- Tool-Flo To Move into New 80K-SF Headquarters, Manufacturing Facility in Pearland [HBJ]
- Groundbreaking Ceremony for Midtown Superblock Scheduled for May 28 [HBJ; previously on Swamplot]
- A Week After Opening, Bayou Bend Business Park in Southwest Houston Is 63% Leased [HBJ]
- Most Expensive Real Estate in Houston, per SF: A Plot in Glenwood Cemetery [HBJ]
- The 40 Most Expensive Houston Neighborhoods To Rent an Apartment, According to Apartment List [HBJ]
- Framing Goes Up on First-Floor Addition of Jacked-Up Heights House at 500 Teetshorn [Prime Property]
- I-10 Toll Rates To Increase by up to $1.20 Starting May 30 To Help Ease Congestion During Peak Hours [Houston Chronicle]
- The Evolution of Houston’s Light Rail [Houston Public Media]
- Sprawl Creates Challenges for New On-Demand Delivery Services Setting Up in Houston [HBJ]
- Industry-Friendly Bills Would Weaken Citizens’ Ability To Request Environmental Hearings by Putting Burden of Proof on Protestors [Houston Chronicle]
- Lakeside Homeowners Want To Suspend Plan To Tap Lake Conroe for Drinking Water [Houston Chronicle]
Photo of Wood Partners apartments, 4020 Koehler St.: Swamplot inbox
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One of the reasons rents have gotten pretty high in the last decade is people finally realized that owning a house is not what it’s cracked up to be. You can have a pretty decent apartment inside the loop for $2k a month which will only buy you about a $200k house which means you get an old small house between the loop and beltway, or a decent new house outside of the beltway. Also, you don’t start building real world equity in the house until after year 7 and coincidentally average time people live in a house is 5-7 years. Renting also allows for extreme flexibility in case your job changes, you create little clumsy clones of yourself, or simply don’t like changes in your neighborhood.
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There was a study that showed that during the great recession there was a much higher rate of unemployment in Home Owner vs. Renters because after losing their job, Home Owners either were unable to sell or refused to sell their homes and simply move to an area with better job prospects.
Lake Conroe is a reservoir. End of story. Anyone who lives on one around the country knows the risks of water being drawn-down.
I thought that said “Deadliest Cities” I was excited about potential 2014 murder map….. Where is my murder map Swamplot!!!
Re: I-$10
I recently met someone living in exurbs who commutes into town daily. When I told them my commute from my inner loop home to my office downtown is 10 minutes, they said, “Lucky you!”
I had to remind them that it is not a matter of luck, but of choice. I chose to live here and deal with some of the inconveniences of urban life, as a trade off for the conveniences (to me the latter outweighs the former).
I also find it laughable (and predictable) how quickly the new and improved I-10 went right back to severe and perpetual congestion. All that money was spent, and an existing railroad grade paved over, and all it did was facilitate more sprawl and long-range commuting, which negated the benefits of the project. Meanwhile, every effort for building out a rail system has been instantly squashed by Republican congressmen representing the suburbs. The result has been a partially-built rail system only serving the inner loop. Even Dallas has been able to build suburban commuter trains, while Houston commuters chose another path – freeway widening and toll lanes with ever-increasing rates. Before you whine that Metro is inept, clueless, etc., realize that if they had support from the ruling political elite, they would have a world-class transit system by now. It is impossible for any government agency to flourish when it is consistently denied federal funding and stonewalled at every turn by the congressmen representing its own region.
I predict that within the next 5 years, commuter rail will finally become a viable option for John Culberson’s Katy voters, which will be a sea change from recent political sentiment. Even my assault rifle-toting, Texas secessionist brother-in-law who lives in Fulshear has started to change his tone on trains. When enough of those residents do, the political animosity will fall away and congressmen will embark on a race against each other to build the first commuter train which will service their district.
commonsense is lacking….
If you have 20% to put down, $2,000/month will cover the principal, interest, taxes and insurance on a $335,000 house, before counting any tax benefits. On top of that, anyone who owned a home on Houston over the last 10 years knows that owning leveraged real estate can be VERY profitable, and tax free to boot.
The real factors that have pushed up rents in Houston are:
1. Job Growth —- 25,000-30,000 new jobs a year used to be considered a good year for Houston job growth. 50,000 new jobs a single year was considered a VERY good year for job growth. Now Houston has strung together many years of 100,000+ job growth. No one saw this coming.
