“You Can’t Go Up Forever”: Texas
The Express News reports from Texas. “The party isn’t exactly over for San Antonio real estate, but the champagne has stopped flowing. Home builders, feeding off of the anxiety of the national real estate meltdown coupled with the typical seasonal slowdown, have started offering deals and incentives not available a few months ago. KB Home even has started to lay off employees.”
“‘I’m hearing more people being concerned than I am (hearing them be) ecstatic,’ said Michael Moore, vice president of the Greater San Antonio Builders Association.”
“The new home market party started when Fortune magazine anointed San Antonio the nation’s strongest housing market, predicting an 8.3 percent home price appreciation in 2006, luring investors who helped push the market to record levels.”
“As a result, one segment of the real estate market already has a hangover: single-family home rentals. Out-of-town investors flooding into San Antonio this year have glutted the market with rental homes, and the average rent has dropped $202 a month since this time last year, from $1,301 to $1,099, according to the San Antonio Board of Realtors.”
“At the end of October, renters had their pick of more than 2,000 homes. So far this year, more than 10,650 homes have gone onto the rental market, 22 percent more homes than last year.”
“Kevin Knight with Liberty Management Inc. said the out-of-state investors had a different mentality than local landlords, who traditionally bought fixer-uppers. The out-of-state investors wanted new homes that required little maintenance.”
“‘San Antonio investors used to buy for positive cash flow,’ Knight said. ‘In California, they buy for appreciation. They’ll buy a house here and lose $200 to $300 a month and they don’t care.’”
“That’s helped contribute to a drop in rents. ‘We’ve had owners who are used to getting $1,100 a month in rent and we tell them they have to drop their price,’ Knight said. ‘They don’t want to hear that.’”
“One such owner is real estate agent Missy Stagers. She owns five rental homes that used to be moneymakers, but now are breaking even. ‘They’ve ruined our rental market,’ Stagers said of the investors, many of whom cashed out of the East or West Coast markets and planted their money here. ‘You can now rent homes cheaper than you can buy.’”
” A recent report from the Federal Reserve Bank of Dallas said builders across the state have pulled back on starting homes and have increased incentives to sell rising inventory. ‘On the new home side, we’re starting more houses than we’re selling,’ said Bob Gardner of Gardner Financial Services.”
“Centex Homes recently offered as much as $25,000 in incentives on its homes. Such deals were unheard of a few months ago. ‘We hit a wall at Halloween,’ said Leslie Mullins, operational marketing manager for Centex Homes in San Antonio. ‘It’s not just us. We’ve spoken to all of the other big builders in town.’”
“No one can say when the party might be over, but as Travis Kessler, CEO of the San Antonio Board of Realtors, puts it: ‘At some point you can’t go up forever.’”
The Dallas Morning News. “Laurie Minchew said she made the right decision to buy the three-bedroom house in Red Oak. The appeal was both the lifestyle and investment potential of homeownership. ‘It was about 50-50,’ said Ms. Minchew.”
“(Realtor) Kim Fowler just sold a two-bedroom condo in Oak Lawn to Laurie Self. ‘Mortgage rates are good now, and it’s a buyer’s market,’ Ms. Self said.”
“‘I saw how real estate prices were going up like crazy,’ she said. ‘I can flip it in a few years and have some equity.’”
‘Stagers said of the investors, many of whom cashed out of the East or West Coast markets and planted their money here. ‘You can now rent homes cheaper than you can buy.’
I have heard even Rich Toscano say ‘there will always be a premium to buy over renting’ or something like that. But that hasn’t been my experience in Texas and other states. Also from Dallas:
‘The Bank One Center purchase also highlights another trend in today’s investment market. In years past, trophy buildings like the Bank One skyscraper and others that have recently traded would have been acquired by pension funds, real estate investment trusts or foreign institutional buyers. But recently high-dollar sales have gone to private firms from the East and West coasts who have raised money from wealthy investors.’
‘Andrea Peskind, executive director of Cushman & Wakefield of Texas’ capital markets group, says there is a reason for the shift in buyers. ‘The majority of the large pension funds and life insurance companies had prior bad experiences in our central business district, and they haven’t yet forgotten them,’ she said. ‘The big opportunity funds bought here in the next round, and each had difficulty in exiting the market and so aren’t buying again now.’
Gawd. That Bank One Center brings back memories. That’s where I was the day of the 1987 market crash. It was in foreclosure several years later unless my memory fails.
As for the two single women DFW homebuyers, the one in Oak Lawn has a chance to recoup her “investment” if she can hold on 8-10 years but the Red Oak one . . . that’s too bad. And I like that area!
I own (in the real sense of the word, no mortgage) in Ovilla. Red Oak is getting a Starbucks so evidently it’s now “the place to buy” in Ellis County.
I’ve lived in Ellis County for ten years and there is no hope for appreciation here. The Supercollider fiasco crushed investor dreams before and it’ll happen again.
EC is a nice place to live if you like the slower life but nobody will get rich here.
The “Flip This House” mania is switching in scale from million dollar homes to billion dolalr office buildings.
At the same time Zell and Trammell Crow are selling out. Thanks, I’ll take their side of that trade.
I heard reality tv was going toward “Private LBO this Large Cap”.
