- Harris County Prepares for ‘Normal, Heavy Thunderstorm Event,’ Flooding as Tropical Storm Bill Hits Area [Houston Chronicle]
- Residents Continue Ritual of Parking Cars on State Highway 6 Bridge Near Bayou Vista To Keep from Flooding [Galveston County Daily News]
- Streets To Avoid When it Floods [Houston Chronicle]
- Rents Don’t Fall Off in Houston Suburbs as Much As They Do in Other Major Cities [Prime Property]
- Houston Has the Second Most Overvalued Housing Market in the U.S. This Year, Behind Austin, According to Forbes [Culturemap]
- Oil Rout Can’t Stop Houston’s Economic Boom, If Lack of Interest in Cinq’s Lunch Special Is Any Indication [Bloomberg Business]
- Houston Cash Sales Down 5.6% Year-Over-Year in March, Finds CoreLogic [Prime Property]
- Effective Rents for Houston Office Tenants Are Down 15% From Last Year, Declares New York Firm [HBJ]
- Inside the Grenader Family’s Renovation of Heights Clocktower Building [HBJ; previously on Swamplot]
- City Breaks Ground on Post Oak Blvd. Dedicated Bus Lane Project in Uptown [Houstonia]
- Cosmopolitan Condo HOA Files Lawsuit Against Metro Over Post Oak Bus Lanes Plan [Houston Chronicle]
- How the City Commandeered Glenbrook Golf Course for a Botanic Garden Without Any Public Meetings, Civic Club Presentations, or Community Input [Super Houston; previously on Swamplot]
Photo of Memorial Park: Russell Hancock via Swamplot Flickr Pool
Headlines
I always chuckle a little when I read about how Houston’s housing market is overpriced. Invariably, they use abstract data to make the argument, instead of simply asking “can a middle class person afford to buy a decent house here?” When you ask that question, on a metropolitan scale, the answer is “yes.”
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Now I will note that some areas are overpriced. Midtown, Montrose, The Heights, basically the “hot” neighborhoods. A lot of people fall prey to what I call “the tyranny of location” – they can’t afford a house in the hot neighborhoods, and they refuse to consider a neighborhood that’s not hot, so they start whining that they can’t afford a house at all.
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Then there are investors who want to find deals, and who WANT Houston to be overpriced, and to crash. But neither of these make it true. And abstract data and conjecture won’t change that,
Way to go Bloomberg for using selective data in its analysis. The 1980s oil glut was first recognized in a 1981 NYT article and prices continued crashing from 81-86. Bloomberg’s graphs start at 1985. The current oil glut was recognized in the summer of 2014 — we still have a way to go to compare with the 80s.
What’s different this time is that the large Wall Street firms and investors are largely keeping oil companies afloat, whereas in the 80s it was smaller regional banks that weren’t feasting on free Fed money. We’ll see how long interest rates stay near zero and how long the investors can be kept optimistic.
Also recognize that a big chunk of the cheap natural gas that has enticed the chemical plants and LNG export terminals is produced as a byproduct of oil drilling. As oil output declines, the gas glut will also diminish, raising feedstock prices for all these new plants. Will they still be able to remain globally competitive with higher natural gas prices?
ZAW, is it really fair to call basic economic fundamentals as ‘abstract”? Considering they’re looking at averages I think the math is fairly straightforward and we have sufficient data points to understand trend lines between economic/wage fundamentals and housing demand. Whether or not a middle class person can afford a home here has nothing to do with sustainable pricing. We have low average wages compared to most of the country so middle class folks will always find this place affordable until we see large wage growth.
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I think it’s fairly easy to see little growth in housing costs through the next 5 years in both the hot and depressed neighborhoods. Housing has no choice but to revert back to the mean against wage growth and even low income neighborhoods saw a lot of appreciation since the last recession that has not been reflected in wages.
@Carpetbagger: LNG is often a byproduct of wet drilling (e.g., for Texas-T). However, Texas has a lot (LOT) of dry-gas (only) wells– they are wells for nothing but LNG. Draw ’em and frac ’em (and frac ’em again, heck!). Review “Eagle Ford Formation” on Wikipedia. Many people believe LNG demand and thus price and thus production (and exploration and, shit, everything along the way) will overtake oil’s. People keep thinking “Houston and Oil” and forget that the players here have been and continue becoming more and more LNG-LNG-LNG. Drink the Kool’Aid, ya’ll.
The Forbes analysis is of little value because it fails to consider the starting points of each of these markets. The market may be overvalued; certainly that prices have been increasing faster than economic fundamentals would indicate. Unfortunately I can’t tell that from their article because I don’t know how over or undervalued the market was before pricing began outpacing growth. They really should have started with the last sentence — they were better buys years ago than today – that’s the only conclusion you can draw from their data and it would have saved me clicking through three pages.
Not sure how to interpret the decline of cash sales since they are fairly uncommon amongst most home buyers. Do they represent the investor market?
@MrEction, might also represent the wealthy foreigner pied-Ã -terre market, at least to some degree.