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Could someone explain Houston's housing prices


forereal

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Now aside from the obvious of condo vs. house and size, what else is justifying the big difference in price?

Several things: The HOA fees need to be built into the condo sale price and the cost of privately arranging for anything that the HOA provides (i.e. lawnmowing or cable TV) has to be added in to the home's sale price to get an idea of true comparability. Also, the condo appears to be in a very old complex that may have issues relating to age. If you look closely at the photos, you can really see the differences. You also have to remember that having a private yard can be very expensive and that the buildout quality is probably much higher within the new home than in the older condo.

Houston is just this way, especially in the inner city, where high-dollar townhomes are often situated next to tear-down cottages. I live in a 1BR condo built in 1981 that I got for $42k. Up the street a ways are new condos that will likely start at $160k to $180k for a similar floor plan, but between me and the new condos is a Section 8 apartment project. There's always little something for every category of buyer/renter, and its located everywhere.

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The better answer is the lack of Zoning in Houston.

While I dont want to start a debate about zoning, one of the results of no zoning is a very large mixture of neighborhoods within a very close proximity of each other.

Just a few miles away from River Oaks (one of the wealthiest areas of Houston) are some extremely run down neighborhoods.

Land value can have an extreme change in just a mile or two...

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The better answer is the lack of Zoning in Houston.

While I dont want to start a debate about zoning, one of the results of no zoning is a very large mixture of neighborhoods within a very close proximity of each other.

Just a few miles away from River Oaks (one of the wealthiest areas of Houston) are some extremely run down neighborhoods.

Land value can have an extreme change in just a mile or two...

No, even with zoning, there would likely have been neighborhoods very close to one another with widely varying prices. It has less to do with land use controls than with the characteristics of the improvements (age, land value at time of construction, buildout quality, etc.). For instance, the condos that this person was looking at were built in the 60's, when the concept of an upscale Galleria area did not yet exist. Land prices were relatively low, so the complex was built to the market of the day. Then the market changed and the product that is currently there became obsolete. Prices are high relative to condos of similar quality in other parts of town, but that's just a matter of present-day land values.

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That seems kind of weird. There must be houses in the same area built in the 60s when the condo was built. I doubt they are priced as low. Even if it is not as high as the newer homes, it should still be higher in value. I was going to say market value, but I can even figure out what that is in Houston.

For those living in Houston, is home appreciation not something people calculate when buying a home? I see development, newer jobs and diversity being created in Houston but I do not see property appreciation following. Is it too much land available to build on?

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Where are you moving from?

Houston is a BIG city...lots and lots of land. If you move only 5 - 10 miles outside the city, you can buy a home that would cost twice as much or more inside the loop. Houston also has very different neighborhoods within a matter of a few blocks. There is a lot of transitioning going on right now inside the loop. Those condos you mentioned by the Toyota center might be really nice, but the area around the condo very scuzzy. But, that is where you are going to see the most appreciation if you are willing to take the risk of it not transitioning.

One area of town, Montrose, 10 year ago you could get a home for, what? 50K...those same homes are now selling for 350K.

I wouldn't buy here unless you could come down and see it for yourself. Also, check out this website for a comprehensive list of homes www.har.com.

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Here are two examples

http://realtor.com/Prop/1051567382 1bed/1bath condo for 75k

1 mile away is

http://realtor.com/Prop/1055290332 3bed/2.5 bath house 549K

Now aside from the obvious of condo vs. house and size, what else is justifying the big difference in price?

well, one is 700sqft...the other is 3000. also, one is a new build so you will have modern amenities, the other is quite old, so I'm sure there will be issues with age. The newer one is also close to memorial park. in a more residential area, whereas the old one is in a pretty commercial area with lots of traffic. the older one also looks like it is more of an apartment complex, where as the new is a town home. just a couple of observations...

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well, one is 700sqft...the other is 3000. also, one is a new build so you will have modern amenities, the other is quite old, so I'm sure there will be issues with age. The newer one is also close to memorial park. in a more residential area, whereas the old one is in a pretty commercial area with lots of traffic. the older one also looks like it is more of an apartment complex, where as the new is a town home. just a couple of observations...

All correct. I'm still in California so i'm just not use to seeing that. Those are all factors to make a difference in price but not a 600% difference. At least not in California. That is why I was shocked to see the price difference and had to ask.

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All correct. I'm still in California so i'm just not use to seeing that. Those are all factors to make a difference in price but not a 600% difference. At least not in California. That is why I was shocked to see the price difference and had to ask.

600% more money for a house with 400% more space isn't as big of a stretch. In terms of cost per square foot, the disparity shrinks.

