‘No One Expects It To End’ In San Antonio
A pair of reports on the housing bubble in full-swing. “Rural Hill Country communities have become a favorite of buyers from California. High taxes, inflated property values and a higher cost of living are prompting more Californians to leave the state and buy property in other parts of the country.”
“Now there are signs that the appreciation in California home prices may be peaking, and that values could soon begin declining. If this trend pans out, then the rush to sell could accelerate.”
From My San Antonio. “Morning comes to the foothills of the Texas Hill Country, and everything appears to be in the sight line of a surveying crew. Construction began on nearly 16,500 new homes last year. That’s up 27 percent from 2004, part of a trend that has held steady for 15 years.”
“Jack Inselmann’s projections for 2006: 18,000 housing starts. It’s not just new construction. All housing, experts say, is good housing in the Alamo City. Builders and real estate officials are cautious in their description of the growth. They shy away, for example, from calling it a ‘housing boom.’”
“‘I’ve never seen anything like this,’ said Rick Barnett, who has been a builder since the 1970s. ‘All sectors are seeing tremendous growth,’ said (builder) Ralph Rodriguez. ‘The steady growth across the entire spectrum of prices has resulted in growth in all parts of town. It’s not just the North Side anymore. It’s everywhere.’”
“The city’s building renaissance has its roots in failures 20 years ago. In the late ’70s, however, a housing boom pushed the city out to Loop 1604 and beyond. The trouble, builders say, was that it was built on a foundation of bad business plans, flimsy financing and specious demand.”
“The bubble burst in the early ’80s, taking subdivisions, builders, and hundreds of savings and loan associations with it. The bubble, said (builder) Dean Morris, occurred because of cooked numbers, demand exceeded supply and housing appreciation was higher than inflation.”
“‘There was some growth,’ said Art Burdick, a custom builder who specializes in luxury homes, ‘but it was all smoke and mirrors.’”
“For the builders who survived the financial purge, this was akin to Christmas arriving early. Cheap money. Pre-fab land. ‘It was there for the taking,’ said Rodriguez, ’so we took it.’”
“The highly coveted North Side is filling up, Barnett said, pushing buyers to the east and west. Already, developers are divvying up the land west of Loop 1604 on the West Side. Until that’s ready, Kessler said, existing-home values will continue to appreciate, and that has lured out-of-state investors, who see the bargains on every block in the current housing market.”
“Those investors, in turn, drive up costs by their purchases. No one expects it to end.”
These articles reveal just how long this boom has gone on. IMO, the Hill Country has been ruined by development. And will the Toyota jobs support these $600,000 houses? Good luck Texas; with such a short memory you’ll need it.
I just wonder how long I’ll have to wait before Austin comes back to reality. We repelled one wave of California locusts back in the dot-com days, now we’ve got a second wave to try and push out (or at least get the nicer ones deprogrammed)
Second wave is a good description, as some characterize housing as a second wave of the same credit bubble. This one will be ‘repelled’ as well. Even in coastal California, eventually building will destroy the myth of land shortages.
Now, in California, at least in the Bay Area, it’s the Chinese who are really the cause of the housing bubble. As my grandma used to say “if you point your finger at somebody else, you have three fingers pointed back at yourself.” Is it really the Californian’s causing all of this? My guess is, greed knows no bounds.
BUT, the way I look at it, if it’s only rich Californian’s (I’m a native, BTW), and rich Chinese that are the root of all of this, and it’s only us that are going to be hurt by the housing bubble busting, the all the more reason to hike interest rates right through the roof!!!
I like San Antonio a lot. It’s one of my favorite cities. The question is, what are these California speculators counting on for jobs? SA has two industries. Tourism and the military. Neither pay well.
Many of them are probably consultants or others who have managed a sweet WAH telecommuting gig. Of course, what happens if they lose that WAH job is another question.
I hope this thing cools off soon, as the only way I’ve kept some sanity is knowing that, if the bubble doesn’t crack in the next few years, I could move my family from CA to Texas and find a nice place to live and settle down.
But hell, if prices keep shooting up out there is well, it’s all over. I’m not going to pay a $3K month house payment in TX. I guess I could move to Thailand or something :-S … this is truly sad.
