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Old 02-12-2019, 09:15 PM
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How's the real estate market?


I have been in an apartment for the last 5 years. I have decided for the most part I really like where I am (Houston, Texas) and am not really looking to go anywhere else.

The things I like about the apartment, I can leave easily if an opportunity presents itself. Also, I don't have the headaches of home ownership like dealing with foundation problems or having the water heater go out.

The benefits of home ownership also have been reduced thanks to the current administration. I feel that Trump and the republicans have pushed us back to 2007/8 where another crash could very definitely happen. Also, with their awful tax law many of the deductions were removed on top of not having my taxes reduced.

So, to those more knowledgeable about real estate, should I stay where I am or is owning a home still a good overall investment.

I am interested in any and all opinions. Many thanks.
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Old 02-12-2019, 10:01 PM
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Median home value in Houston is $184,000. Thats a fairly reasonable price for a home.

Also it was my understanding that Texas weathered the 2008 housing crisis much better than other states like California. I can't remember why, but that is what I recall reading at the time. Maybe the laws down there are different. Then again, looking at zillow median price was down to 115k back in 2012.

IMO, what is a big risk in real estate is that due to income inequality, a handful of millionaires and billionaires are buying up houses and turning them into rentals. I believe the % of home purchases that are cash is way up compared to 20 years ago, when a lot of home purchases were home owners taking out mortgages.

I'm not a real estate expert by any means though.

People always say 'a recession is just around the corner', so who knows. But in between the exploding deficit, the tariffs, the trade wars, etc I wonder if there will be another recession and if that'll drive home prices down again.
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Old 02-12-2019, 10:27 PM
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Can you research the median price over the past decade or so? And read into local-market articles about the forecast for 2019? $184,000 seems insanely cheap to me but Westley Clark's wording suggests that this is good. The median list price in New Hampshire is $295,000 at the moment, so if it was ever as low as in Houston, I'd want to jump on it thinking it was a massive bargain I'd never see the likes of again, but maybe 184k is an abnormal high for your area and due to drop because that 115k price seven years ago hasn't happened here, ever, in my entire adult life; even in the thick of the housing crash the median was still almost 200k. I think it may have been higher than 115k back when my parents bought our first house in the late 80s!
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Old 02-13-2019, 09:02 AM
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How have prices moved in Houston? Are they at all time highs now, or have they only increased moderately?
I'm in the Bay Area and the price of my home is about 50% higher than it was at the height of the housing boom. But time on market has been increasing, and sale prices have begun to match listing prices rather than being much higher.
So if time on market is very long in Houston, you might be able to get a bargain. If it is short, you might wait until there is a correction.
Having a house is often a good investment, but not at all price points.
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Old 02-13-2019, 07:12 PM
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Also it was my understanding that Texas weathered the 2008 housing crisis much better than other states like California. I can't remember why, but that is what I recall reading at the time. Maybe the laws down there are different. Then again, looking at zillow median price was down to 115k back in 2012.
Mostly because Texas doesn't have crazy building restrictions like CA that caused prices to rise so high in the first place.
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Old 02-13-2019, 07:35 PM
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One thing to keep in mind is the very real tax advantage to ownership. This is independent of deductibility of mortgage interest. Think about it. I own a house that is worth, say, a half million. If I sell it, invest the half mil and move to an apartment I pay taxes on the investment income and the rent is not deductible. In effect, my investment in my home is equivalent to earning my rent untaxed.

This was brought home by an interesting story. A friend of mine many years ago, went on sabbatical to some place in Colorado. He found someone there who wanted to have a sabbatical in his school in Massachusetts. They arranged to trade houses, even up, as well as cars and they each came across the country on their own. No money changed hands at any time. It never occurred to my friend--and probably not the other family either--that there were any tax implications. But later my friend discovered that both of them should have declared the fair rental value of their respective houses as income and paid taxes on them. This is a perfect illustration of how renters are screwed by the tax system compared to buyers.
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Old 02-13-2019, 10:17 PM
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Mostly because Texas doesn't have crazy building restrictions like CA that caused prices to rise so high in the first place.
Apparently so, interesting.

http://www.newgeography.com/content/...reat-recession
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Old 02-14-2019, 01:16 AM
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That article is from 2010. My house is now worth 50% more than it was worth at the height of the pre-recession boom, and about double what it was worth during the worst of the recession.

