COMMENT OF THE DAY: NO SUCH THING AS A FREE LIMB “. . . Reading that story about the person complaining that someone is cutting a tree in their yard makes me hot under the collar. I almost wish someone had told me I couldn’t cut down the tree in my backyard because it provided lower energy bills for them. I would love the opportunity to laugh at someone in their face. Honestly, I’d be fair and civil. I’d offer, if they want me to keep the tree, they can pay me a maintenance fee. This fee would include the water, pruning, time, money I have to spend on vegetables that I can’t grow in my backyard because this tree is blocking all the sunlight. So yeah, that’d go over like a lead balloon. Guess I’m back to laughing in the person’s face and cutting the tree down.” [toasty, commenting on UH Basketball Arena Renovation Moves Forward; Inside Ashlar Commons in Montrose] Illustration: Lulu
WHY HOUSTON COMMERCIAL REAL ESTATE THINKS IT’LL DO JUST FINE, THANK YOU Deeply embedded Houston real estate reporter Catie Dixon comes back from a panel event sponsored by her employer with a clickworthy account of 5 reasons Houston (commercial real estate) will survive the latest oil bust. Included in the list: attractiveness to foreign investors whether prices fall or not; this boom wasn’t as big as the one before the last big bust; the industry doesn’t rely on short-term gains; industrial real estate is still healthy; and — yes — data centers! (But things will be tough for developers for a year to a year and a half, maybe.) [Real Estate Bisnow] Photo: Russell Hancock
OIL CRASH CHEATING HOUSTON OUT OF 50 NEW APARTMENT COMPLEXES IT DESERVES TO HAVE So it may be bouncing back a little, but the precipitous drop in the price of oil since last summer has been responsible for the axing or delay of a considerable number of large-scale residential projects in Houston. How many new apartment buildings would we have had available to gawk at or choose from if it weren’t for the freefall? Ralph Bivins reports: “We’ve heard 50 multifamily projects have been cancelled or postponed,” says local Colliers prez Patrick Duffy. [Realty News Report] Photo of proposed (and delayed) Hanover River Oaks: Solomon Cordwell Buenz
COMMENT OF THE DAY RUNNER-UP: WHAT DIFFERENCE DOES THE PRICE OF OIL MAKE TO HOUSTON REAL ESTATE? “Let’s assume 100,000 people live and work in Houston and are employed, somehow, someway, by the energy industry. That’s a very high guesstimate, but let’s go with that. Now let’s assume one of four, or 25,000, are in danger of having their hours reduced or jobs eliminated. Again, a very high estimate. 25K folks in financial distress is less than one percent of the giant Houston SMA (5M or so). Even if you tripled the number to 75K folks living in Houston that are instantaneously released from their employment ’cause oil dropped to $25/barrel, that’s still less than 2% of the city’s population, and a blip on the ‘financial health of Houston’ radar. Home prices may dip a bit in Houston, but that may be more due to a massive number of shit houses being constructed and sold cheap than $1.95/gallon gas.” [c.l., commenting on Houston Housing Market Reaches All-Time Highs — Before It Crashes, Dips a Little, Remains Steady, or Climbs Further] Illustration: Lulu
COMMENT OF THE DAY: HOUSTON REAL ESTATE PROBLEMS, WITH OR WITHOUT CHEAP OIL “The Houston market had a few easily identifiable problems even before the drop in oil prices.
1) Older homeowners with paid off or mostly paid off homes are asking unrealistically high prices for fixer uppers or tear downs. That’s slowing down new home purchases and new builds. That was a problem at $100 oil. Well priced homes moved and unrealistically high priced homes sat. People wanting $300K for a total fixer upper inside Beltway 8 or $400K for a lot near the 610 loop are just completely slowing down the revitalization process as those houses/lots sit for months on end while everyone thinks the sky is falling.
