Inside the Loop Housing Stats?

[voltron]

Does anyone have thoughts on how the inner loop housing market is doing? Just from glancing on HAR.com, it looks like prices have increased quite a bit in the last year. Is Houston's real estate market poised for growth despite what's happening on the national stage?

[TheNiche]

Does anyone have thoughts on how the inner loop housing market is doing? Just from glancing on HAR.com, it looks like prices have increased quite a bit in the last year. Is Houston's real estate market poised for growth despite what's happening on the national stage?

The Inner Loop is a large and varied market. If you can be more specific regarding various neighborhoods, it would be easier for us to give you an opinion.

[Original Timmy Chan's]

Our neighborhood, South Union, was the "lucky" recipient of a 50% increase in appraisal values from HCAD this year.

New homes have been built, or are being built, on nearly every block in the neighborhood. The new homes are definitely bringing up the value of property in the neighborhood...and because of that, we're starting to see a lot of "for sale" signs going up. I think a lot of long-time owners are looking to cash in.

[dalparadise]

My opinions, for what they're worth:

I think Downtown sales are in for some hard times. The lease market might be really good for landlords over the next few years, though.

I also think townhouse-heavy neighborhoods like The West End, Midtown and Rice Military are due for a big correction pretty soon. I don't think current owners are going to like it, either. there are, of course some exceptions, like the area south of 59, near the Museum District.

Places with bungalows and smaller houses, like The Heights, Montrose, Timbergrove and such will probably continue to grow at a huge rate. I'm not sure we've even come close to testing the top of that market. Sunset Heights, on one end and Shady Acres on the other seem bitten by the delusion that they can pull values like their nextdoor neighbors. I think they will find out soon that they can't. Then, maybe in the next 10 years or so, they will and people who gambled here will look like geniuses.

Transitional neghborhoods like the East End and points south from there will need to keep an eye on retail infrastructure. If they get good quality grocery, restaurant and store options opening in their neighborhoods, the prices will go boom! If not, they'll see a spike as new town houses come in and then a correction in a few years. How you play that could make a real difference in how you view this situation.

Large home neighborhoods like Southside Place, River Oaks, West U, Southampton, etc. will probably continue modestly appreciating in built-out areas and be going crazy in tear-down ones. These regions have proven virtually recession-proof and determined to make sure you can't afford them.

Throughout the Southeast side, there will be pockets of speculation, but values should remain largely flat after having enjoyed a few years of good growth. These seem to be solid, conservative investments.

Northeast and and around the Harrisburg area are mostly absentee landlord neighborhoods, where the property is worth more than the houses can bring in rent. This keeps new buyers out, because when financed, the houses won't cash-flow. If you own some outright, it's fine. Otherwise, it's a money-loser. Thus, values stay pretty flat.

A real bright spot is the Southwest area around Stella Link and Braeswood, west of Main. There's lots of new mixed with re-hab and old, well-kept homes. Values are climbing and neighborhoods are growing.

In general, the highrise market is pretty flat. Previously untouchable buildings like Randall Davis' stuff or Bayou Bend Towers, or the few fairly exclusive buildings around the park are beginning to dip into Joe Anyman's price range. the problem is that their maintenance fees are still high, so it keeps them out of reach. It's a resale problem for current owners who end up seeing a larger percentage of their payment not translate into equity, too.

[Houston1stWordOnTheMoon]

Highrise maintenance fees in Houston are completely insane as well as the prices for downtown living. I would have to be 2 steps from stupid to pay those high prices to live in those places.

[TheNiche]

My opinions, for what they're worth:

I think Downtown sales are in for some hard times. The lease market might be really good for landlords over the next few years, though.

Agreed.

I also think townhouse-heavy neighborhoods like The West End, Midtown and Rice Military are due for a big correction pretty soon. I don't think current owners are going to like it, either. there are, of course some exceptions, like the area south of 59, near the Museum District.

Not so sure. I certainly don't anticipate a great deal of price appreciation, and I could forsee a slight decline in prices if interest rates go up at a rate that is faster than expected, but I don't get the sense that it'd be a disaster, either.

Places with bungalows and smaller houses, like The Heights, Montrose, Timbergrove and such will probably continue to grow at a huge rate. I'm not sure we've even come close to testing the top of that market. Sunset Heights, on one end and Shady Acres on the other seem bitten by the delusion that they can pull values like their nextdoor neighbors. I think they will find out soon that they can't. Then, maybe in the next 10 years or so, they will and people who gambled here will look like geniuses.