I’m waiting for the first LBO or PE buyout of a Dow stock to short the index
Well, you could say Home Depot has already been rumored, per that New York Post story the other day. Is that good enough? Or does it have to be an actual closed deal? Deere — while not a Dow stock — was another one supposedly being looked at. Gotta love that “tight” monetary policy the Fed has been running …
No, it has to be reality tv. With snot-nosed fresh out of college punks with cool clothes and hair spinning these deals. You know - like ‘the real world’, but with these young hot-shots sitting in a circle trying to think of what giant company to buy. The moral of the show; Why work hard for the american dream when you can borrow easy money and buy it. Isn’t that what has been driving this proud nation lately? I just know it would be a hit…
“I have heard even Rich Toscano say ‘there will always be a premium to buy over renting’ or something like that.”
That is complete BS. In bad times, it is often (significantly) cheaper to BUY than to rent - the “fear premium,” if you will. It is also pretty well established that in a healthy market, the monthly PITI cost should be about the same as comparable rents. That is what “normalcy” looks like.
There is one exception to this rule - very affluent neighborhoods. It always costs more to buy than rent in the swankiest parts of town.
I highly doubt this. I know Rich and would never believe he said something so obviously wrong. There never is an “always”.
There are scenarios that could be envisioned where it would be cheaper to rent than buy… even in “swanky” or “skanky” parts of town. It’s always a function of supply vs. demand. Period.
Sorry, meant to say cheaper to buy than to rent not vice versa.
It was on that radio show we were both on. I have it recorded, so I’ll have to go back and check. He is a Californian, and there is a west coast mindset about RE.
If you can find it, I’ll certainly have a different opinion of Rich. Thanks, Ben.
“It’s always a function of supply vs. demand. Period.”
Always a function of supply, demand and quality. Amended.
I have to agree. When I moved back to Ohio 2 years ago, I discovered that it cheaper to buy a good duplex with no money down on a 30yr fixed mortgage than it was to rent a small house. And that was before taking into account the rental income. Unvelievable.
In flyover country the land is basically free so the property is valued at the structure only which depreciates. Land is so expensive in CA that the transfer tax alone on the bare land will cost what an entire lot costs in flyover country. Seriously its like 500-800k for a lot/tear down house. Coastal Cali of course.
Think like a buying a car. You want to rent or own a car? Renting is more expensive. The catch is the property values in flyover only go down or flat and you pay upkeep maintenance so owning isnt that attractive at all. Why buy a depreciating asset that costs 6% to unload?
Property values only go down in flyover country? My parent bought a house for $62K back in 1982. The houses in that area are going for over $120K.
When they run out of middle-class suckers in California, and the state begins to look more like Tijuana, we’ll see if the lots that sold for $800K are still rising in value, or if they will drop to $400K.
Yes 62k to 120k over that period of time is LESS than rate of inflation!! Dude inflation was like 15% in the 80’s.
So yes they generally go down. I’m not dissing flyover country, it suks in CA.
I’m couciling a corpus christie inlaw
so far she’s gotten 3k in perks on a 139k new build- I ‘m tellng her to hang in for 4-8k mo free sht
“One such owner is real estate agent Missy Stagers. She owns five rental homes that used to be moneymakers, but now are breaking even. ‘They’ve ruined our rental market,’ Stagers said of the investors,”
Dah, since you are a RE and in the business, why didn’t you unload those properties to some GF while the market was hot?
From the original post:
“One such owner is real estate agent Missy Stagers. She owns five rental homes that used to be moneymakers, but now are breaking even. ‘They’ve ruined our rental market,’ Stagers said of the investors, many of whom cashed out of the East or West Coast markets and planted their money here. ‘You can now rent homes cheaper than you can buy.’”
Okay, Missy Breakeven, who handled the sales of those rental houses? The ones that those mean old investors bought? Could those sales-facilitators have been real estate agents like you?
“You can now rent homes cheaper than you can buy.’
Welcome to the rest of the country Missy …..
“Missy Stagers” is a made up name. It is the stage name of a stripper from the strip joint where the reporter was. He should have been out researching his story instead. Lucky for him, though, “Missy Stagers” is actually a real estate agent, too, and she does own five rentals with no cash flow. Moreover, she also isn’t making money selling homes now, so she is using the assets that god gave her to make money.
Similar training and certification process I believe.
All she is “missyng” is some “stagers” to make her rental properties more appealing to the limited tenant population.
Again… states like Texas have me scratching my head. The state and most of it’ metros are still full of homes ( not great ones) but homes just the same for as little as 60-70k. I look on craigslist from time to time in all the usual areas, like Austin, Dallas, Houston, etc etc and it is fascinating to see just how big of a spread there is in housing prices. Out here in Cali, I don’t care what it is: a ugly 60’s tract home, a burnt out crack house in the ghetto, or some former garage perched on a hillside in Marin… they’re ALL expensive. There is no such thing as a “median” priced home here because there’s little in the cost difference. There are NO starter homes.
yet in Texas, you can either go cheap and buy a boring 60’s house for 75-100k, or buy some giant mcmansion in Dallas or Austin for a cool mil. Even the most liberal city in Texas- Austin- is still affordable if you drive out of town a little ways.
Yet their RE is crashing? I’m surprised because all I hear around here are people moving to Austin from SF because there is a perception that it’s the ” next best thing” compared to SF in terms of tree-hugging lifestyle.