2) Near loop new construction is priced exclusively for people making $200K and up. A family of two earners making $50K (teachers, cops, firefighters, non O&G professionals) can only afford to live out west in the burbs, but many are choosing to rent rather than go west. There’s no attempt at affordable housing inside the beltway. When oil goes down, the engineers stop buying in Houston. The aforementioned buyers would be happy with smaller houses they could afford to get into but the developers are chasing the biggest gains possible on each new build.
The real estate market will ultimately be fine for people who didn’t overpay but it would be nice to see changes that reflect reality now that oil is not at $100.” [Houstonian, commenting on Tanking Oil Prices Place Houston Second on Fitch’s Overvalued Housing Market List] Illustration: Lulu
COMMENT OF THE DAY: ENJOY THE RIDE “Houston: the wonder city that showed the country how laissez-faire economics, conservative values, and lax planning lead to growth and prosperity.
It turns out Houston was just benefiting from another bubble and a siphoning of wealth from the rest of the country via higher gasoline prices.
The shale boom was supposedly proof that peak oil was dead and we can keep building car-dependent cities. Houston was riding into the future in its new Mercedes.
It turns out that shale was only accessible at prices too high to pay to maintain strong economies around the world. When consumers cut oil demand, the shale, deepwater, and tar sands dry up.
We’re on the slope downward, folks. Oil prices will likely spike again when demand returns, Houston may boom temporarily, but consumers aren’t going to be able to pay for it forever. After the spike, demand slackens, prices drop, and expensive new oil projects are cancelled. Production drops, demand outstrips supply, and we hit another price spike. Over and over it goes until we one day wonder why we can’t afford to open the oil taps as wide as we could in the 2000-2010s. The thriving economies will be the ones that depend least on oil.” [Carpetbagger, commenting on Oil Price Plunge Leads to Stock Downgrade for New Greenway Plaza Owners] Illustration: Lulu
DON’T Y’ALL GO WORRYING ABOUT THE FALLING PRICE OF OIL NOW Houston real estate reporter Ralph Bivins has been watching all those tanking oil prices: “Prices for West Texas Intermediate oil, over $107 per barrel in June, has fallen sharply, dropping below $80 a barrel this fall,” he writes. “WTI closed at $77.18 per barrel Wednesday and dipped even lower on Thursday morning.” But the worst prediction of doom and gloom he’s able to scare up comes from Matthew Deal of commercial real-estate valuation firm Deal Sikes & Associates, who eventually admits that “if oil prices fall precipitously and a significant number of oil rigs are mothballed this winter, Texas real estate markets would be impacted by late 2015.” Otherwise, Houston property prices and demand are supposed to emerge not-so-scathed. And Deal’s partner Mark Sikes says way-out suburbanites have it made: Even though a drop in local job growth is likely to cause demand to dwindle for urban redevelopment sites and land slated for commercial development, he says, “suburban land for new residential communities has plenty of price support because the single-family market has tight inventories. Builders have not yet caught up with the residential boom.” [Realty News Report] Photo of San Jacinto Monument: Andrew Wiseman [license]
COMMENT OF THE DAY: HOUSTON’S REAL ESTATE BOOM IS OVER “I’d like to see newer articles start noting that the jobs boom is already over and at this point it’s just the construction industry finishing off contractual commitments before we wrap it up and call the show over. past this it’s only retail & service sectors jobs growing which have a negligible impact on the overall economy anyhow due to the large supply of non-workers in the population and readily available labor. i’m not calling a downturn or anything here, but with drilling activity in the gulf starting to ease up (see hercules note [yesterday] morning about cutting personnel) and falling oil prices barring new onshore fields from starting up i’m not seeing any way for current growth trends to continue. fed pulling out of buying bonds will start hitting mortgage rates and drying up the cash closings that have helped stoked the fire as well so will be interesting to see if any slack appears in the market in the coming year.” [joel, commenting on AmREIT Takeover Approved; Bringing Gino’s East to Houston] Illustration: Lulu