I'm concerned that land values in many parts of the Heights area may be somewhat overinflated. If I owned there, I'd be giving some long and hard thought to cashing out.

Transitional neghborhoods like the East End and points south from there will need to keep an eye on retail infrastructure. If they get good quality grocery, restaurant and store options opening in their neighborhoods, the prices will go boom! If not, they'll see a spike as new town houses come in and then a correction in a few years. How you play that could make a real difference in how you view this situation.

My only concern with the East End is that it is able to catch a lot of the market spillover from people priced out of Montrose and the Heights, and that if those neighborhoods were to have a correction, the East End would lose its primary competitive advantage. Otherwise, I'm just crossing my fingers and waiting for the 2010 Census. I'd expect that it'll give rise to more retail development and rehabilitation.

Large home neighborhoods like Southside Place, River Oaks, West U, Southampton, etc. will probably continue modestly appreciating in built-out areas and be going crazy in tear-down ones. These regions have proven virtually recession-proof and determined to make sure you can't afford them.

I don't know about the last sentence, there, but I concur that these are safe areas.

Throughout the Southeast side, there will be pockets of speculation, but values should remain largely flat after having enjoyed a few years of good growth. These seem to be solid, conservative investments.

Northeast and and around the Harrisburg area are mostly absentee landlord neighborhoods, where the property is worth more than the houses can bring in rent. This keeps new buyers out, because when financed, the houses won't cash-flow. If you own some outright, it's fine. Otherwise, it's a money-loser. Thus, values stay pretty flat.

Many of these areas raise a red flag with me. The land value appreciation is very much linked to interest rate volatility and where there are habitable improvements, they aren't worth a great deal relative to the value of the lot. If a neighborhood in these areas is not in the immediate path of redevelopment or you aren't looking at picking up a row of shotgun shacks all at once, I'd steer clear.

A real bright spot is the Southwest area around Stella Link and Braeswood, west of Main. There's lots of new mixed with re-hab and old, well-kept homes. Values are climbing and neighborhoods are growing.

Very well-located. TMC is driving force behind appreciation in that area.

In general, the highrise market is pretty flat. Previously untouchable buildings like Randall Davis' stuff or Bayou Bend Towers, or the few fairly exclusive buildings around the park are beginning to dip into Joe Anyman's price range. the problem is that their maintenance fees are still high, so it keeps them out of reach. It's a resale problem for current owners who end up seeing a larger percentage of their payment not translate into equity, too.

Concur. I'd expect that a greater proportion of high rises in coming years will be rental.

Additionally, the condo market in my area, Astrodome/TMC, has cooled off somewhat. Surprising, too, considering how easy the access is to the TMC. It seemed to have coincided with the Katrina/Rita experience...whether or not there's a causal relationship there, I couldn't say.

[voltron]

Wow...thanks guys. That is exactly what I was looking for.

I did some browsing in the Rice Military area (my price range is 250K - 300K) and I just can't imagine living that close to the railroad or that close to some very sketchy areas. As we were driving to the West End, I literally saw a drug deal go down. I can't imagine that much appreciation in that area with railroads and drugdeals right around the corner.

[dalparadise]

Wow...thanks guys. That is exactly what I was looking for.

I did some browsing in the Rice Military area (my price range is 250K - 300K) and I just can't imagine living that close to the railroad or that close to some very sketchy areas. As we were driving to the West End, I literally saw a drug deal go down. I can't imagine that much appreciation in that area with railroads and drugdeals right around the corner.

I'm kinda casually looking in that price range right now, too. There is not a lot out there that seems worth it. I used to live in the Jackson Hill area of the West End, in a town house that I sold for a decent profit when things were still jumping. The area has gone down a little since then and the townhouses don't seem to be as hot as they once were.

Washington hasn't grown up, as promised, into the grand boulevard it could be. There's also a lot of junk that's been built in the area, with no real cohesive style. It all seems very...temporary.

Not a great sign for longterm values.

[TheNiche]

Washington hasn't grown up, as promised, into the grand boulevard it could be. There's also a lot of junk that's been built in the area, with no real cohesive style. It all seems very...temporary.

Were you expecting something else?

