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Rice Military Information & Developments


Bacchus

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I have narrowed my house search down to the Rice Military area. While previously I was concerned with future price appreciation on my home, I am now more focused on finding an area that I'm happy to be living in, is safe, and offers a nice lifestyle. When browsing the HAR website, there are literally 90 townhouses for sale in a 7(ish)-block radius of the place I'm looking at. The particular 8-unit block of townhomes that contains the one I'm interested in has only sold 1 unit. Construction just recently finished on all 8 units. I figure they were up for sale well before construction was completed, so they've been on the market for I'd guess roughly 3-4 months (someone correct me if they think this logic is flawed). Additionally, there are loads of newbuilds going up in the area, as well as the 129-unit gigantor-complex just west of Detering that hasn't even broken ground yet. Combining all of this with the perceived peak in the real estate market in late last year, it is a situation that strikes me as being *very* buyer friendly.

Using round numbers, if the price on the home is $400k in the HAR listing, what do you think is the price that the deal will ultimately close at (i.e. how far do you estimate I could negotiate down)? I am not planning on using an agent (let's save this debate for another thread though). Anyone have any good negoitating strategies for me? I'm not under any time pressure to move into something, as I am still under lease at my current residence. I'm thinking that a 10% haircut to the HAR listing price is a starting point for the negotiations. Will this end up giving me the ol' "rejection without invitation to resubmit"? Any thoughts on value/market trends in this area, as well as negotiation strategies would be greatly appreciated.

Thanks!

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my being in the real estate industry not-withstanding, i think your decision to not use a realtor will actually work against you in getting the price you deserve and/or seek as an expert in new construction inner city housing will be able to easily steer you in the right direction to get a good deal.

that said, in general it is hard to say if 10% off the list will get accepted, i would need to know the complex to better determine however i can tell you that many builders are dealing right now in that price range and because of the amount of units for sale in that area sizable discounts are available.

another alternative depending on your time frame would be to build from the ground up. land prices are high in that area however considering you are spending $400k or so, the land prices are not too bad. I can recall a nice piece of land that was near Detering behind that laundry whse. that sold for roughly $36k and it presently has 2 nearly completed townhomes that are probably for sale now.

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another alternative depending on your time frame would be to build from the ground up. land prices are high in that area however considering you are spending $400k or so, the land prices are not too bad. I can recall a nice piece of land that was near Detering behind that laundry whse. that sold for roughly $36k and it presently has 2 nearly completed townhomes that are probably for sale now.

$36k? Isn't that rather cheap for the area? Was it a small lot?

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New construction has a narrow profit margin. A builder is more inclined to throw in upgrades than come down too much on their price. Regardless, though... the most important negotiating tool you can have is comps. If you don't have those, you don't have a whole lot to work with, and it ends up being a guessing game on your end. HCAD has a record of all sales but you will have to go down there to research and get them.

Good luck! It's a nifty area.

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New construction has a narrow profit margin. A builder is more inclined to throw in upgrades than come down too much on their price. Regardless, though... the most important negotiating tool you can have is comps. If you don't have those, you don't have a whole lot to work with, and it ends up being a guessing game on your end. HCAD has a record of all sales but you will have to go down there to research and get them.

If there is a narrow profit margin, then it cost the builder $137/sq ft to build the place, which I simply do not believe. I believe there is a lot of room to negotiate price. Is there anything wrong with asking the guy who has already purchased a unit in the complex what he paid for his? That's the best comp one could get, as the floorplans are almost identical. The other thing is that the house will sell for its market value. That market value could be higher or lower than the cost to build it. The builder is eating a couple thousand dollars every month he can't sell the place due to interest costs. Of course one of the first things out of the agent's mouth when he showed the place a couple of weeks ago was to not attempt to negotiate price (duh, his fee is a % of the price), but instead to shoot for upgrades. I'm pretty much going to ignore that comment, unless people think it is actually legit.

Edited by Bacchus
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If there is a narrow profit margin, then it cost the builder $137/sq ft to build the place, which I simply do not believe. I believe there is a lot of room to negotiate price. Is there anything wrong with asking the guy who has already purchased a unit in the complex what he paid for his? That's the best comp one could get, as the floorplans are almost identical. The other thing is that the house will sell for its market value. That market value could be higher or lower than the cost to build it. The builder is eating a couple thousand dollars every month he can't sell the place due to interest costs. Of course one of the first things out of the agent's mouth when he showed the place a couple of weeks ago was to not attempt to negotiate price (duh, his fee is a % of the price), but instead to shoot for upgrades. I'm pretty much going to ignore that comment, unless people think it is actually legit.

This is a new construction from a builder you are talking about buying? Let us know how the negotiations turn out, I for one would be interested to see how they respond.

