Future Property Values in Sugar Land (Houston, Austin: renters, houses, tenants)

[Jonathz]

Originally Posted by Htown2013

These are very valid concerns. I am guaranteed a substantial profit now, but I don't want to come back to paying 20+% more than today's prices at 6+% interest and get priced out.

If the property rents I'll be fine. Even just breaking even on total monthly cash flow, considering ALL property related expenses, would be fine, as the equity builds over time and the property should appreciate.

However if the property does not rent, it would be a challenge. I do think it would be one of the more rentable properties.

It all comes down to what the housing market would do over the next 4 years.

hm.. in other words, you are subsidizing the renter rent betting for future appreciation. If you treat it like an investment, you might want to compare other options as well. For example, buying builders stock like Taylor Morrision, Ryland, Meritage. Those stocks have high correlation with the housing market. It will be very hard to sell a house in down market. If you have a tenant in your house, you cannot sell the house until the lease end. If you want to get in and out to time the housing market, it might be better to buy the builder stock and skip the trouble of being a landlord

[Htown2013]

Originally Posted by Jonathz

hm.. in other words, you are subsidizing the renter rent betting for future appreciation. If you treat it like an investment, you might want to compare other options as well. For example, buying builders stock like Taylor Morrision, Ryland, Meritage. Those stocks have high correlation with the housing market. It will be very hard to sell a house in down market. If you have a tenant in your house, you cannot sell the house until the lease end. If you want to get in and out to time the housing market, it might be better to buy the builder stock and skip the trouble of being a landlord

Builders stocks trend with the overall nationwide housing market, or at least with all the regions they operate. An individual property's value is substantially different than a multi region corporate builder.

I own one of the lower priced properties in the neighborhood, hence lower rent and potentially more rentable, but I don't want to be priced out of the neighborhood altogether, as I worked really hard to get in there and did not get to enjoy it that long.

[Htown2013]

Originally Posted by Jonathz

hm.. in other words, you are subsidizing the renter rent betting for future appreciation. If you treat it like an investment, you might want to compare other options as well. For example, buying builders stock like Taylor Morrision, Ryland, Meritage. Those stocks have high correlation with the housing market. It will be very hard to sell a house in down market. If you have a tenant in your house, you cannot sell the house until the lease end. If you want to get in and out to time the housing market, it might be better to buy the builder stock and skip the trouble of being a landlord

I'm not sure you understand my situation. If I were renting it out, I would have no intentions of selling, it would be a future long-term family home. If I had any intention of selling, I would sell now, as I get relocation benefits. It would be stupid to pass those up and sell later on my own dime.

So I'm trying to make a well informed decision on what the Sugar Land, specifically Telfair, market will be like in 4 years.

[cheryjohns]

Originally Posted by Htown2013

What is the rationale for these statements? Even if interest rates are 1-2% higher, do you still expect aggressive price appreciation in the Sugar Land area over that time frame?

I am leaning towards renting it out, but will have to hire a property manager due to distance, so cash flow won't be anything to brag about, but it should at least pay for all expenses, including the equity building part of the mortgage.

I will kick myself if prices drop in 4 years, but I will kick myself even harder if I have to pay 25% more than today's prices at 6%+ interest.

What do you think?

We had well over 50,000 houses a year sell back when interest rates were 7%, and population smaller in Houston. I don't know why people think houses will stop selling once interest rates rise, it just becomes the new normal. "I am moving to Houston, but am going to live under a bridge, because rates are 6%", said no one ever.

In Telfair, all of this is especially true. I am seldom amazed in real estate - but Telfair's appreciation amazed me.

Check with Elda Management (believe her name is Rhini, or close to that). They don't really charge all that much per house. It was like $100 per month, maybe a little more. How many square feet in the house? Rents in Telfair go up to $4500. The higher, the longer to rent. Anything under $2500 goes pretty fast, except for one under 2000 square feet for $2300. That might be a little ambitious.

[Htown2013]

Originally Posted by cheryjohns

We had well over 50,000 houses a year sell back when interest rates were 7%, and population smaller in Houston. I don't know why people think houses will stop selling once interest rates rise, it just becomes the new normal. "I am moving to Houston, but am going to live under a bridge, because rates are 6%", said no one ever.

In Telfair, all of this is especially true. I am seldom amazed in real estate - but Telfair's appreciation amazed me.