[MiDTOWNeR]

Our neighborhood, South Union,

Just curious where this neighborhood is? Thanks.

[musicman]

I just can't imagine living that close to the railroad or that close to some very sketchy areas. As we were driving to the West End, I literally saw a drug deal go down. I can't imagine that much appreciation in that area with railroads and drugdeals right around the corner.

Was just in the new Target and i clearly heard the trains go by. kind of surprised me in a place like that.

[Original Timmy Chan's]

Just curious where this neighborhood is? Thanks.

The area I'm referring to is between SH 288 and Scott Street, just north of the South Loop and going up to Corder. This stretch of Scott Street isn't much to look at, but the neighborhood behind it is a quiet area of single-family homes. There are plenty of vacant lots available, plenty of abandoned homes and homes in need of demolition. The availability of cheap, close-in, convenient lots is helping bring in some new home construction.

There are definitely more $$$ being invested here now than any time in the last 20 years.

[HeightsGuy]

Things may soften a bit in the "usual suspects" areas inside the loop due to rising interest rates more than anything, but I think the long-range outlook on most inner-loop areas is can't miss. Unless you think all the long-term population indicators on the Houston area are bunk, then demand for close-in property can only increase in the next few decades.

I'd think twice before trying to flip a property in this climate, but I also wouldn't worry twice about buying inner-loop for the long-haul.

[RedScare]

The only reason to cash out of the Heights right now is if you are leaving town. Interest rates are under 6.5%, and not expected to move much in either direction. The Houston economy is expected to remain vibrant for at least the next five years. Baby Boomers started turning 60 this year, and many are moving closer to town. Even though land in the Heights is going for up to $35 per foot, that is still much lower than Montrose, Hyde Park and Midtown, where it is going for $50.

Besides, where would I move to? I have to live somewhere. I am close to everything, I have 6,600 feet of land, the house is sturdy and the right size, and even a 1986 size crash could not lower my home value below what I bought it for. The only people who should get nervous are the ones who bought too much house for too little down, with an ARM. I did none of those things. My mortgage is lower than most people's inner loop apartments. I'm not going anywhere.

With the number of $700K and higher homes being built around me, there are no worries on my street.

[TheNiche]

The only reason to cash out of the Heights right now is if you are leaving town. Interest rates are under 6.5%, and not expected to move much in either direction. The Houston economy is expected to remain vibrant for at least the next five years. Baby Boomers started turning 60 this year, and many are moving closer to town. Even though land in the Heights is going for up to $35 per foot, that is still much lower than Montrose, Hyde Park and Midtown, where it is going for $50.

Besides, where would I move to? I have to live somewhere. I am close to everything, I have 6,600 feet of land, the house is sturdy and the right size, and even a 1986 size crash could not lower my home value below what I bought it for. The only people who should get nervous are the ones who bought too much house for too little down, with an ARM. I did none of those things. My mortgage is lower than most people's inner loop apartments. I'm not going anywhere.

With the number of $700K and higher homes being built around me, there are no worries on my street.

Trust me, a 1986-style crash would give every property owner a cause for concern, no matter where you are. Fortunately for all of us property owners, I don't think that such an event is at all likely.

If I were you, I'd sell what you've got, buy into a home with similar characteristics but at a much lower price in the East End, and pocket the cash that's left over (or alternatively, eliminate your mortgage altogether).

But then, that's just me. I personally don't care much for some of the yuppified businesses that have more recently moved into the Heights. They've crossed that subtle line between bohemian/funky and yuppie/sheek. Give me Mama Ninfa's, Champ Burger, Dinner Bell, Tel-Wink, Dot Diner, Frank's Grill, Kawonowan, 888, and Mandola's Deli any day; you may keep your 'new and improved' Vietnam, with its menus now depicting prices rounded off to the nearest dollar and without the dollar sign. ...OK, rant finished.

Edited September 14, 2006 by TheNiche

[MiDTOWNeR]

The area I'm referring to is between SH 288 and Scott Street, just north of the South Loop and going up to Corder.

Good to know. Thanks!

[ricco67]

I'd have to agree with what Red stated and to add on.

If you're one of those people that work to flip houses, this market is not the best to do it in.

While I don't see an 80's crash, I do believe that there is going to be a substantial increase in housing inventories, which could lead to pressures to lower the value by those who are "motivated" sellers.