I guess it isn’t a bad thing that their RE is going down the crapper. That just means that it will be even cheaper in the coming years, which is music to my ears.
You have to spend some time in these places before you say that. There is a vast disparity of lifestyle/quality of life between the large TX inner cities and exurbs where you can buy those very cheap houses. People in other states really don’t understand what it is you get for $120K or $150K in a Texas suburb. You may very well be overlooking a freeway from your back window. You certainly will be in a cheaply built housing ant farm with high density, low quality crap.
u have to spend some time in these places before you say that. There is a vast disparity of lifestyle/quality of life between the large TX inner cities and exurbs where you can buy those very cheap houses.
Oh I understand fully. I’ve been to TX quite a few times and grew up in the Southeast. I now live in CA. Here’s the major difference between TX and CA, or CA and just about anywhere else except the usual suspects: In CA, I don’t care if you have to drive 2 hours each way. The homes everywhere are expensive. If the home is in the sticks, inner-city, outer burbs, etc etc.. they will ALL be overpriced. And disparity? California has about the most dramatic disparity you’ll find anywhere on the planet. Can you say West Oakland/Oakland Hills?
In TX, NC, and most other areas, you can easily drive say 20-30 minutes out of town and be in the countryside. It doesn’t matter that perhaps the scenery is boring and your neighbors have stupid cast concrete yard critters in the yard, the houses are sometimes DIRT cheap.
Perhaps I’m not considering the fact that most people I’ve met are either one way or another… either they MUST live in the city, or MUST live outside. Very rarely do I meet people that can live in the sticks and work in the city. I grew up in the absolute middle of nowhere. The ‘town’ I lived in had a store and post office. That was it. I’ve lived in a major metro for almost 10 years. But I can easily move to somewhere in the sticks and work in the city no problem.
That’s why I see places like TX, NC, AL, etc as opportunities because they promise dramatically cheaper living standards for those who actually like living in the middle of nowhere yet can drive into the city for work.
Not to mention the zoning laws. Aren’t you allowed to build anything anywhere in Texas? So somebody goes all-in on a nice new McMansion, only to have them build a freeway stack/rendering plant/skyscraper in the backyard 6 months later.
Not anymore in Austin at least. They passed a bylaw here a while back so that in the inner city area at least you can’t build whatever you want. You’re definitely limited to how much bigger you can go on the house based on current size, lot size, setback etc. It was getting ridiculous with these McMansions covering a whole lot and towering over smaller homes beside them.
One of the biggest lies that Californians tell themselves (yes, I am one too) is that the rest of the country is a sweltering, humid wasteland, that nothing good comes of the areas, and that you are destined to poor jobs, poor schools, and reduced future opportunities the minute you step out of the state.
That’s why you have people willing to spend 700K on a 4bd 2.5ba house in the Inland Empire, Bakersfield, or Sacramento… all of which are at least 10X worse than anything Texas could throw at you.
In california, unless you live within 10 miles of the ocean, it is a burning heck hole. I know, I used to live inland.
Exactly… I grew up in one of those “hell-holes”. Does it get humid? yes, but you get used to it. Does it get cold in the winter? Yes, but not freezing either. Most days all you need is a lite jacket. is it close to the ocean? No, but I spent more time at the many lakes in our area than I ever have here in CA at the ocean… because the ocean in CA is TOO COLD to swim in… so what’s the point? Are there lots of churches and religious people? Yes, but none of them are going to force you at gunpoint to believe as they do. For the most part, people go about their businesses. Are there good resturaunts? Not as many, but this is changing. Last time I counted, Nashville had 265 Sushi joints, several of which were Zagget rated.
Are there rednecks? Yup- but some of these folks in my opion are way more fun to hang out. If I had a choice between drinking beer and letting off fireworks versus attending some art event… I’d choose fireworks.
is it cheaper? yes, but the economy is also totally different. If you live and work there, then you’ll live like people did in the rest of the country decades ago… meaning you go to work and pay a small part of it for your mortgage and buy a new car when the old one wears out. You might not get rich, but you won’t be praying for an earthquake to topple prices either. Basically, you can live a fairly normal life.
Is it hell? If the only place you’ve ever lived is CA and you want to make where you move into Cali, then yes, you will be miserable. If you accept it for what it is you’ll be fine.
Bravo, jetsonboy!
We’re back in the country here, and now realize the other time we lived beyond the suburbs was also a wonderful experience. Even though you have far fewer neighbors, you end up knowing more of them and knowing them better. You begin to depend on each other. You watch out for each other. At that other location, one neighbor drove his tractor up our driveway the day we moved in and offered to cut our acre-plus front yard. You also don’t need an Angie’s List to find out who the best plumber or car mechanic is, or where to get the best pizza.
Life isn’t just a financial calculation. The intangibles can mean the difference between living and simply existing.
Only in the Houston area is there no zoning. Having said that, it is not too difficult to get zoning variances if you know the right people.
Amen and amen to that. Austin suburbs vs. Austin in-town are almost two different worlds, including lots more mature trees in town, more amenities, small and (possibly) character-filled properties in-town with characterless generic homes on the fringes.
Traffic’s already bad enough, even in the less-crazy soutgh suburbs, to have bumper to bumper to miles on feeder roads to the interstate in the morning commute.
