In today’s cooling real estate market, I guess "hot" is a relative term. According to Thursday’s San Antonio Business Journal, San Antonio is "Hot":
San Antonio has been named one of America’s top cities for residential real estate investing for the first quarter of 2008.
That’s at least according to a report by Dallas-based HomeVestors of America Inc., the company better known for its "We Buy Ugly Houses" billboards.
San Antonio ranked seventh on the HomeVestors’ list.
The top market for real estate investing is Dallas, followed by Houston, Atlanta, Fort Worth, St. Louis and Philadelphia.
Denver, Minneapolis and Phoenix round out the top 10.
We keep hearing time and again that Texas markets have been relatively immune to the current downturn in real estate, having not experienced the bubble of other areas. In response to that, I’d like to offer a couple of graphs:
Median appreciation:
And home sales:
One of the falacies out there is that it takes a big bubble to have a market downturn. Certainly when markets reached the lofty heights they did in Las Vegas and Phoenix, high prices and massive inventory take their toll, but those aren’t the only problems out there. Tightened lending standards, depressed buyer sentiment, negative economic growth, slower sales, and higher home inventories are being experienced in many markets nationwide that never "bubbled". If the San Antonio market is "hot", the nation’s markets are chilly indeed.
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Regarding Texas, homes for the most part have been consistently affordable over the last several years. It’s amazing the size of home you can get in TX for under $250K. Many Texas areas have brand new homes in the low $100K range. The boom to bust change in the actual cost for TX homes has been relatively small compared to most other areas.
Wizeone-
Agreed- but remember the boom came in later for Texas, and we are nowhere near a bottom.
The HBs have built in excess of demand in Texas as sales have cooled. Many of these homes have been working their way to the resale market.
Certainly the inventory in San Antonio has not reached the lofty levels of markets like LV and Phoenix, but they hit a record high of 12,946 last summer, and although it cooled somewhat for the winter [typical seasonal pattern]listings and months supply are increasing again.
With a 6.5 month supply, the situation isn’t disasterous, but the trend is down- that hardly makes it a “hot” market as described by the report.
I live in the DFW metroplex, and there has definately been a downturn in the local market. Time on the market is increasing steadily for what I would call entry-level luxury (starting around $300k). It also depends on where you are. The land-locked ‘burbs closer to Dallas are doing better. Go north into Carrollton or Frisco, and you see a lot more bank owned properties and dropping prices.
Now the market value sites (like Zillow) are not realistic, IMO. Zillow just bumped the value of my home by $10K in the last 2 weeks. In this market? You gotta be kidding me. There’s another house I’ve been lookng at in Irving. Zillow has it appraised at $315k, but it’s currently on the market for Under $280k. It’s been listed at least 6 months. This is a 3400 sqft home in the beautiful University Hills subdivision. So you have a big, beautiful home sitting on the markek $35k below appraisal in a prime area. And it isn’t selling.
Texas is feeling it, too. Just not as bad as some other areas.
Anecdotally, I think Houston is slowing too. The burbs are definitely slowing down. Inner Loop has lots of $1m plus (a big number for Texas) spec luxury homes sitting. I’ve been following a few of them for several months deciding whether to buy or not. I think Houston still has the cushion of high-wage blue collar jobs that other parts of the country don’t have. A HS grad can get a good-paying job at a refinery or in the oil-services sector and afford a decent house. Higher up the food chain, the bonuses being paid to energy traders are enormous. Houston doesn’t feel like it’s in a recession at all, but housing is probably cooling off.
inside houston, there has been appreciation over the last 8 years. in the burbs, its been the usual
3 to 4 percent per year. i bought a foreclosure in
97 in the nw burbs at 97k, its now at 148k, 11 years later, hardly what i would call a “booming market” over the last decade. there are spotty areas with lots of foreclosures, mostly low end starter homes built in the last 4 years. regarding the local economy, its a mixed bag at best.
JCCO-
I’ve seen what you are talking about with the foreclosures in the suburbs- I have a relative that lives in Pearland. In her small neighborhood of around 25 homes, three are empty REOs.
I checked the Houston numbers from the Texas Real Estate Center. In February, sales were down 11% YOY but inventory is up 10% YOY. For all of Houston metro, appreciation has been pretty steady- between 1% and 3%. That of course is in nominal terms.
There’s no question that some neighborhoods are faring better than others, but I agree, “booming” is the wrong description for Houston RE.
I have been in SA since Sept 2008 and there are a few homes that just keep getting relisted over and over with cumulative DOM over 200, some over 1 year.
SA Feb 2008 Stats
The days on market is 87 days. Months of inventory is around 8, a weak market.
Just my 2 cents out here.
Was that article secretly written by Armondo Montelongo?
Maybe the Flippin’ Team will single handedly spur your new hometown on to a residential RE rally!
Now if they could just get Casey Serin to make a cameo appearance!
Gee, that makes me feel so much better about my SA house that’s been on the market 10 months and I’ve dropped the price 10%! NOBODY has been looking in March or April, and realtors say it was spooky quiet all last month for agents all around town.
I have a current offer that is another 5% below my asking (basically what I paid for it, not counting all the additional money I’ve put into it). From the looks of things I don’t expect them to qualify for a loan even if I accept (100% financing and little earnest money). So next month I still expect to be watching the slaughter from the front line instead of the side lines.
And don’t forget Texas real estate taxes. Those (relatively) low prices come with a high monthly payment. I think we have our share or more of subprime, alt-A, etc. It’s just that much of our credit bubble went to buying huge pick up trucks and the gas that fuels them. Everyone at work bellyaches about what a fortune it costs to fill up.
I live close to a very rich neighborhood and their are plenty of VERY high end spec homes that have been sitting vacant since last summer. I’ve heard that builders in 78209 have been taking losses on these homes for the last year.
PS, I see this is a locally run story. I’m sure it was run so the appraisal district can plaster it all over their halls as we go to protest our next ridiculous valuations.
They scoffed at me two years ago when I said it was a bubble (much less admit that it was over).
These cities and counties have become addicted to higher and higher values, and they won’t come down without a fight.