If an 86 repeat does occur, the only ones that will hurt are those stated by redscare. Those that are buying homes for that are simply going to live in them for the long haul (go fig!) and not intend to buy a home strictly as an "investment" property.

[TheNiche]

If an 86 repeat does occur, the only ones that will hurt are those stated by redscare. Those that are buying homes for that are simply going to live in them for the long haul (go fig!) and not intend to buy a home strictly as an "investment" property.

False. Even if you're in it for the long term, it is better to have a strong housing market than not. There are two primary reasons: 1) long-term plans usually change in mid-course, and 2) if you need to take out a 2nd mortgage on the equity stored in your home, you may find that there's not all that much left of it.

A home that is owned is always an investment.

[ricco67]

False. Even if you're in it for the long term, it is better to have a strong housing market than not. There are two primary reasons: 1) long-term plans usually change in mid-course, and 2) if you need to take out a 2nd mortgage on the equity stored in your home, you may find that there's not all that much left of it.

A home that is owned is always an investment.

False in both cases?

I agree that life has a tendency to sway back and forth from one's plans. But if you intend to stay there for the long term, then it's really a non issue. Most people I know rarely jump from house to house every 5-10 years so they can "upgrade". While yes, a home is an investment in your future because it's something you physically own.

quite frankly, a person to puts in a home equity loan is a fool unless they need to put thier behind out of a financial fix due to a castrophic illness or something.

[TheNiche]

False in both cases?

I agree that life has a tendency to sway back and forth from one's plans. But if you intend to stay there for the long term, then it's really a non issue. Most people I know rarely jump from house to house every 5-10 years so they can "upgrade". While yes, a home is an investment in your future because it's something you physically own.

quite frankly, a person to puts in a home equity loan is a fool unless they need to put thier behind out of a financial fix due to a castrophic illness or something.

In addition to the "upgrade" rationale of switching between houses, there are many other factors that usually go into home sales, including but certainly not limited to:

- Job transfers across town

- Job transfers out of town

- Job offers from across town

- Job offers from out of town

- Unexpected layoff/termination from job

- Moving to better school districts for kids

- Major flood or other disaster

- Death/incapacitation of homeowner

The above factors may apply to only one member of a family, be it a husband, wife, or child, and still cause a need to relocate. And home equity loans have their place in the world, most notably, as you pointed out, for emergency healthcare needs.

[RedScare]

Sorry, Niche. Ricco gets my vote. Here's why. All of your statements are based on gaming the housing market as another place to make money. That's all well and good for you modern 21st Century investors, but I've already played that game. I am in on the upswing of a gentrifying neighborhood. I have some of the greatest neighbors I have ever known. All of us have keys to each other's homes. There are few places I could move to with my profits where I would be as happy as where I am at. To cash out, I would have to be happier with my profits than with my neighbors. I don't even want to meet the person who would prefer the profit on the sale of his home over good neighbors.

You should also consider that I have 25 years on you. Maybe in 2031 you'll agree with my way of thinking. Maybe not. That's your call. But, your advice does not appeal to me. (BTW, I don't hang at the new Vietnam joint either.)

Now, on to the economics. You stated...

In addition to the "upgrade" rationale of switching between houses, there are many other factors that usually go into home sales, including but certainly not limited to:

- Job transfers across town

- Job transfers out of town

- Job offers from across town

- Job offers from out of town

- Unexpected layoff/termination from job

- Moving to better school districts for kids

- Major flood or other disaster

- Death/incapacitation of homeowner

The above factors may apply to only one member of a family, be it a husband, wife, or child, and still cause a need to relocate. And home equity loans have their place in the world, most notably, as you pointed out, for emergency healthcare needs.

I am self-employed. Job transfers and offers do not apply to me. Neither does the layoff, though I have cut my expenses so that I only have to work 20 hours a week. Keeping this house and it's little mortgage is in my best interest.

I am single. I don't care about schools, though they are spending $40 million on the high school up the street. I am in the Heights, 24 feet above the bayou, in a block and beam 2 feet above the ground. I am not worried about floods. If the homeowner dies, my family will sell the house.

When I get old enough to not mow the yard, I will sell the house and move into a condo or assisted living. If I have a mortgage or equity loan, that would not be possible. Besides, I already cashed out 2 years ago to buy this house. My equity is already almost 50% of the value of my house. I also have 3 retirement plans, if I choose to stay.