The Las Vegas area, which built with practically no restrictions, got hit a lot harder than we did.
Anyone choosing to buy real estate in Texas rather than California in 2010 lost a lot of money.
From the Zillow home price index, Texas average prices rose from $130 K to $190K 2010 to 2018, or 46%. California prices rose from $350 K to $560K or 60%.
All numbers eyeball from the Zillow charts.
I did better than this being in a hot market.
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Old 02-14-2019, 02:14 AM
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That article is from 2010. My house is now worth 50% more than it was worth at the height of the pre-recession boom, and about double what it was worth during the worst of the recession.

The Las Vegas area, which built with practically no restrictions, got hit a lot harder than we did.
Anyone choosing to buy real estate in Texas rather than California in 2010 lost a lot of money.
From the Zillow home price index, Texas average prices rose from $130 K to $190K 2010 to 2018, or 46%. California prices rose from $350 K to $560K or 60%.
All numbers eyeball from the Zillow charts.
I did better than this being in a hot market.
Are the buyers of these homes locals buying with a mortgage or are they wealthy people buying the houses?

If wealthy people buy the houses, do they rent them out or just let them sit? I've heard in Vancouver wealthy people from overseas may spend a million on a house, but not even rent it out. They just let it sit, which would make the housing issue worse.

I"ve also heard in high demand areas, a lot of people are using airBNB to make money, which would make the housing shortage even worse because rather than a room or home being occupied 24/7, its only occupied a few days a week at most by tourists.
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Old 02-14-2019, 02:15 AM
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Buying a house is damn near the only good decision I've ever made my entire life.
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Old 02-14-2019, 08:56 AM
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How have prices moved in Houston? Are they at all time highs now, or have they only increased moderately?
There is an index for that. The Case-Shiller index. It is based off of median home price in 2000 for that area is set to 100. However, it does not have a Houston specific one. here is Dallas.

https://fred.stlouisfed.org/series/DAXRNSA
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Old 02-14-2019, 09:25 AM
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Originally Posted by Voyager View Post
How have prices moved in Houston? Are they at all time highs now, or have they only increased moderately?
I'm in the Bay Area and the price of my home is about 50% higher than it was at the height of the housing boom. But time on market has been increasing, and sale prices have begun to match listing prices rather than being much higher.
So if time on market is very long in Houston, you might be able to get a bargain. If it is short, you might wait until there is a correction.
Having a house is often a good investment, but not at all price points.
Here in the NW, house prices are crazy high. Much higher than the 2008 peak. My wife and I want to buy a rental house but we are waiting for a correction. We thought that after last year, we would see a drop when they started going on the market a couple weeks ago. Nope: Even higher.
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Old 02-14-2019, 02:33 PM
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Are the buyers of these homes locals buying with a mortgage or are they wealthy people buying the houses?

If wealthy people buy the houses, do they rent them out or just let them sit? I've heard in Vancouver wealthy people from overseas may spend a million on a house, but not even rent it out. They just let it sit, which would make the housing issue worse.
There are definitely people from China paying cash for houses here, and one down our street doesn't seem to be occupied. We know the people who sold it, so we know it was cash. But all houses are this price, and certainly only a very few of them are bought this way or are being rented. There also doesn't seem to be a lot of flipping going on, which there was during the runup to the recession.
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I"ve also heard in high demand areas, a lot of people are using airBNB to make money, which would make the housing shortage even worse because rather than a room or home being occupied 24/7, its only occupied a few days a week at most by tourists.
That's true in cities. We stayed in one in LA which was rented and turned into an AirBnB against the lease terms. I should look up our city on AirBnB, but I doubt there is much call for houses here. We're not all that convenient to anything.

