Real Estate Bubble Burst In Houston Too?

[brain]

Following is the article from Houston Chronicle on april 11 2007. Available at

http://www.chron.com/disp/story.mpl/business/4704368.html

For the first time in more than three years, Houston-area home sales fell last month, a possible sign that the housing market's heady days may be coming to an end.

Single-family home sales dropped 8.8 percent in March from the same month in 2006, according to the Houston Association of Realtors.

During the month, Realtors sold 6,004 single-family homes through the Multiple Listing Service, which includes mostly existing and some new homes in the city of Houston and its surrounding counties.

A possible explanation for the drop was that sales in March 2006 were unusually high, posting a 22.7 percent gain over the previous year.

Meanwhile, the median price for a single-family home rose 5 percent last month to $150,590.

The association said it will closely monitor sales activity in the coming months, but for now, it's not overly concerned.

"One month is not a trend," said Rob Cook, the group's chairman, adding that sales are still up 6 percent over the last 12 months. "It may be an aberrant situation."

That was the case in January 2004, the last time home sales fell. During that month, sales declined by less than 1 percent and were flanked by two strong months of increases.

Part of the reason for the slowing home sales this year may be a result of psychological effects over a national slowdown. Recent headlines on increased foreclosures, builder cutbacks and a fallout in the subprime-lending sector are making some people leery about entering the housing market. Still, rising defaults have led some lenders to put much higher standards on home loans and cut back on some completely.

Houston Realtor Bryan Boyle has seen business taper off this year, after an unusually busy December. Three of his listings that were supposed to close in February closed in March, and he hasn't seen much activity on the 10 homes he's now listing.

"I'm not getting near the traffic that I thought," said Boyle, of Keller Williams Realty Memorial.

Last month, the number of homes on the market rose by about 13 percent, though such an increase is not unusual this time of year, when homeowners plan for summer moves.

Plus, the number of days a home stayed on the market in March dropped to 79 from 84 a year ago, according to the Realtor association.

Local economist Barton Smith, who thinks one month of data can contain too much "statistical noise" to be taken too seriously, said the real news will come next month.

"You've just got to look at more data to really be sure that there's a true trend with underlying economic fundamentals as opposed to some aberration," said Smith, director of the Institute for Regional Forecasting at the University of Houston.

Houston has been bucking the trend seen in other large markets, where prices and sales have been weakening.

A strong energy-related economy combined with healthy job growth have created what some consider a housing boom in Houston, even though prices have gone up slowly.

"We're bucking the trend because we're very oil-related," Cook said. "We haven't had a bust. We've always had slow growth annually. That's healthy."

[KatieDidIt]

I guess it depends where you are looking but it still seems full steam ahead to me. The areas we are trying to buy its about 250k higher than it was 3 years ago. Its pretty painful the condition most of them are in to.

Part of the problem in the Memorial area is that there are so few listings. Our agents says people are not moving around the way they used to because they can't afford to move up. They sit and appreciate in value. The few that do go on are bought in just a few days and sometimes hours.

[musicman]

The areas we are trying to buy its about 250k higher than it was 3 years ago. Its pretty painful the condition most of them are in to.

I think the prices are inflated in some areas which might account for some of the slowdown. did the bubble burst? IMO no.

[GovernorAggie]

I think the prices are inflated in some areas

Like Midtown

[texas911]

Its like buying something on sale at Neiman Marcus, a suite originally selling for $5000 is on sale for $3000, which is a pretty good discount but its still $3000! The drop in home sales was compared to the previous year.

[TAK]

There are only a few parts of Houston that are bubbliscious, unlike CA, NY, DC/VA, where EVERYTHING - including suburbs - is now priced at a point at which a home purchase is now only attainable for those in the top 10% (or higher) in income (housing subsidies for $100k incomes are real!).

In Houston, an income above $30k can afford a home - not necessarily ITL and in high demand / high wealth areas , but certainly inside the beltway (is that ITB?), in the city limits, or in the suburbs.

That's not to say prices can't go down some with general market conditions (glut of new homes, foreclosures, etc.) However, home value appreciation in Houston hasn't outpaced inflation by double digits... ever?