ARE HOUSTON’S B-CYCLES ‘MERELY TOYS FOR URBAN BOHEMIANS’? Houston has some 175 rent-a-bikes available at swipe-a-credit-card kiosks here and there in Midtown, Montrose, and Downtown, with plans to expand to the East End, Med Center, and universities soon. But an editorial yesterday from the Houston Chronicle seems to doubt that all these bikes are making much of a difference so far, pointedly wondering whether they represent “legitimate transportation or merely toys for urban bohemians. . . . After all, there are no B-Cycle stations in the poor neighborhoods surrounding downtown’s B-Cycle core. It is not as if these neighborhoods aren’t bike-friendly. The Fourth Ward is accessible by West Dallas St., a designated bike-share road that connects directly with downtown. And the Columbia Tap bicycle trail stretches from east of downtown through the Third Ward to Brays Bayou — one of the most convenient bicycle paths in the city, utterly wanting for a B-Cycle station.” [Houston Chronicle; previously on Swamplot] Photo of Market Square Park B-Cycle Station: Flickr user YMKM Agency
BIKE RACKS FOR INNER LOOP EATERIES Buried in Anvil owner Bobby Heugel’s long complaint about Houston Press coverage of possible neighborhood opposition to an application for an on-street valet parking zone for the Hay Merchant and Underbelly in the former Chances Bar space on Westheimer at Waugh: News of a new initiative sponsored by OKRA, the restaurant advocacy group he helped found. “We’re going to start providing complimentary bike racks to small restaurants and bars inside the loop, at our cost, to encourage alternative transportation in Houston. This is for OTHER restaurants and bars, not our own, which already have bike parking.” [Eating Our Words] Photo of Underbelly, 1100 Westheimer: Vinson
COMMENT OF THE DAY: WHEN THE HORMONE STIMULUS WEARS OFF “A bad economy causes low testosterone levels so it’s not surprising low-grade breastauranteurs are suffering. The only thing up is the stock market and that’s only because the Fed is gobbling Viagra, which will wear off any quarter now.” [DanaX, commenting on What Killed Houston’s Tilted Kilt?]
THE BIGGEST LOSER “An analysis of the latest Bureau of Labor Statistics figures by the Associated General Contractors of America shows Houston lost 25,500 construction jobs between December 2008 and December 2009. The Houston/Sugar Land/Baytown area fell from 203,900 construction jobs at the end of December 2008 to 178,400 jobs at the end of 2009 for a 13 percent decrease. Houston had the largest total job loss in the construction sector, but other metropolitan areas had higher percentage decreases year over year, according to the association.” [Houston Business Journal]
From his perch high in the (formerly AIG) America Tower on Allen Parkway, Swamplot reader Stephen Cullar-Ledford forwards this latest dramatic scene, which aches for suitably metaphorical captioning.
A few months ago it was fog, this afternoon it’s a rainbow over downtown . . .
Photo: Stephen Cullar-Ledford
HOUSTON NEIGHBORHOODS THAT ARE STILL GROWING, AND THE INTERESTING PEOPLE WHO’VE MOVED THERE Reporting on the growth and development of Houston for a continuing NPR series on how cities grow and change, national Morning Edition co-host Steve Inskeep hopes to get some tips from Swamplot readers: “I’d like to identify a few middle-income Houston-area neighborhoods that are still growing, in spite of the national housing trouble. I’m also looking for especially interesting people who have moved to the area in the past few years. Any thoughts come to mind?” Suggestions for contacts can go to Inskeep directly. But y’all can squabble about the neighborhoods right here in the comments, no? [Steve Inskeep; email]
COMMENT OF THE DAY: O BROTHER, CAN YOU SPARE A T-SQUARE? “. . . The reality is that we’re all trying to endure circumstances that possibly could be described as the Great Depression in architecture. Spoke to a Boston Architect last week who said the unemployment rate there is 50%. That’s not a recession… that’s a depression in our industry. So, we’re all enduring a brutal time. We can all get testy and nasty… which would be human nature. Or, we can work together to endure these hard times. Somebody please pass the soup.” [Darrell, commenting on Leaner and Meaner: The EDI Architecture Story]