>move to Thailand
A good friend of mine moved to Thailand about 3 months ago to teach english. He’s having the time of his life.
And no, not in that way…
Better hurry if you’re going to move to Thailand. The word is out that it’s a cheap place, and “ugly Americans” are on their way to turning it into another Costa Rica style bubble.
A little tip for people looking to buy in CR. Better sit on your property full time, and check the lien office once a week. RE laws aren’t the same as in the US, and you’d be surprised how easy it is to get cheated out of your land.
Ben, I don’t know how secure those Toyota jobs are. First, there aren’t that many. Just a few thousand. Second, the plant builds the biggest gas-guzzler Toyota has. If the SA plant was building Camry’s and Corolla’s, I’d say it has a bright future.
Maybe they’ll switch the assembly lines over.
Ask Arlington, TX what relying on auto-jobs is like. I’m glad they are actually ‘making’ something, but what if all this homebuilding energy/finance was going into similar production? And being on I-35, hasn’t the boom promised by NAFTA proponents shown up? We were told the trade would create a wealthy middle-class in Mexico, who would then start importing products from places like south Texas.
“I’m not going to pay a $3K month house payment in TX.”
Who can say? Lots of idiots are paying that to live in SoCal armpits.
>SoCal armpits
At least the temperture is reasonable most of the year. I agree that most of SoCal is now a gigantic, stinking armpit. But I’d take a SoCal hairy armpit ANY day to living anywhere near Texas.
I’ll mess with texas.
“But I’d take a SoCal hairy armpit ANY day to living anywhere near Texas.”
At least our armpits don’t cost $600,000 to live in.
YET
Going back to my neck of the woods for a moment, OMG, just received this from my friend, a realtor who represents David Weekly Homes in a nice East Tampa, FL suburb. I’d say this is one builder trying to stay ahead of the curve, or is freaking out, take your pick. Any takers???
“Dear Friends,
I wanted to take the time to share some Fantastic pricing and opportunities in the New Construction Market. CLICK THE LINK BELOW to preview 5 David Weekly “Spec Homes”. All of the Upgrades have been pre-selected by their Professional Design Team. Other than these 5, there are currently some additional opportunities for Example; JUST REDUCED YESTERDAY, a “GASTON” floorplan 2337 sf / 4 br / 2 ba / 2 car garage / study / formal dining was $444,671..now $349900!!”
No, prices will not be coming down, there is no bubble, etc. etc. How do you think those last greater fools who bought this home for $444k are feeling right now??
A Tool Kit for New Landlords
I clicked the link expecting the tool kit for new landlords to be a rope, a bucket, and a pencil and paper to leave the note.
JUST REDUCED YESTERDAY, a “GASTON” floorplan 2337 sf / 4 br / 2 ba / 2 car garage / study / formal dining was $444,671..now $349900!!”
No, prices will not be coming down, there is no bubble, etc. etc. How do you think those last greater fools who bought this home for $444k are feeling right now??
I’m guessing they feel like the bubble bitches they are, with some bankers pole firmly implanted and every day is another stroke! This is getting FUN!
in the New York Times they profile certain areas. more than a few times I’ve seen that they make a note that the market in the area profiled is slowing.
(Havens | Pawling, N.Y.
Billionaires Welcome, Helicopters and All
PAWLING, a community at the southern edge of Dutchess County with scenic horse farms and stunning vistas, is less than two hours from New York City by the Metro-North Railroad — but weekend residents who prefer a shorter trip can travel by private helicopter.
The Real Estate Market
As with other communities in the region, buyers who were priced out of Westchester and Putnam Counties came north, enduring longer commutes for more affordable housing. In 2000, Pawling was the fastest-growing town in Dutchess County, and town leaders realized they had to do something to slow growth, Ms. Coursen said.
They adopted strict zoning laws that limited where development could occur — not on steep slopes or too close to wetlands — and encouraged developers to build houses in clusters and preserve open space around them, she said. The result was like putting the brakes on. Since then, only 4 percent of the available land has been developed, Ms. Coursen said.