To be blunt do you believe there is lots of room to negotiate price because that is what you want to believe, or because of facts or history or background that you have looked up? Have you found this particular builder to give discounts? If you can get it, more power to you. Just be aware that the median list to sale price ratio for the last 6 months on new construction in Rice Military is 99.2%. I suspect the ones that were discounted were the "close out" sales mostly. You are more likely to get a discount on one of those.

Edited by rps324
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This is a new construction from a builder you are talking about buying? Let us know how the negotiations turn out, I for one would be interested to see how they respond.

To be blunt do you believe there is lots of room to negotiate price because that is what you want to believe, or because of facts or history or background that you have looked up? Have you found this particular builder to give discounts? If you can get it, more power to you. Just be aware that the median list to sale price ratio for the last 6 months on new construction in Rice Military is 99.2%. I suspect the ones that were discounted were the "close out" sales mostly. You are more likely to get a discount on one of those.

Where did you find the 99.2% figure? That is almost unbelievable. Especially if we are talking about a median value. How many times did the list price decrease before selling in that analysis? What that tells me is that the selling agent pretty much dictates what price the house will be sold at. Again, that's hard for me to accept.

I'm basing my price commentary on several observations:

1) Only 1 of the 8 houses in the complex has sold. The units are completed, so you figure they've been on the market a few months

2) Other new build houses down the street are offering $25,000 in upgrades.

3) The selling agent bent over backwards to talk about how easy it would be to negotiate upgrades

4) There are no less than 90 houses in the immediate vicinity for sale, most of which are new builds. This is a very small area

5) Nationwide, there is a story a day about how house sales are slowing, housing starts are slowing, and that the residential market in general is primed for a slowdown.

6) Homes in the area have lowered their HAR asking price

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Where did you find the 99.2% figure? That is almost unbelievable. Especially if we are talking about a median value. How many times did the list price decrease before selling in that analysis? What that tells me is that the selling agent pretty much dictates what price the house will be sold at. Again, that's hard for me to accept.

I'm basing my price commentary on several observations:

1) Only 1 of the 8 houses in the complex has sold. The units are completed, so you figure they've been on the market a few months

2) Other new build houses down the street are offering $25,000 in upgrades.

3) The selling agent bent over backwards to talk about how easy it would be to negotiate upgrades

4) There are no less than 90 houses in the immediate vicinity for sale, most of which are new builds. This is a very small area

5) Nationwide, there is a story a day about how house sales are slowing, housing starts are slowing, and that the residential market in general is primed for a slowdown.

6) Homes in the area have lowered their HAR asking price

It came from HAR. 99.2% is the median figure. Most sold for full asking price. If a builder isn't using HAR then those won't show up, and it was limited to ones listed as new construction. Builders simply do not discount much on new construction unless it is a close out.

A lot, not all, but a lot of townhomes don't really get moving until they are completed. Have they been sitting completed for months? Is this a bigger builder? The holding expenses are not exactly going to break them if it is an established builder.

If the other new builds down street are comparable, and are offering $25,000 in upgrades, why aren't you looking at them? There obviously is something superior about these over them. Negotiating upgrades will be a lot easier than getting a discount, as you already know.

I don't doubt there are 90 houses for sale, I have always had concerns about that situation, especially for resales, but I don't think that is particularly a new situation. Inventory has been high like that for awhile.

This may be why you see prices lowering, are these resales or new constructions dropping prices?

As for a national slowdown, that argument has absolutely no merit to try and get a lower price. I'm sorry but there is no slowdown here. We continue to set new records every month in the real estate market.

Go for it and try to get a discount, it doesn't hurt to try but my experience with builders is it is very difficult to get them to come down much. If you can make it happen, more power to you, just understand the reality of what you are facing.

Edited by rps324
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Just be aware that the median list to sale price ratio for the last 6 months on new construction in Rice Military is 99.2%.

I thought about this figure some more and have concluded that it is best described as being a misrepresentation of the market. Using a median average is very deceptive. Consider the following numbers:

100%

100%

99.2%

70%

70%

What is the median of these 5 numbers? You guessed it, 99.2%. What is the mean? 88%. The median is simply the midpoint of a series of numbers. It is not an average of a series of numbers. Because many buyers do not think they can negotiate price, I'd guess that most homes do in fact sell for 100% of the list. This skews any type of median calculation, which no doubt is why the association of realtors would quote that statistic in that manner. Realtors, in turn, attempt to convince buyers to negotiate upgrades, not price, in order to further inflate their "median list to sale price ratio" which they love to quote. It's a big game. A better representation of the market would be the "mean" list to sale price ratio, and better still would have the upgrades netted out of the purchase price.