Even those that are not in my position should think twice before using their home as an investment vehicle. Your homestead cannot be taken by any creditor except for your mortgage lender (or the IRS). If life throws you a curve, you can lose your home. Even if you get lucky and never hit a soft patch, constantly playing the markets takes a toll. I am much happier now that I quit the rat race. (It is also nice to be able to shrug when people tell me how much money they make.) For the last month, I have spent more time renovating my house than I've spent at the office. It feels great to say that.

Cashing out to go to the East End is not a bad idea for some. I just have it too good where I'm at.

[musicman]

I have some of the greatest neighbors I have ever known. All of us have keys to each other's homes. There are few places I could move to with my profits where I would be as happy as where I am at. To cash out, I would have to be happier with my profits than with my neighbors. I don't even want to meet the person who would prefer the profit on the sale of his home over good neighbors.

I could almost hear the theme to Leave It to Beaver playing in the background when i read this.

[RedScare]

I could almost hear the theme to Leave It to Beaver playing in the background when i read this.

Nah, they're all liberals, and either no kids or the kids are grown. There's bound to be a better theme out there.

[musicman]

Nah, they're all liberals, and either no kids or the kids are grown. There's bound to be a better theme out there.

Ah ok Golden Girls...

[Guest danax]

When I get old enough to not mow the yard, I will sell the house and move into a condo or assisted living. If I have a mortgage or equity loan, that would not be possible.

You'll never get too old to mow the yard, Red. You gotta believe that. The guy up the street from me, near the tracks, mows his yard all the time, I think that's his main activity, and he's 88. Not only that, he mows the railroad ROW and picks up litter there too. I was doing some guerrila planting in the ROW (no, not that) , just some Katie Ruelia to make it pretty, and had a miniature bamboo ready to plant. He asked me not to plant it as he'd just have to cut it. I said ok.

Get yourself a reel mower. I know you probably used one too as a kid. Power mowers make you soft and deaf little by little. A reel mower (not real, for the younger members of the listening audience) you have to push. It's reeeeelll hard to push through the St. Augustine so your shoulders get tight and you get a good, gentle workout. Once you've done it a few weeks, it's easy. Keep ya young, I say!

I would imagine that the demographics where you are now share your current philosophy to a large extent so we can imagine that a lot of those bungalows are in safe hands for the next 20-40 years.

[RedScare]

Ah ok Golden Girls...

I was thinking more like Grumpy Old Men.

[musicman]

Get yourself a reel mower. I know you probably used one too as a kid. Power mowers make you soft and deaf little by little. A reel mower (not real, for the younger members of the listening audience) you have to push. It's reeeeelll hard to push through the St. Augustine so your shoulders get tight and you get a good, gentle workout. Once you've done it a few weeks, it's easy. Keep ya young, I say!

Ok i'm going ot bed cause i'm thinking Leave It to Beaver again.

Dont click this! You'll regret it

Edited September 15, 2006 by musicman

[TheNiche]

If the homeowner dies, my family will sell the house.

When I get old enough to not mow the yard, I will sell the house and move into a condo or assisted living. If I have a mortgage or equity loan, that would not be possible. Besides, I already cashed out 2 years ago to buy this house. My equity is already almost 50% of the value of my house. I also have 3 retirement plans, if I choose to stay.

Ah, but what if you happen to die when the housing market is in a slump? If you'd cashed out at the peak and done nothing more than to keep your money in short-term T-bills, then there'll be more for those that you leave behind. Of course, that's assuming that you care about their financial well-being.

The same strategy can be utilized to provide yourself with a safer retirement. All you have to do is practice responsible financial management, and you'll never have to worry about running out of money before you die.

Oh, and the Leave it to Beaver music is now stuck in my head. Does seem to apply, however. After all, you and all of your neighbors seem to live in an ideologically-homogenous little world unto yourselves. That's not all that different...

[Gary]

Although I'm not a liberal I agree with Red's sentiment. He lives in a home he loves, has great neighbors, and is sitting more or less on a good investment.

I wish I was in your shoes Red.

[sunsets]

So what's wrong with staying in a neighborhood because you like it? Not everything on earth needs to be about making as much money as humanly possible before you die.

And how do you know when it's time to sell anyhow? No one knows the "peak" until after the peak has passed. I assume you make the best judgement you can, and if you get lucky, so be it.

signed.... just another commie idealist living in the Heights.