Edited by jm1fd
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Guest danax

Condos can be very cheap because they can be very hard to get financed if the owner-occupancy rate of the complex gets too low, which makes it very hard to sell to anyone except investors with cash. This is a risk in buying a condo. You might buy one in a complex that's say, 75% owner-occupied then, in a couple of years, the percentage drops to say 69%, any potential buyer will have to do some hunting for a lender. I would imagine the same situation exists in other states as well.

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Condos can be very cheap because they can be very hard to get financed if the owner-occupancy rate of the complex gets too low, which makes it very hard to sell to anyone except investors with cash. This is a risk in buying a condo. You might buy one in a complex that's say, 75% owner-occupied then, in a couple of years, the percentage drops to say 69%, any potential buyer will have to do some hunting for a lender. I would imagine the same situation exists in other states as well.

That is very interesting. Now that is a reason that I have not thought of before but it makes total sense. Is Houston a heavily invested area? I assumed the high property tax made it undesirable to investors.

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That is very interesting. Now that is a reason that I have not thought of before but it makes total sense. Is Houston a heavily invested area? I assumed the high property tax made it undesirable to investors.

Costs to investors ALWAYS get passed on to renters in the long term. Its just built into the market price, so that the renter will never see it, but that doesn't mean that it's not there.

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  • 3 weeks later...

to make it easy for you since you are coming from California... forget almost everything you know or have heard about real estate. I can't think of any place in California that has real estate characteristics similar to Houston.

Even "location, location, location" can be misleading here, as it is almost impossible to define location. An undesirable location today, may not be in a year, and vice-versa.

Not sure if you've seen a picture of Houston or not, but it is not as picturesque as CA. There isn't any scenery. Demand for land in Houston isn't based on the fact that it's in Houston (unlike most of CA, which has a premium just for being there.)

Yes, there is a lot of land - especially West and Northwest, and the center of the population is moving West - toward the cheap land and away from the city and everything that comes with it. Generally, the things that drive the prices in Houston are income and ethnicity (chicken and egg). However, I think the price of gasoline and the commute will eventually put a smash on moving 25 miles or more outside the loop.

Houston, as diverse as it is as a whole, is quite segregated by income and ethnic background. ("Good schools" is a term people use, but it usually means "a middle to upper-middle class area with fewer minorities.) There's a map of the segregation somewhere... I'll look for it so you won't think I'm making this up or being overly sensitive.

Having said all that. Houston is no California - which is fine with me (I like them both.)

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Here's some info of Houston home prices and the reasons why:

____________________________

Housing sales outpace rates throughout the country

- 4/17/2006

(Houston-Sugar Land-Baytown: Housing)

The Houston residential real estate market continued to play opposite of national trends during February, the most recent period for which the Houston Association of Realtors has compiled statistics from its Multiple Listing Report. In many national markets, prices are skyrocketing as sales decrease. In Houston, the market continues to see strength in both sales and pricing. There were several month-of-February Houston real estate milestones: Highest average sales price for single-family homes; Highest median sales price for single-family homes; Highest dollar volume of sales; and Highest level of pending sales at month end. Total property sales for the month totaled 5,792, a 16.4 percent increase over February 2005. Properties sold during the month reached nearly $1.1 billion, a 26.4 percent increase. The median home price for a single-family home reached $142,960, and the average home price rose to $191,779, both increases from last year of 4.4 percent and 7.8 percent, respectively. The number of available homes at the end of February was 40,857 properties, a decrease of 3.5 percent versus February 2005 but an increase of approximately 40 properties from the previous month. Month-end pending sales were up 23.5 percent. The month's inventory of single-family homes for February remained at 5.2 months. The overall median price of single-family homes reached a record for the month of February at $142,960, an increase of 4.4 percent compared to February 2005. The average sales price for single-family homes was $191,779, up 7.8 percent. Houston's current median price is 31.4 percent less than the national median price. Additionally, total sales for single-family homes in Houston increased by 14 percent. Existing single-family home sales increased 16.4 percent from February 2005. The median sales price for existing homes in the Houston area was $136,000, an increase of 5.8 percent, while the average sales price for the month of $177,862 was an increase of 6.8 percent.

[Houston Business Journal]

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Here's some info of Houston home prices and the reasons why:

____________________________

Housing sales outpace rates throughout the country

- 4/17/2006

[Houston Business Journal]

Does anyone have info on inner-loop home price statistics? To me, its a totally different animal than the rest of Houston as land is not plentiful and demand is higher with the trend that younger folks want to be closer to downtown.

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