2. Demographic Changes —– The echo boomers are here, but they aren’t ready to buy houses yet. They are young. They are pushing back marriage . They are pushing back kids. They are forming LOTS of households, but not the kind of households that need a house.
3. Supply Constraints — The Houston apartment market was fairly strong throughout the Great Recession, but frozen capital markets shut of the construction spigot for over two years. Supply has not kept up with demand. Additionally, today’s renters want to live close in to the city. Land for development is in tight supply. Developers have not been able to deliver new product fast enough.
“One of the reasons rents have gotten pretty high in the last decade is people finally realized that owning a house is not what it’s cracked up to be”
Assuming you’re in a stable market with little to no appreciation. Yes after all the non-sense you have to pay for to maintain a home, purchasing is not wise. But if you’re appreciating 10% annually then hard not to justify buying. Of course that’s unpredictable so you’ll have to roll the dice.
@commonsense – another reason apartment demand and rents are going up is there are many who are still not able to get financing. Also, why spend 600K to live close in when you can pay less for a nice new apartment and still be where you want to live.
@vwgto well stated!. Do your research before investing in property.
vwgto – Lake Conroe sounds much better than Conroe Reservoir, though. I think there are very few real lakes in Texas – Caddo Lake is the only natural lake I can think of, and there is an oxbow lake which is really just a wide bend in a river. Kinda like the people who buy a house by the railroad tracks and expect trains to stop making noise. . .
lol @ “create little clumsy clones”. I just did that. She’s pretty clumsy :(
Commonsense your numbers are a bit on the conservative side. With a 3.65% interest rate and 5% down you’re looking at monthly payments of ~1500$ (w/ insurance + taxes etc) for a 200k house. With lender credit you can knock down your closing costs (at the expense of interest rate ofc) and look at maybe 3-4k in closing costs. You’re plopping down maybe 2-300$/mo in principle right off the bat, and over the course of 3 years you should have cleared your closing costs in built equity plus maybe 1k or so (+ your down payment). In 7 years you should have built close to 20k (-3k in closing costs, +9k in down payment) in equity, which is enough for a downpayment on a new house which may be what you meant by “real world equity”, but you’ve built equity before then. This is of course ignoring changes in market valuation and all that jazz.
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So, realistically, you’re looking at comparing a 200k house with a 1500k apartment. Maybe 1700k, since you should factor in another few hundred a month for repairs. You won’t find a nice house many places inside the loop for that, for sure, but you also aren’t easily getting a nice 2BR apt for that much either. You should be able to get a 1 BR condo for 200k though, or a really nice 1 BR at a place like the Susanne.
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I think the real thing holding people back is that they don’t have the upfront money for a down payment. Many millennials missed a lot of earning potential during the recession and so we have this big gap of built equity. Add to that the increased scrutiny on loans and the removal of fun stuff like piggy back mortgages and additional limitations on concessions and credits and you have a market that is pretty hard to enter for a lot of younger folks. Plus many young people just don’t want to commit to an area, especially one like Houston, and there is no larger commitment out there than buying a house.
@ Commonsense….
Your post ignores the phenomenal home appreciation during the same period. I built $100k in equity (verified by recent appraisal) in my first year of ownership on the house I bought late 2013. Renting would have been very costly indeed.
I do however have to admit that it’s interesting to see Third Ward, Independence Heights, Pasadena and Northside on that list and not Eastwood or EaDo, although the latter may just be considered part of “Downtown”
By real world equity I mean the money you’ll walk away with at sale. You are forgetting that you lose about 5% when you buy through closing costs and pre-payments and you lose about 10% when you sell through commissions and closing costs. Not to mention the interim maintenance and remodeling which is money down the drain. Sure there are some examples in specific neighborhoods like Heights where appreciation has been ubnornally high but on average appreciation rates in the single digits.
My numbers are rough and we can spend hours parsing line item by line item, but overall premise holds and is backed up by personal experience.
P.S. When you put a cash downpayment on a house, it may be there on paper, but since it’s money that you will most likely roll over into the downpayment of your next house and so on, you may never see that money again in a cash form for the rest of your life. Theory always differs from reality.
@Dave: “All that money was spent, and an existing railroad grade paved over, and all it did was facilitate more sprawl and long-range commuting, which negated the benefits of the project.”
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Sprawl and long range commuting ARE the benefits of the project. And maybe you don’t get a chance to drive on I-10 much, but the congestion is vastly improved since they widened it.
Blerg! I forgot about the sellers costs! Yeah you’re about right then.