With limited development and an increase of buyers from closer-in suburbs, prices in Pawling surged in the last five years, though they now seem to be leveling off, said Gillian Stewart, a real estate broker whose agency is on East Main Street. This year, properties are staying on the market for longer than sellers have become accustomed to, Ms. Stewart said.
“It has been a bit hard to convince sellers that times have changed,” she said.
The average selling price is $475,000, said Rosemary Osborne, an agent with Century 21 at Tela Cook on Route 22 in Patterson. But the average price is perhaps not as revealing in Pawling as the range of prices.
Recent listings start in the low $300,000’s for small two-bedroom cottages that need work, and in the low $500,000’s for houses built in the 1960’s, Ms. Osborne said; prices rise to $600,000 to the high $800,000’s for newer houses.
Estate prices can be stratospheric: a six-bedroom, six-and-a-half bath, 5,000-square-foot home on 350 acres, with its own lake and mountain views — and a helipad — is listed at $15 million.)
I guess even in the land of billonaires things can slow.
Sprott has a piece out on the housing market and the Feds choices.
Warning! PDF file!
http://www.sprott.com/pdf/marketsataglance/05-2006.pdf
My brother-in-law works for Pulte Homes in Austin. They are building like gangbusters out there. Especially the higher-end of the market, which is strange because Pulte mainly focused on the lower-end a few years back. Maybe all the CA equity money fueling demand for these homes?
Went through Austin this week….Sunday and Friday. Have a friend who bought a national home builder house which was cancelled by an investor. The cracker boxes there are everywhere. Went further down 35 and stayed in a national chain resort in San Antonio (what a POS cracker box)….but what I noticed was a lot of cracker box houses which appeared to be non owner occupied for sale……this is a disaster waiting to happen. A few thousand 15$ hour jobs from Toyota will not save this…..I am a native Texan and saw the mid 80’s disaster….and this will be much worse!
Loop 1604 AKA “the death loop”.
Update: A few weeks ago my freind in PHX AZ put her home up for sale. I was concerned the price was too high given we had 45K houses for sale at this point. House was purchased for a total of $170K 3 years ago and has upgrades galore, full landscaping, and a pool. I said it should be priced below zillow estimate of 233K, agent listed it at 250K and of course I’m all wet. I bet myself it would never sell. Result, 3 weeks later she has accepted a full price offer with her paying closing costs. I am flabbergasted to say the least. The only explanation I have for this is that the comps nearby do not have upgrades like the vaulted ceilings, bay windows, tile floors, good carpeting, landscaping or pools. In fact most homes bought for investment are pretty stark boxes with no landscaping in rear yard that really don’t show that well.
Res
Is this a sarcastic post? If so you sure did it well. How big is this house for 250k? 900 sq ft? Is it 100 years old? Of course a nice house with upgrades would sell for 250k in Phx! And if it was 170k a few years ago it is surely “worth” 250k by today’s standards, at least at this point in the burst. Are you pretending that it is 2004? Please let me in on the joke.
what are you babbling about ?
She’s calling “Bullshit” on your story.
Not babbling. I had no idea that 250k for a house with upgrades and a pool is considered expensive in Phx. I must be living here in the Southeast for too long. A deal like that does not exist here.
Buying at a price above the rest in the neighborhood because of upgrades is not the best choice considering that you may be the overpriced house in the block. How many of the other properties are going into foreclosure? Every 4th house may be soon sprouting weeds as you drive up to your house saying ‘but it has nice upgrades’……this is way, way, way, way, way, way to early to consider buying a NEW house in an unestablished neighborhood…..
The house is 3 years old. Doesn’t $250k sound cheap for a nice house in Phoenix?
Since the median price in Phoenix is $350K, a nice house for $250K sounds pretty good on the surface. Although I expect median prices to be $175K there in 5-6 years.
http://www.benengebreth.org/housingtracker/location/Arizona/Phoenix/
The only way you can buy a “nice” house for 250K in Phoenix is if it is about 1600 ft2 and located in a 90%+ Hispanic school district. I’m not racist, but that’s the facts. The same house in a more moderate demographic mix would cost a lot more. Also, we all have a diiferent sense of what “nice” means.