One thing now is that people like me can't sell because we'd get clobbered by taxes. The gain in value of my house is now way above the amount you can exclude for capital gains taxes on home sales. People who bought before me have it worse. My accountant says that when one of us dies it gets reset, but until then I don't feel like paying oodles of money for the privilege of moving to a smaller place.
I know, first world problems.
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Old 02-14-2019, 02:36 PM
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Here in the NW, house prices are crazy high. Much higher than the 2008 peak. My wife and I want to buy a rental house but we are waiting for a correction. We thought that after last year, we would see a drop when they started going on the market a couple weeks ago. Nope: Even higher.
That's exactly what happened during the housing bubble. Lots of people saved up to buy a house only to see prices rise much faster than their down payments. Until it crashed.
My daughter in Connecticut is waiting for a crash. My daughter in Indiana just bought a 4,000 sq ft house for $400K in the best suburb, which is the cost of a garage around here.
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Old 02-14-2019, 03:01 PM
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$368,600 median apparently. It's cooled but still hot. Wages haven't caught up either. I'm in a condo and hate it, all the disadvantages of home ownership mixed with the disadvantages of renting. We want to get a home as living conditions suck but can't afford it. A move is probably in the future.
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Originally Posted by Hari Seldon View Post
One thing to keep in mind is the very real tax advantage to ownership. This is independent of deductibility of mortgage interest. Think about it. I own a house that is worth, say, a half million. If I sell it, invest the half mil and move to an apartment I pay taxes on the investment income and the rent is not deductible. In effect, my investment in my home is equivalent to earning my rent untaxed.
Unless your mortgage interest and property taxes aren't high enough to be worth itemizing. And especially with the 2018 tax changes.
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Old 02-14-2019, 04:04 PM
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So, to those more knowledgeable about real estate, should I stay where I am or is owning a home still a good overall investment.
This is the key. If you are buying a house as an investment then, like any other investment, the key is to be in it for the long haul. The St Louis Fed site linked in a prior post shows that, for Dallas, the overall trend in home values is upward. The other cities i looked at were pretty much the same. Atlanta housing was hit hard by the last recession. Even if you had bought at the peak ~2006 (using the median home price) the investment would be up about 10% now. As with any investment, there will be peaks and valleys. Over time, a house is almost always an appreciating asset.

Anecdote - I have bought 3 houses, sold 2. My experience was as follows:
House 1 - lived in 15 years, sold at 32% higher than purchase price
House 2 - lived in 18 years, sold at 54% higher than purchase price

Neither "investment" performed as well as the stock market, but both gave solid gains - and a place to live.
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Old 02-15-2019, 01:32 AM
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Don't forget to add in property tax. I just looked on realtor.com and the property tax on a median home in Houston is about $4,000 a year. Just for comparison, property tax on a $185,000 condo in my Seattle suburb is $1,826.
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Old 02-15-2019, 01:35 AM
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$368,600 median apparently. It's cooled but still hot. Wages haven't caught up either. I'm in a condo and hate it, all the disadvantages of home ownership mixed with the disadvantages of renting. We want to get a home as living conditions suck but can't afford it. A move is probably in the future.

Unless your mortgage interest and property taxes aren't high enough to be worth itemizing. And especially with the 2018 tax changes.
I paid off the rest of my mortgage today because with the new tax law the tax advantage went away, which makes my other investments yield more.
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Old 02-15-2019, 11:19 AM
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Don't forget to add in property tax. I just looked on realtor.com and the property tax on a median home in Houston is about $4,000 a year. Just for comparison, property tax on a $185,000 condo in my Seattle suburb is $1,826.
That seems high. Maybe that figure doesn't include homestead exemptions? Or perhaps it does include them, but the averaged taxes for Houston appear higher because there are so many rental properties, which don't get the homestead exemptions.

My property taxes (in another town but still in Harris County) would be about $3400.00, but with homestead exemptions my combined tax bills for last year were only $2100.00 on a house valued slightly above the Houston median.
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Old 02-15-2019, 03:23 PM
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That seems high. Maybe that figure doesn't include homestead exemptions? Or perhaps it does include them, but the averaged taxes for Houston appear higher because there are so many rental properties, which don't get the homestead exemptions.

My property taxes (in another town but still in Harris County) would be about $3400.00, but with homestead exemptions my combined tax bills for last year were only $2100.00 on a house valued slightly above the Houston median.
I'm just saying be sure to take taxes into consideration. It sounds like you have a pretty good deal, but obviously, others don't.
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Old 02-15-2019, 10:23 PM
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Texas also required larger down payment ratios than other states - negative-amortization loans, low and no-doc loans, 5% down loans, none of that shit was allowed to fester pre-2008.

Last edited by JohnT; 02-15-2019 at 10:23 PM.
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Old 02-15-2019, 10:27 PM
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Oh, and it's great here in San Antonio. We have 25,000 people moving in every year*, it's a young population, demand is high, sales are high, construction is ongoing. As economic growth is a function (largely) of population growth, the future looks bright for the San Antonio-Austin corridor.

*estimates are 1.2 million new people by 2040.
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Old 02-16-2019, 07:15 PM
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Can you research the median price over the past decade or so? And read into local-market articles about the forecast for 2019?
I haven't done all that yet. Thought I'd see what others more knowledgeable thought. I keep going back and forth on the topic.
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