I noticed plenty of water front or lake front properties for well under what I could buy in a bad part of the south bay. So, I could take a 30% haircut in income and still get a nice place in Tx.
Price in Cali has become just plain old silly.
“As a result, one segment of the real estate market already has a hangover: single-family home rentals. Out-of-town investors flooding into San Antonio this year have glutted the market with rental homes, and the average rent has dropped $202 a month since this time last year, from $1,301 to $1,099, according to the San Antonio Board of Realtors.”
No no no no NO!!!!!! Rents are supposed to go UP! Those bitter renters are throwing money away! Otherwise how are they gonna learn?
Hey this is good news, it means when Ben calculates inflation by using the “equivalent rent” fudge, inflation will go down.
Isn’t that great. Interest rates will drop, Helicopters will rise, and everybody is happy again. (except of course your dollar)
European Central Bank raised again the other day while the UK held. Would not be surprised if Ben is under pressure from the Euros to do something with rates (i.e. raise) because their exports are becoming too expensive.
I thought BLS was going to switch to prices to keep it down- we KNOW prices are tanking- roflow
Definitely saw it in FL too. Houses that used to rent for $2400 now going begging at $1800. Meanwhile, carrying costs doubled due to tax & ins increases. Ha ha.
“Those bitter renters are throwing money away!”
Landlords are the ones throwing money away! Amazingly, they are not bitter; they are simply delusional.
It is hard to be bitter when you are completely out of touch with reality.
Do folks see this spreading to the Austin area at all? I was in Austin recently and I saw a lot of building, but also a lot of forclosure/REO listings in local circulars.
I think what’s happening in Austin is that you have all these out-of-staters aho think 500k is just a screamin’ deal for a house. They move to Austin and… HOLY S*IT!- a house for ONLY 350k!!! Well.. they but it and suddenly, the owe 3% taxes on the thing. Bingo- instant foreclosure.
Not to mention, they then see that Cali is going down and want to move back, but can’t begin to get what they paid for the TX house. We’ll see plenty of that.
That is a very valid comment. I think a lot of people will want to go cack to california but they will be screwed when they can’t sell where they bought. How about those dallas cowboys? They will crush the saints on sunday night football.
After having left So Cal for Austin just about 2 years ago, my wife and I can’t picture going back to So Cal. Prices would have to drop 50% from current levels before we’d even think about it, but we’ve found Austin (weather aside of course) is a MUCH better place for us to raise a family. Not to mention we don’t have 2 hour commutes. I laugh at the commute here that people complain about!!
I wonder how many other blue-staters are going to have these ephinays… ” gosh- homes in TX/TN/AL/TN… are affordable! holy crap! I could live a normal life without having to throw it all away on some overpriced stucco box!
I hear A LOT of Californians saying this same thing. Kind of scary to think of : ‘A United States of California’ if a signifigant amount of CA’s 38 million leach out from beyond their borders. Not that that would be bad- they’ll bring all those tech jobs with em’
The funny thing is CA is actually cheaper to live in that most other states for most residents here. That is IF you bought on the cheap 5+ years ago. Prop 13 locks in tax rate at the purchase price + 1% maximum per year gain. And if you bought before 1977 there is/was never a 1% increase.
My parents pay 400 a year in property tax on a 600k house in CA. In TX it would be 2.5%= 15,000 a year AND GOING UP EVERY YEAR. Some people only make 15k a year for gods sake! Bascially meaning your retirement plan in TX is sell house and get a mobile home unless you do very well. In CA you die in the house.
With the aging population and the old housing stock in much of CA you see many many owners who will never ever leave. Oh and you can will your prop 13 tax rate to your children!! outrageous. Its very third worldish here now, most peope shut out from a ‘normal life’ as you have in TX. So the people moving out are the have nots I cant blame em.
As to the notion that your porety taxes go up every year in TX, that is accurate until the prop owner attains a certain age, 65 maybe? Not sure, but whatever the age is, the taxes are then frozen at the assessed amount at that point.
A prop 13 like provision for seniors.
There’s not many $600K houses in Texas - only real millionaires live in houses that cost that much. Most of the houses here cost under $200K. The state, country and school district taxes add up to 2-3 % in most surburbs. It still hurts, but at least you don’t have to take out a suicide loan to “own” a home
I am in Houston and typical ‘burb’s’ tax is about 3-3.5%. Most home price is in the range of 140-300k. The appreciation is minimal, my house I apreciated 20% in *10* years with the prior owner. So for a 200k house, typical tax is 6k, or 4.8k with 20% exemption, which is about $400/mon, not too bad at all. The flip side is the utility cost in the summer, can be $200 to $400.
So, the property tax is not as high as many imagined, plus you know where your tax $ goes - most of my property tax $ go to the school district, and the schools in the ‘burb are new to near-new - you don’t feel get robbed as much as the paying the fed tax $ that have been filling the Iraq hole.
why are these people so insistent on buying a house as soon as they touchdown in a new area? what if the job does not work out? what if they hate the area but bought strictly
on price?
is being a renter that bad?
The reason the CA locusts buy a house same day they drive into town is because thats the ONLY reason they move out there. Its like mexicans coming to the states and NOT looking for work right away… not gonna happen.
Anyway when you are from CA looking at houses in TX is like getting a 1 million gift check good for housing only. New homes in CA are all over 1 million, under 1 mill = 30 y/o craphole in a ghetto. They dont build affordable homes on lots when the lot cost 500k.