Edited by Bacchus
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I thought about this figure some more and have concluded that it is best described as being a misrepresentation of the market. Using a median average is very deceptive. Consider the following numbers:

100%

100%

99.2%

70%

70%

What is the median of these 5 numbers? You guessed it, 99.2%. What is the mean? 88%. The median is simply the midpoint of a series of numbers. It is not an average of a series of numbers. Because many buyers do not think they can negotiate price, I'd guess that most homes do in fact sell for 100% of the list. This skews any type of median calculation, which no doubt is why the association of realtors would quote that statistic in that manner. Realtors, in turn, attempt to convince buyers to negotiate upgrades, not price, in order to further inflate their "median list to sale price ratio" which they love to quote. It's a big game. A better representation of the market would be the "mean" list to sale price ratio, and better still would have the upgrades netted out of the purchase price.

Bacchus, you are mind(^&**% yourself, spinning your wheels using every reasoning to try to invent your own reality as to how/why you are going to get a certain price. Just go and get the best deal you can get and quit spinning your wheels.

If it is a higher priced condo, a close out, or something that has sat for awhile then those things will increase your chances. Give it your best shot and see what happens. The biggest decrease I saw on there was something like 2.8% off I think. So occassionally someone is able to do a little better. See what you can come up with.

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Bacchus, you are mind(^&**% yourself, spinning your wheels using every reasoning to try to invent your own reality as to how/why you are going to get a certain price. Just go and get the best deal you can get and quit spinning your wheels.

Paralysis by Analysis

flipper

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I would guess the avg builder in RM has about $120-$125 per foot into the house? My guss is they would not drop price a whole lot unless they had it sitting for more than 4 months?

My guess is most of the homes have sold for near full price but they had a lot of concessions in that number?

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I would guess the avg builder in RM has about $120-$125 per foot into the house? My guss is they would not drop price a whole lot unless they had it sitting for more than 4 months?

My guess is most of the homes have sold for near full price but they had a lot of concessions in that number?

Thanks, I value your opinion, as I've seen some of your other posts and you are very informed as to construction costs. That's a bit higher than I would have guessed, but I would be truly guessing.

Using what HCAD appraised the land for last year and this psf cost estimate range, I calculate that there is 3.5% - 7% of margin built into the builder's list price. That is skinnier than I would have thought, particularly when the seller's commission must also be deducted.

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Im guesssing a 5000 or so sq foot lot would sell for around $200k in that area? I haven't looked, so... subdivide into 2 lots and you are looking $100K for land alone? Sub into 3 lots and its whzt $66K. Throw in soft costs and my guess is before you even scrape any dirt you are at $90K or $125K or more. I would then say construction costs in the $70 per foot range.

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Im guesssing a 5000 or so sq foot lot would sell for around $200k in that area? I haven't looked, so... subdivide into 2 lots and you are looking $100K for land alone? Sub into 3 lots and its whzt $66K. Throw in soft costs and my guess is before you even scrape any dirt you are at $90K or $125K or more. I would then say construction costs in the $70 per foot range.

Oh, thank you for that clarification. I was thinking you meant the improvement alone was $120/psf.

In that case, I'm estimating the builder has roughly a 35% markup (pre commission to agents). This gives me a LOT more room to negotiate, assuming that my theory that the market is soft is true. Thanks again.

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Your talking $240-260K is the cost for a 2000 sq footer right? I would price something like that in the $330000 range which in the end really only would net you $40K or so? Hardly a bunch of room to negotiate?

Can you explain your math? Even with a 6% sales commission (and 3% seems more likely unless the builder has a selling agent), a $330 sales price would get you $310,200, netting 50,000-70,000. Am I missing something?

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Concessions, closing costs...I usually pay a full 6% to Realtor and have found that I usually get a lot of buyers when I do that;)...Really though, for the amount of risk and the pure pain in the ass building can be, if the builder is making say $40K there really isn't a whole lot of negotiating room unless you HAVE to negotiate. In that case are you really getting a discount? Personally, I would try and buy where there is enough demand so that your builder doesn't HAVE to discount?

Edited by jscarbor
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I have yet to take action on the house.... still suffering from analysis paralysis. That said, a new build house right around the corner just was dropped $30,000 in price. An interesting data point.

Bacchus... I am representing a builder in the area... thought you might want to some factual information.

We are building three detached townhomes (aka single family dwellings) at the corner of Malone and Venice in Rice Military....

Lot cost $203,000

Price Per Sq Ft to Build ranges anywhere from $75 to $85 ... but finally coming down after Hurricane Katrina spiked the price of materials.

Sold corner unit in 9 days after listing before construction started.

Asking Price: $349,000

Edited by joelpond10
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Bacchus... I am representing a builder in the area... thought you might want to some factual information.

We are building three detached townhomes (aka single family dwellings) at the corner of Malone and Venice in Rice Military....

