$ per square foot trend

[TAK]

OK, HAIFers, this one is probably not that easy, but we seem to be pretty good at coming up with a few good theories, so give me a hand with this one...

At what price per square foot do you notice a neighborhood start to continue to significantly increase in price (demand / improvement / etc.)?

For example, I'm looking at a neighborhood that has sold at the following:

6 mos 4/24/06 - 10/24/06 = $63 per sf (97% of list price = $65 )

6 mos 10/24/06 - 4/24/07 = $65 per sf (95% of list price = $68)

12 mos 4/24/06 - 4/24/07 = $64 per sf (96% of list price = $66)

so, over the last year, the selling price per sf has increased $2 psf, and asking prices have increased $3 psf during the last 6 months - which is, supposedly, the "slow" time. this neighborhood is on the edge of a transitioning neighborhood ($120psf) and a not so great neighborhood ($54psf). HISD schools. outside the loop.

at what point does $psf start break through the ceiling (think stock market) and you find an area really start to pick up?

give it a shot...

[woolie]

Don't hold your breath on rapid appreciation. It looks like those days might be over for the foreseeable future.

[TheNiche]

OK, HAIFers, this one is probably not that easy, but we seem to be pretty good at coming up with a few good theories, so give me a hand with this one...

At what price per square foot do you notice a neighborhood start to continue to significantly increase in price (demand / improvement / etc.)?

For example, I'm looking at a neighborhood that has sold at the following:

6 mos 4/24/06 - 10/24/06 = $63 per sf (97% of list price = $65 )

6 mos 10/24/06 - 4/24/07 = $65 per sf (95% of list price = $68)

12 mos 4/24/06 - 4/24/07 = $64 per sf (96% of list price = $66)

so, over the last year, the selling price per sf has increased $2 psf, and asking prices have increased $3 psf during the last 6 months - which is, supposedly, the "slow" time. this neighborhood is on the edge of a transitioning neighborhood ($120psf) and a not so great neighborhood ($54psf). HISD schools. outside the loop.

at what point does $psf start break through the ceiling (think stock market) and you find an area really start to pick up?

give it a shot...

What is your sample size on the data? Older homes tend not to be uniform in character, so looking at comprehensive sales histories when 'comprehensive' means that a dozen sales per year can be misleading or useless.

If possible, try running a price history of lot sales. If you can adjust for corner vs. in-line, for traffic volume/visibility, or for messy neighbors, you should come up with some extremely valid data that can be applied throughout the neighborhood. Making those kinds of adjustments on lots is a hell of a lot easier than on land and improvements together.

[TheNiche]

Don't hold your breath on rapid appreciation. It looks like those days might be over for the foreseeable future.

This is a common fallacy that folks on-the-outside-looking-in fall into when they're trying to decide whether to invest in a home or real estate, generally. I could argue that investing in any class of used homes in Houston is just a better idea than used homes anywhere else in the nation right now on the basis of economic fundamentals and probably win, but the more important point to make is that a booming neighborhood like Bellaire can happen with or without a booming housing market. Even in stagnant cities, there is usually a boomtown somewhere. The trick is either figuring out where before everyone else does and getting in on the ground floor.

...of course, more widespread tightness in the housing market helps too.

[woolie]

This is a common fallacy that folks on-the-outside-looking-in fall into when they're trying to decide whether to invest in a home or real estate, generally. I could argue that investing in any class of used homes in Houston is just a better idea than used homes anywhere else in the nation right now on the basis of economic fundamentals and probably win, but the more important point to make is that a booming neighborhood like Bellaire can happen with or without a booming housing market. Even in stagnant cities, there is usually a boomtown somewhere. The trick is either figuring out where before everyone else does and getting in on the ground floor.

...of course, more widespread tightness in the housing market helps too.