Yes, renters are scum! Just kidding, I wonder that as well. If I ever relocate then I will definitely rent for 6-12 months for just those reasons. A rational person would want to get a feel for the lay of the land, if you will. Which neighborhood do you like best, commute times, etc. The ridiculous transaction costs associated with buying and selling a house make renting (short term) the only logical choice for people relocating. Still, most will just dive right in and buy. They don’t want to be priced out forever, you know!
Yes, everything old is new again.
“They’ll buy a house here and lose $200 to $300 a month and they don’t care.”
2006 -3K/yr cash flow
owner: “that doesn’t hurt”
Bank: “Its all good”
2007 -3K/yr cash flow -10% appreciation
Owner: “ouch”
Bank: “that doesn’t hurt”
US economy: “its all good”
2008 (arm resets) -10K/yr cash flow -20% appreciation
Owner: RIP
Bank: “Ouch”
US economy: “that doesn’t hurt”
2009 (foreclosure auction/fire sale) -60% appreciation
Bank: RIP
US economy: “Ouch”
2010…
Fox — sounds about right.
What is happening is the national builders are seeking markets that are not “bubbled out”. Thus, we are seeing more selling pressure in places like Texas. The nationals will price high then sweeten the deal or lower the price in Texas. This is what local builders have told me — their sales force is not allowed to do that.
Though, the property taxes here — 2.6% ( pre tax cut ) — are going to cap any price appreciation. The only way home prices will go up is if wages go up too.
Another thing, they cut the school taxes here by 30%. But I suspect the properties might appreciate and the state will collect the same amount of tax it did last year! A big shell game.
Pretty high foreclosure rate with the arm + property combo in Dallas.
Otherwise, things going well for this California transplant. Made 100% of my San Diego property. Threw the honey pot job away since it made no sense to have anymore because I did not need to support the San Diego bubble market anymore. If the market does implode I’d rather loose 50K in Texas than 300K in California.
Over and out…
I’ll bet you live inside the LBJ Freeway. Otherwise, you’d be babbling senselessly by now.
The taxes in TX make an excellent point of how a tax system can effectively curb housing overinflation and keep the housing stock flowing. Prop 13 in CA is the main reason property bubble inflate and pop repeatedly in CA.
Good luck getting California tax laws changed. Won’t happen in our lifetimes.
I know. We’ll have to wait at least until all the baby-boomers keel over.
Our the state/country become insolvent….
The second derivatives are kinda high in these things. The end comes faster than you think.
“That’s helped contribute to a drop in rents. ‘We’ve had owners who are used to getting $1,100 a month in rent and we tell them they have to drop their price,’ Knight said. ‘They don’t want to hear that.’”
didn’t William Sherman once say “If I owned both Hell and Texas, I would live in Hell and rent out Texas”.
I don’t blame that San Antonio realtor who had rentals for being pissed at all these people coming in from out of state and disruputing what was probably a normal, sleepy market there. They’re like a plague of greedy flesh eating bacteria. I know people like that in Dallas who bought dumpy properties, cleaned them up and rent them for + cash flow or did for years. People like that contribute something.
That boom didn’t last long in Texas .Wasn’t it just 9 to 10 months ago that the equity locust was heading down to Texas to run up the prices on that cheap property ?Guess the flippers aren’t going to get the rent they expected .
Anyway, Bens article is a good example of how rampant speculation destroys the economy of a area . Just because it cheap compared to other State prices doesn’t mean it’s a good investment ,( as Taxchick has always stated about Texas ).
It’s not a good investment. It *might* be in 2-5 years to pick up inner city medium priced places near major employment areas on the cheap. It was a hell of an investment to buy foreclosures in Highland Park and University Park under $1M in 1989 - 1992.
Although not as good as buying Intel back them.
Oh , I see that you posted about the locust right above me Txchick. Sorry , I called you Taxchick instead of Txchick in my post .
Yeah, considering I’m currently in a pitched battle with the IRS, that stung. LOL
Anyone on here a good IRS killer?
Casey serin is looking for work?
He’s the diversion.
Wesley might be able to help
http://www.news24.com/News24/Entertainment/Celebrities/0,9294,2-1225-2108_2042435,00.html
Eeek! Eeek! They can rent for less than they can buy! Oh, no!!!! We’re ruined!!!
Texas Downgrade by Cramer: from “steers and queers” to “FBs and useless dirt”.
Nobody under the age of 40 will know what you mean. I liked that movie.
Hey, I’m under 30 and I recognized the quote!
Then again, I’m weird. I rent.
I used to get SmartMoney magazine during the tech bubble. Each month they would give stock picks. During the height, after those picks were published, the average stock pick would literally go up 50% that month. It was crazy. Eventually, though, all the stock picks eventually bombed and all the speculators lost their butts. I started noticing the same thing about three or four years ago with housing. The WSJ would publish articles on areas that were relatively cheap compared to other places such as Salt Lake City/Park City, UT, Crested Butte, CO, Phoenix, AZ, etc… and, sure enough, six months later these places suddenly had incredible appreciation. The seemingly last remaining place with relatively cheap housing was TX and the WSJ reported this (as well as other magazines). Speculators have since poured in and the markets shot up accordingly. And soon, just like the tech bubble, they will lose their butts again. Moral to the story: It is all the media’s fault. Don’t trust the media. They are only out there to screw everyone. All speculators are victims.