Lot cost $203,000

Price Per Sq Ft to Build ranges anywhere from $75 to $85 ... but finally coming down after Hurricane Katrina spiked the price of materials.

Sold corner unit in 9 days after listing before construction started.

Asking Price: $349,000

Thank you for that information. That is encouraging that construction material prices are beginning to come down. That's likely good news for buyers and sellers alike. Congratulations on your sale. You got that one sold very fast.

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  • 3 weeks later...

Hi All...I'm new to the forum and to Houston. I've been looking for a townhome in the Rice Military area and I understand that Rice Military is framed by Westcott, Washington, Memorial and Durham/Shepherd. How is the area just east of Shepherd around Paterson St? For resale, do you think it's important to stay in the real Rice Military?

Any other areas near Rice Military I should check out? I work out west on I10 so I want to be able to access I10 pretty easily. Thank!

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Share with us your budget and requirements such as beds, baths, garaga, etc... and we can help you. Also how long do you think you would reside in the home?

Scharpe St Guy

Hi All...I'm new to the forum and to Houston. I've been looking for a townhome in the Rice Military area and I understand that Rice Military is framed by Westcott, Washington, Memorial and Durham/Shepherd. How is the area just east of Shepherd around Paterson St? For resale, do you think it's important to stay in the real Rice Military?

Any other areas near Rice Military I should check out? I work out west on I10 so I want to be able to access I10 pretty easily. Thank!

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My budget is probably anywhere under $310k. I'm looking for 3 beds, 2.5+ baths and a 2 car garage. I really like the 3 story townhomes with the garage on first floor, living area on 2nd floor and beds on 3rd floor. I could use any advice you've got. Thanks!

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Hi All...I'm new to the forum and to Houston. I've been looking for a townhome in the Rice Military area and I understand that Rice Military is framed by Westcott, Washington, Memorial and Durham/Shepherd. How is the area just east of Shepherd around Paterson St? For resale, do you think it's important to stay in the real Rice Military?

Any other areas near Rice Military I should check out? I work out west on I10 so I want to be able to access I10 pretty easily. Thank!

IMHO, it isn't terribly important to stay within the boudaries as defined by RMCC....its all pretty much the same over there.

Check out Cottage Grove and Roy Cir...you might find a better deal since those aren't as far along in the gentrification process...but be aware that SOME of those houses can flood. Be sure to check any property you're thinking about buying on maps.tsarp.org

One other thing...a single family home will be more likely to have better resale than a townhouse. There's plenty of lots yet to be subdivided in the RM area, and that means plenty more townhouses yet to be built over there. Why would I want your 2-4-6 year old townhouse when I can get a brand new one just up the street? That means little to no appreciation.

Edited by jm1fd
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Sounds like you're talking about the Upper West End developments. I'm building a 3 story 3 bed/2.5/2 in Upper West end right now. It's at www.upperwestend.com.

Parillo is finishing some neat 2/2.5/2 that are going for around 225 on Spencer right now, I think a few are still available. My 3 bed model is the last "big" TH he's building in the development and its going for 245. I'm biased because I love his design so much but I think the area is going to do well as well. Another developer was building some smallish 2/2/1's on Thompson and he listed for 150 but the price was up to 175 before he sold out (I think he sold out, they aren't on HAR anymore).

Jeff

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Hi All...I'm new to the forum and to Houston. I've been looking for a townhome in the Rice Military area and I understand that Rice Military is framed by Westcott, Washington, Memorial and Durham/Shepherd. How is the area just east of Shepherd around Paterson St? For resale, do you think it's important to stay in the real Rice Military?

Any other areas near Rice Military I should check out? I work out west on I10 so I want to be able to access I10 pretty easily. Thank!

Waterhill is building in the Rice Military area. They are also about to begin construction on the same type of product in the Heights. 8th Street between Waverly and Nicholson. (From 10 go north on Heights Blvd. and turn left on 8th.) They are a few blocks down on the left. Their web site shows them priced "from the 300's".

I don't know about Waterhill but the Heights area gives you an alternative to Rice Military and still great access to I-10, downtown and the Galleria.

Everybody has their opinion but I would prefer the Heights. This location is adjacent to the proposed hike and bike trail.

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I'm looking to stay in this house/townhome for 8-10 years so I was hoping by then that there will be no more room in Rice Military to build so if you wanted to live there you would have to buy a used townhouse. I understand right now that you have the option to buy new, but I'm hoping that by the time I am looking to sell, that option won't be there.

Upper west end doesn't appeal to me as it is right on the train. I know that I'll still hear the train in Rice Military, I just don't want to be right on top of the tracks.

Does anybody know any more areas in the heights with new townhomes or 3 story single familys going up?

Also, any opinions on the quality of Waterhill homes?

Thanks for the replys

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