There will be neighborhoods gentrifying at any point in time, but the rates we saw around the country in the past several years were fueled in large part by access to massive, easy credit for anyone with a pulse. I'm not saying there won't be increases, but it's not going to be anything like what we saw in LA. It can still be a good investment, but it's not the "no brainer" it was 2002-2006.

*waits for the NARcissists to crap on me*

[TheNiche]

There will be neighborhoods gentrifying at any point in time, but the rates we saw around the country in the past several years were fueled in large part by access to massive, easy credit for anyone with a pulse. I'm not saying there won't be increases, but it's not going to be anything like what we saw in LA. It can still be a good investment, but it's not the "no brainer" it was 2002-2006.

*waits for the NARcissists to crap on me*

There's no such thing as a "no-brainer."

[AJXterra]

One trick could be to follow the oil...

I wouldn't think that you could put a purely mathematical theory into place to find the next area to boom without looking at the environmental factors. For instance, Cy-Fair is an up and coming area b/c of schooling, etc. However when 290 goes under construction that move is going to become much less popular, especially when it comes as I-10 is being completed and people can continue to follow the 'oil corridor' and be closer to good jobs and have an easier time getting around.

If you look at the current booming areas you're going to find a major thing in common...within 15-20 minutes of oil related businesses (traders, administration buildings, etc.) and/or the traditional high dollar careers (Law offices, Med Center, Finance companies.) Heights, Rice Military, etc. are within 10-15 minutes of downtown and the galleria area where the big oil/gas traders are located as well as most top law firms and the medical center. 'I can get anywhere w/in 15 minutes' is a huge seller in the Heights where I live. The memorial area (the whole way out past 8) is along the oil corridor down I-10. These places are becoming more and more in demand as these businesses expand and grow while making their fortunes...and that's the key, DEMAND. Would people want to live there more than anywhere else...or is it just convenient b/c the homes are cheaper there than 10 blocks over?

And if you don't want to theorize, there are reports on % increase and decrease in home values for every neighborhood in Harris County over the past 10 years. Find them and look at it...if it's not going up in the middle of the oil boom where Houston is the best job market in the country...then it's probably not going to ever really go up.

Just my two cents...

[TAK]

i agree with following the oil, but that doesn't explain Garden Oaks, Oak Forest, Shepard Forest, Candlelight Park, the East side, etc...

The specific areas I'm referring to are Candlelight Oaks and Mangum Manor, which have been discussed on the forum before. It just seems like it's at the crossroad of right / wrong place, and I wonder what it would take to change that to right place - barring a complete "do over" of all of South Inwood and Acres Homes.

[jm1fd]

i agree with following the oil, but that doesn't explain Garden Oaks, Oak Forest, Shepard Forest, Candlelight Park, the East side, etc...

The specific areas I'm referring to are Candlelight Oaks and Mangum Manor, which have been discussed on the forum before. It just seems like it's at the crossroad of right / wrong place, and I wonder what it would take to change that to right place - barring a complete "do over" of all of South Inwood and Acres Homes.

All those supposed counterexamples of following the oil don't make good counterexamples. They're all a reasonable distance from downtown, the galleria, greenway, etc.

As to Candlelight Oaks and Mangum Manor, I think they're just a bit too far away. Same goes for Oak Forest in 77092...it just takes that extra 5-10 minutes that makes it seem like a long drive.

[mpbro]

Seems that if you're after a doubling in land value (as you alluded), it's somewhat of a crapshoot. To transform an entire neighborhood in a short period of time, you've got to be riding the crest of a wave of concerted development. Once the little guy knows where the big money is moving, it's usually too late.

Perhaps a safer, if less lucrative, approach is to find pockets of value in an already established desirable neighborhood. For instance, you see considerable variations in land value within the Heights, even when there is no obvious barrier, such as a busy street, school district boundary, or differences in deed restrictions. Given a high-demand, liquid market, you'd expect over the long term for values to equilibrate within a given neighborhood. (assuming lots of things, like similar prevailing lotsize, similar construction, etc.)

It's the $64K question, isn't it! Good topic.