an apartment for my son 3 miles from UT campus, $710/mo for 450 sq ft. It is a nice complex, well-maintained, but nothing fancy.

A significant number of jobs in Austin revolve around technology industry, and, at least in personal reports I receive from the front, that industry doesn't seem to be doing lots of hiring right now. My son is majoring in Electrical Engineering, some of his friends graduated in June, and quite a few are having problems landing jobs, in Austin or elsewhere.

Our house in Houston is fairly close to the big HP campus. It's a huge, beautiful campus inherited from Compaq, with quite a few buildings. They just sold off majority of buildings to the Lone Star Community College system. A friend who was just laid off by HP told me that HP-Houston is having huge lay-offs this year, and that they are are only retaining 2 buildings and "cubicle-izing" them. Friend said that in majority of cases, HP is simply moving those "lost jobs" overseas, the final task of many of the laid-off HP-ers is to train their foreign replacements. Sad and scarey. Also interesting is the fact that while HP doesn't seem to have the money to retain employees and buidlings, the community college system does!

[plinko]

Wow, we should talk more World Traveler! My dad worked in those buildings back in the compaq hey-day of the 90's. I remember going there for some high school competition back then, the place felt a bit over-the-top then. Gotta love the greenspan era :P

I work in the same field in austin, and in many ways feel pretty lucky for now. I also try to keep a pulse on UT graduates, and you're right, I know a number who have graduated this year and haven't found jobs yet -- or there's people who were expecting an offer after already interning at a company, then getting rejected due to hiring freezes. I've also been running into old classmates who recently lost their jobs, luckily some of them have had some backup plan already of going to grad school.

I've heard reports of local tech companies doing things such as taking away sodas/bottled water, some even taking away custodial service. Not sure if this is a psychological thing or a real cost-saving effort.

Speaking of grad school, I feel like I've seen more people studying for GRE/GMAT/XXX standardized test more these days at the coffee shops I frequent.


Five years ago in Austin, I could easily find a parking spot in the downtown area for free at night without driving very far (save for mardi gras / holloween), I rented a room typically for $500/month in any area north or west of campus. Things started getting expensive around 2005 in my opinion, starting with UT tuition. This also is when the condo boom started getting underway, kicking up into high gear around 2007. Hearing from friends, HOA fees for a 2 bedroom at milago are roughly $500 a month, and a 1BR at the 360 tower is $300 a month and possibly going up. Nevermind how much taxes + whatever mortgage people are paying there.

Speaking of Austin being a tech-town: http://gigaom.com/2009/06/19/affordable-austin-no-longer-a-tech-mecca/
I tend to agree with it in many ways, but that's for another day.

[lb]

http://har.com/MLS/dispPressRelease.cfm

enjoy.