Right , the media became the market makers . I think it must of been the advertising dollars . In addition this bubble turned into a National bubble with little towns across America touted as the next hot investment spot for the locust just because the property was cheap .
After the locust exhausted Florida and Arizona they started up with Texas , and sure enough the money started going down there .Moral of the story =Don’t get your investment advice from the newspaper/main media who are getting paid advertising dollars to be bias .
I just sold my house in Dallas (Uptown / high demand area) and I’ll be the first to admit that it is a very weak market. My house was very competitively priced, and I’ve owned it for five years so I have a good bit of equity in it. I bought the house in 1/2002 for 302k and was able to sell for 385k, which is about 5% YOY, not bad, but nothing compared to the rest of the country.
There are several comparable houses on my street asking for $75 - 125k more than mine and have sat on the market for almost a year.
I was able to sell mine in 30 days, but only because it was priced right. The sad part is that we only had four showings in 30 days. It is a tough market in Dallas no matter what the papers say.
shhhh!! you’re not allowed to tell it like it is- you will ruin it! … and, don’t omit relevant details- like how many st joseph statues did you bury…Huh? -D Lereah
Was it a SFH or townhouse? That area is criminally overbuilt.
It was a SFH with a small yard, and built in 2000. Very rare in this area, and upscale.
It’s funny because in many RE articles they talk about the bad markets in Cali / Phoenix, etc., but they always say Dallas is going great. Well.. it isn’t.
The house is sold now, and did only take 30 days, but again I was very competitively priced. I was pretty much the cheapest price/sqft for any 3bdrm newer home in the area, and still only four people came to look. This is a nationwide bubble, nothing else.
I know it isn’t, brother. You don’t have to tell me.
The problem is that there is too much land in Texas and the good jobs are spread out everywhere (except South Dallas). The only elite areas are the Park Cities. Southlake and Frisco are wannabes. All you have to do is build a bunch of McMansions and malls, and you could transplant those cities anywhere.
I’m goin’ back to Cali, to Cali to Cali
I’m goin’ back to Cali
I don’t think so.
That has got to be the first LL Cool J reference posted.
Home builders, feeding off of the anxiety of the national real estate meltdown coupled with the typical seasonal slowdown, have started offering deals and incentives not available a few months ago. KB Home even has started to lay off employees.”
It’s not a bursting bubble — it’s a national real estate meltdown.
The people moving to Texas who think they have it made really don’t understand the Texas economy. It is the very definition of boom/bust. Sure, they may have a much cheaper house than in Cali, and may not lose much equity in the housing bust. But they also may not have a job when the next recession hits. Marginal businesses will close (and there are lots of those here). Some big companies will pull up stakes. It will get very very ugly. Lots of people who came here will find that their financial situation is much worse than they imagined it could be. How could things become so bad when housing is so cheap?
Of course I could be wrong. Maybe the Texas economy has really changed. Maybe this time is different.
Many people have this impression of the TX economy, and historically, it was accurate. Booms were generaly oil or land driven.
Currently, TX enjoys a large (2nd most populus state in nation) diverse, fairly well educated and trained population who enjoy low cost of living. There’s a reason there are over 10 Fortune 500 Companies hq’d in the DFW area.
Parts of TX were hurt by the tech meltdown, but have since recoverd.
Define “recovered”. I work in the tech industry. Our office has half the staff we had 5 years ago. Most of my friends from that era are in different industries now. (A few are working in RE unfortunately.) There are still empty office buildings all over Las Colinas and along 35.
Look again at the list of 10 largest companies based in Texas. That list includes ExxonMobil, ConacoPhilips, Schlumberger, Haliburton, Valero, Marathon Oil. Those same companies are in the 10 largest Fortune 500 in Texas. Literally hundreds and hundreds of smaller businesses in Texas service these companies and the oil industry. Oil prices usually drop during bad recessions. Dell and TI aren’t big enough to keep things afloat.
Yes I’m skeptical. I’ve heard this before. Texas was the next big thing in the 1980’s. Plano was the fastest growing city in the country. People were moving here from all over. And it went really really bad for several years. Layoffs are much easier to accomplish in Texas, so some companies cut there instead of places where the state govt might hassle them. I’m a 6th generation Texan. The 80’s wasn’t the first time. My dad and grandparents have seen it happen before too.
Look ibbots, you may be right. There may have been enough structural changes in the Texas economy in the last few years to weather tough times better than in the past. But I’m not going to believe it until about 6 months into the next really ugly recession. And sooner or later one will come.
You’re right about all of it. It’s amazing how you just can’t get it through the heads of people.
I like TX alot. I lived there briefly then moved back to CA where I was shat out.
The one thing they never tell you about TX is that there are almost no public parks/national parks at all. The state is 99% privately owned, higher % than any other state due to its unique history - the veterans of the war with mexico each got a land grant. Anyway what it means if you want to go hiking or off roading or camping you have to buy the land to do it. Thats why street bicycling and football are the main sports. OTOH in CA the goverment actually buys up land where ever they can to fence off and ensure no houses every get built thus pleasing tree huggers and existing homeowners and pricing people out further.
there are over 600,000 acres of state parks in TX, as a percentage of the entire state that may be only 1%, who knows, but I have never had any trouble finding good camping, hiking, boating, etc in TX.
