MARKET SPOTLIGHT: TASTE OF TEXAS
WEATHERING THE MARKET IN ‘SPACE CITY’ Despite the damage inflicted when it made landfall as a Category 4 hurri- cane in August 2017, Houston weath- ered Hurricane Harvey and recovered fairly quickly in many ways. Known as “Space City” as the site of NASA’s Manned Space Center, Hous- ton is the largest city in Texas and the fourth largest in the country. And while its population growth has slowed down, the metro area is projected to exceed 10 million people by 2040. “Houston is benefiting from people moving from other states,” said Jones, the chief economist at Stew- art Title. “We lost thousands of jobs after Harvey, but recovered three months later.” According to Jones’ data, the number of net new jobs in the Hous-
a home was $231,563 in the third quarter, a 3.5 percent increase from the same period the year before, and a 103 percent upswing from the post-recession bottom price report- ed in the third quarter of 2012. Still, there is opportunity in Houston. While way down from their peak before the Great Recession, the number of foreclosure auctions in the metro area is up 54 percent from a year ago. A total of 8,953 Houston-area properties were scheduled for foreclosure auction through November 2018, up from 5,806 during the same period in 2017.
The biggest challenge we seem to be facing is getting enough inventory.” Foster’s company focuses on purchas- ing homes in the $130,000 to $175,000 price range with three bedrooms, two baths, a garage and a backyard, typically 1,500 to 1,600 square feet. Foster notes the majority of inves- tors are coming from either of the two coasts. For those who are coming, a 1 percent rent-to-value ratio is the ideal, although not always achievable. According to ATTOM Data Solutions, affordability in Harris County was down 9 percent in the third quarter from a year ago, with a median sales price of $221,888. Average monthly rent was $1,565 for a three-bedroom home during the quarter, a 9 percent increase in rent from a year ago and providing a potential annual gross rental yield of 9.5 percent. For the Houston metro area as a whole, the median sales price for
ton metro area were up 3.87 percent for the 12-month period ending October 2018, and up 10 percent for the five-year period through the same month. Unemployment in the metro area was 3.8 percent for Oc- tober 2018, down from 4.4 percent for the same month the year before. “We have more jobs than any time in history,” he noted. Until Harvey hit in 2017, the Hous- ton real estate market was primarily overbuilt, said Jones. Prior to the storm, builders had constructed as many as 70,000 new Class A apart- ment buildings that sat unoccupied. But Harvey destroyed so many homes that the oversupply of vacant units were quickly absorbed. “All the indicators for real es- tate in the market are pretty green right now,” said Brian Foster, head
HOUSTON HOUSING STATS AT A GLANCE
Houston is being benefitted from people moving from other states. We lost thousands of jobs after Harvey, but recovered three months later.”
$231,563 median home price, up 3.5 percent
$1,565 average rent for 3 bedroom, up 9 percent (Harris County) 9.5% potential annual gross rental yield (Harris County) $44,078 average gross flipping profit, 26.4 percent gross ROI 8,952 scheduled foreclosure auctions, up 54 percent
TED JONES
‘ALAMO CITY’ TAKES AIMATHOUSING
of sales and marketing for Texas Turnkey Properties. “The market is being driven by job growth and that’s driving population growth. All the people coming in need a place to live.
A recent report by the San Antonio mayor’s Housing Policy Task Force claims that the home of the Alamo is “beginning to experience more severe affordable housing problems
HOUSTON SCHEDULED FORECLOSURE AUCTION TRENDS
SAN ANTONIO MEDIAN PRICES & APPRECIATION
YEAR-OVER-YEAR PCT CHANGE
HOUSTON SCHEDULED FORECLOSURE AUCTIONS (STARTS)
MEDIAN HOME SALES PRICE
YEAR-OVER-YEAR PCT CHANGE
1000%
2,500
60%
$250,000
50%
800%
2,000
$200,000
40%
600%
30%
1,500
$150,000
20%
400%
10%
1,000
$100,000
0%
200%
-10%
500
$50,000
0%
-20%
$-
-30%
-
-200%
28 think realty housing news report
february 2019 29
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