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Print Pagefrom Sept 2007 issue of Houston Real Estate Experts - FREE subscription
Careful Where You Get Your News
by Matt Carreras
Watching the nightly national news these days can be scary. Aside from the usual assortment of stories on murders, viruses, hurricanes and wars, you can pretty much count on getting a good dose of doom and gloom related to the housing market. To be sure, there are some very real reasons to be worried. In many markets, the economy is slowing, home prices have flattened or are falling, mortgage rates have increased over the past several years, and foreclosure rates have climbed to record levels. Is there any good news? I think so.
One interesting psychological effect that I've seen in this market is a sort of paralysis that is gripping many people thinking about buying a first home, moving to a new home or investing. Here are the symptoms… Home sellers don't want to put their home on the market because they think they'll get a better price if they wait several more months or even years. Home buyers and investors are reluctant to purchase real estate for fear that the market will go down further and they'll be taking a loss right away. What you end up with is many people waiting on the sidelines for evidence that things are either getting better or getting worse.
So, how can I be optimistic in the midst of all of this? Well, here are a few reasons why I think there's no reason to wait to get in the game.
The myth of the "national housing market."
Most major news outlets take national statistics and averages and over-generalize the news so it can fit into sensationalized 60-second stories. National home price trends and other real estate statistics are interesting, but what really matters is what's happening here, in your own backyard. National statistics are heavily weighted by markets such as California, Florida, Arizona, and much of the mid-Atlantic and Northeast, etc. - all of which bear very little resemblance to the Houston real estate market. The fact is that in Houston, according to the Houston Association of Realtors, total property sales for August 2007 were down only 1.2% from August 2006 (a historically strong year), but the median home price for a single-family home rose 4.6% in the same period.
Still a bargain.
Houston continues to have one of the lowest priced real estate markets of the top ten major cities in the country. While housing prices in most major cities were growing 10-30% per year over the past seven years or so, Houston was chugging along at a modest 3-5% annual price appreciation. So, while we didn't have the parties they had in places like Miami, Phoenix and San Diego, we also can expect we're not going to have the hangover that they're having today in the form of dropping home prices and record foreclosures.
The mortgage market correction is actually good news.
When people with poor credit, weak job histories, and no money saved for a down payment are able to buy homes quickly and easily, you have to ask yourself: "Is this really a good thing?" Answer: No. What we're actually seeing this year is a much-needed correction. The main consequence of the so-called "sub-prime meltdown" is that it's much harder for financially weak individuals and families to get into a home and get financially in over their heads. But those who have decent credit and financial stability still have many very attractive mortgage options, including low and no money down financing.
It's the economy.
The Houston business environment is as strong as it's been in a long time. Major companies, particularly those in energy (everything related to oil & gas), technology (HP, for example), and infrastructure (Halliburton, for example), are doing quite well - which means more jobs and more demand for housing, among other things.
So, while the Houston housing market has slowed from last year and foreclosures are rising, our local market continues to show signs of health and growth. In other words, it's safe to say that we're long way from California and Florida.
Matt Carreras, real estate agent and investor
Matt Carreras is a licensed real estate salesperson and investor serving traditional homebuyers and sellers as well as individuals who seek to diversify their investments through real estate. Matt brings over 12 years of experience in finance and marketing for Fortune 500 companies, as well as an MBA, to his real estate business. You can reach Matt at (281) 213-6232 or by email.