Also, from infoplease.com “millions of tourists spend well over $44 billion annually visiting more than 100 state parks, recreation areas, and points of interest..”
People don’t spend $44 billion to play football and streetbike. There are like 600+ miles of coastline in TX and pretty important ecological reserves associated with them.
ok i stand corrected. let me point out this for CA since we are comparing.
278 parks in the California State Park System in 23 districts, include five in the Off Highway Motor Vehicle Recreation Division. With a total of 1.5 million acres of land are owned by California State Parks
Tinfoil - I think your understanding of Texas national/state parks may have more to do with proximity than quanity. Padre Island is wonderful. Big Bend is one of the most beautiful of the National Parks. Palo Duro Canyon is also amazing (I grew up near it) and there are lots of other great places. (Like the Guadelupe Mtns) But none of them are particularly close to the DFW area. I work with a lot of people from other states who have never ventured much outside the DFW area or Austin, and hear them talk about how there aren’t any of these great public parks and beautiful spaces in Texas. Well we do have them, and lots of them. They just aren’t within a 20 minute drive of Valley Ranch. You have to travel a bit. I like long drives myself.
I live right down the street from a fantastic state park with miles of canoeing and hiking. We don’t have Yosemite or Yellowstone, but Big Ben ain’t bad and we’ve got some nice hiddden treasures. That’s one thing I actually prefer about Texas state parks - you can find parking and peace and quiet. California may have more parks and more beautiful scenery at most of those parks, but they are usually overcrowded.
Oops - I meant Big Bend, not Big Ben. I was talking to someone in London last night and I guess I had the clock on my mind. Duhh..
I don’t think Texas got hit any harder by the dotcom bust than any other state. At least alot of California companies are pulling up the stakes and moving to Texas. They are following their workers who can’t afford the cost of living on the West Coast.
Well, I said there are 10 Fortune 500 companies in DFW, Penny’s is one of them as is Frito-Lay, TI. Exxon-Moblie is another, I’ll look for the list. Lot’s of energy companies I am sure.
If most of your friends from the tech era now work in different industries, wouldn’t that indicate economic diversity?
I am not an expert but having liverd in TX for over 27 years and witnessed the bust of the 80’s, I think TX is more diversified than people think.
A national recession would hurt TX of course, but what state wouldn’t be hurt?
There are a total of 56 Fortune 500 companies in Texas according to Fortune. http://money.cnn.com/magazines/fortune/fortune500/states/T.html
The list includes DR Horton (Ft Worth) & Centax (Dallas), so there might be only 54 next year. :-0
I may also be too pessimistic because of the 80’s. I lived in a small farm town and the oil bust and farm crisis hit at the same time. I saw real depression era type stuff for a couple of years. It was a nightmare. The factors that caused the farm crisis aren’t likely now, and as long as oil stays above $40 bbl then that level of oil bust aren’t likely now.
However, Texas has some quirky laws around things like liens, evictions, debts, and employment. What happens here in recessions (at least in my lifetime) is that layoffs start early and end late. Also, some businesses find that they can’t collect on some debts and that the courts aren’t much help. (A friend in the financial industry once called Texas a “debtor’s paradise”)
So the metrics to watch are unemployment and business closures. These are usually higher in Texas during recessions than in other states, and the unemployment numbers usually take a bit longer to work out here than in other states. I think part of the problem with this discussion is that there hasn’t been a deep recession since 91-92, so memories are short and some things may have changed. I just am not convinced of that yet.
Oh really? Tell that to the Telecom Corridor folks who are STILL filing bankruptcies in record numbers in the Eastern District.
there are record bankruptcies in So Cal too, does that mean So Cal is still realing from the tech turn down?
The reality is that courts in many areas have seen records #’s of bk’s for the last few years and the surge is more likely associated with easy creduit than lack of economic diversity in a region.
Some things have changed. The workforce is much more mobile now for example. I took my job with me from So Cal to Texas and I know several other people from my company that are moving out of Calif to other parts of the country as well.
I’m sure we’re still somewhat a small segment compared to all of the workers, but things can change with the help of technology.
Rich Toscano and I are good friends - we lived near each other in San Diego, and he spoke to one of my MBA classes. I think he was saying that people attatched a premium to owning over renting, not that the market would always reflect this premium. So it could be cheaper to buy then to rent, but this would represent a consumer surplus.
Rich is most definatley a bear, he and his lovely wife are currently renting a nice house in California.
“I think he was saying that people attatched a premium to owning over renting, not that the market would always reflect this premium.”
I concur with this interpretation. If other things are equal — same monthly payment forever, same quality of housing for a rental versus comparable owner-occupied home, etc., then there is a premium for owning because of the freedom of choice it entails (to decorate, to remodel, to sell) which renting does not.
But this ownership premium is offset by the rent-ownership price differential, which can work in either direction. For example, if real home prices are rising along with rents (like they were in recent years), the rent-ownership differential works in favor of higher owner-equivalent rent over tenant rent, as owners enjoy the benefit of asset price appreciation and (at least for fixed rate loans) fixed monthly mortgage payments, while renters have to deal with ever-increasing monthly payments and no asset price gains.
Conversely, if home prices are falling, monthly rents are flat and home prices are falling, the rent-price differential tends to move increasingly in favor of renters, as nobody wants to try and catch a falling knife.
OK, I’m a little emotional about this but here goes…..
I was born and grew up in San Antonio. After living around the state practicing nursing and law (Austin for 25 years, Galveston and Alpine/Big Bend), I moved back home in 2001 to teach and be with my family. This city was my ugly baby but, heck, gotta love it.
Anyway, I could not figure out what in the hell was going on here in the last five years. We’ve have had everything go wrong here that has gone wrong in so many places around the country - scorched earth policy, fantasy housing market, stucco, foreclosures out the quista….and for what? Like what’s here to bring on this tacky bubble? Certainly, we are the 7th,8th or 9th largest city in the country…depending on your source….and I bet you can figure out why that’s the case. BUT, exactly what are we really known for? San Antonio is not exactly the center of the financial universe.
Ah, the Alamo! That’s our Holy Grail.
Well, to all you spec builders who are in big trouble, the locusts, cheerleaders, greed grubbers, cheaters, dreamers, dimwits and destroyers of the land who are now losing your a$$…..recall a lesson…..Remember the Alamo!
saywhat….
I visit San Antonio quite frequently as my wife has family and friends there. We’re Texas newcomers having only moved here 4 years ago but prior to moving to Texas for my wife’s career we lived in Juneau and when single I lived in Seattle, Portland, Washington DC, and for short periods in Chicago and San Francisco so I’ve seen a good bit of the coasts.
In any event, the only reason why San Antonio ranks so large is because they drew a giant circle around everything remotely suburban or likely to ever be suburbs and included it all in the city of San Antonio. It might be a large city when you measure population within the city limits, but as an metro area it’s probably more like #30 in the US.
I think the reason why San Antonio has no real hipness is because it lacks a major university. Yes, of course you have UT-San Antonio. But that’s a commuter school not a college scene like in Austin. So San Antonio just isn’t a mecca for young people. Some cities can be hip without a major university. Portland Oregon comes to mind. But Portland has a whole lot of other things going for it. In fact it really has a amazing amount of tech industry for not having any universities to speak of.
In any event, I’m not so down on Texas as some on this list. Last fall my wife and I went back to Oregon to interview for some jobs out there. She was offered positions at every place she interviewed in Portland and Salem but we ended up deciding to stay put. The development pressure was even more extreme in Oregon and I couldn’t even recognize many places around where I grew up. We can live in comfort here in Texas with a mortgage that is around 10% of our income and pay no state income tax. In the Portland area a similar house would have gobbled up a 3rd of our income.
It’s nice where you are. I don’t blame you. I could live there too.
Rich Toscano and I are good friends - we lived near each other in San Diego, and he spoke to one of my MBA classes. I think he was saying that people attatched a premium to owning over renting, not that the market would always reflect this premium. So it could be cheaper to buy then to rent, but this would represent a consumer surplus.
When I lived in Juneau Alaska in the late 90s it was most definitely the case that buying was cheaper than renting. When I moved there I rented a small 2 br condo (about 800 sf) for about $1300/mo. and I paid all the utilities. When I bought two years later I bought a much nicer 1300 sf 3 br zero-lot townhouse and with a 30 year fixed my mortgage payments with the escrow included were about $875/mo. Utilities were about the same so my monthly housing dropped by over $400 when I bought.
Juneau was pretty unique because there is a very large seasonal population and smaller year-round population. During the winter the State legislature is in session so all the politicians come to town along with their staff and all the lobbyists. Most of them have expense accounts and housing allowances so they drive up rents but only want to rent from Jan-May. From May-Sept it is the tourist season and the place gets flooded with seasonal tourism workers who just want to rent summer crash pads. Many of them rent 3-4 to an apartment and they’re making big bucks so they can pay whatever they want for rent but don’t ever have any interest in buying. So there is a huge amount of seasonal demand for rentals that runs from Jan-Sept but a much much smaller year-round market for housing. On top of that, most of the landlords are completely lazy because they know they always have the rental gravy train coming into town. So if you are going to live there permanently it just makes way more sense to buy and avoid the crazy rental market. In fact, I was single when I bought my house and then turned around and rented out my two extra bedrooms for $500 each because I was traveling a lot and the rents more than covered my mortgage.
Of course it would be ridiculous to try that here in Texas.
” A recent report from the Federal Reserve Bank of Dallas said builders across the state have pulled back on starting homes and have increased incentives to sell rising inventory. ‘On the new home side, we’re starting more houses than we’re selling,’ said Bob Gardner of Gardner Financial Services.”
Does Dallas Fed President Fisher begin to suspect that there might be more new houses than are selling on a national level as well? Because it is kind of hard to miss if you drive around a little bit, at least in the parts of the country which I have visited in recent years (primarily up and down the west coast, the southwest desert and HI). And you get the full effect by reading this blog faithfully…
My b’friend (31) & i (52) are moving to Houston, in the fall this yr. Not knowing ANYTHING about the different parts to the city or even the suburbs, were looking for a safe neighborhood to rent either a small house or an apt. What is the best places to live. Right now we live in the burbs of Buffalo, N.Y. I know yucky & YICKSSSSS, that is why we are relocating to TX. Any help would be appreciated!