Check with Elda Management (believe her name is Rhini, or close to that). They don't really charge all that much per house. It was like $100 per month, maybe a little more. How many square feet in the house? Rents in Telfair go up to $4500. The higher, the longer to rent. Anything under $2500 goes pretty fast, except for one under 2000 square feet for $2300. That might be a little ambitious.

The property is not the lowest end in Telfair but certainly would be under $3000.

And yes, people but properties at high interest rates, but what happens to property values?

In my specific situation, I would do quite well selling if interest rates were to increase and if the property values didn't change much. It's the combination of higher rates and higher property values that would deliver the blow. So again I ask, what factors have driven all the appreciation in the Houston market? How sustainable are they? Just 2 years ago, Telfair was a bargain. I bought less than what the original owner paid to build it.

[Jonathz]

One of Warren Buffett’s most famous investment sayings is “Be fearful when others are greedy. Be greedy when others are fearful.” I am looking at the rental listing in Telfair, there are two brand new houses bought in 2014. They are never live in and just used it for rental. one listing for $3600, and the other for $3500. I think they are already on the market for more than two months. and there are 18 rentals on Telfair. I think we are already at the investment cycle that even out of state investors are attracted to come in Texas to buy real estate for rental purpose. There are also 5 rental listings in Riverstone that are purchased brand new in 2014 for rental purpose and are priced from $2900 - $4999. In my opinion, we re already in the heated state of housing market. and the demand is artificially driven by investor's hope for further appreciation. But realistically, how many households can afford a $3500 monthly rent ? Who know what happens in 4 years ? if we are in the down cycle, I am sure all the above rental listings will turn into for sale listing in no time.

[fordguyhtx]

A lot of people in Sugar Land, particularly Telfair and Riverstone, are house poor. They spend most of their paychecks on mortgages and property taxes, and live beyond their means. In addition, you will find two (2) or more families living in one house because one household couldn't afford to buy the house they currently live in. Most of the people in Telfair and Riverstone (all of Sugar Land) live beyond their means; these people wouldn't have been able to buy these houses had they provide with only one household income. All the cars parked in front of the driveway, in addition to their 3 or 4 car garages are very telling.

You can also tell how house poor they are when they barely have any furniture in their 400-500K house (Riverstone and Telfair). If they do have furniture, a lot of times they are cheap furniture. I mean come on, I would expect a house to be fully furnished if you can afford a $300K+ house. A $500k house without a dinning room table and chairs? LOL

[Htown2013]

Originally Posted by fordguyhtx

A lot of people in Sugar Land, particularly Telfair and Riverstone, are house poor. They spend most of their paychecks on mortgages and property taxes, and live beyond their means. In addition, you will find two (2) or more families living in one house because one household couldn't afford to buy the house they currently live in. Most of the people in Telfair and Riverstone (all of Sugar Land) live beyond their means; these people wouldn't have been able to buy these houses had they provide only a single household income.

You can also tell how house poor they are when they barely have any furniture in their 400-500K house (Riverstone and Telfair). If they do have furniture, a lot of times they are cheap furniture. I mean come on, I would expect a house to be fully furnished if you can afford a $300K+ house. A $500k house without a dinning room table and chairs? LOL

I have not noticed this there. I am 19% DTI with no other debt on a single income.

[AK123]

Originally Posted by Htown2013

What all is driving the recent demand and subsequent appreciation in property values? I know people trying to buy in Sugar Land and they recently got in contact after losing more than 10 bidding wars over two months.

I don't think it will go down anytime soon. It will keep going up, then maybe level out eventually.

And you will likely continue to see new development just outside of Sugar Land (e.g. Windsor Estates on FM 1464 and the new Johnson Development MPC on the Grand Pkwy west of Aliana).

[swopoe]

Originally Posted by fordguyhtx

A lot of people in Sugar Land, particularly Telfair and Riverstone, are house poor. They spend most of their paychecks on mortgages and property taxes, and live beyond their means. In addition, you will find two (2) or more families living in one house because one household couldn't afford to buy the house they currently live in. Most of the people in Telfair and Riverstone (all of Sugar Land) live beyond their means; these people wouldn't have been able to buy these houses had they provide with only one household income. All the cars parked in front of the driveway, in addition to their 3 or 4 car garages are very telling.

You can also tell how house poor they are when they barely have any furniture in their 400-500K house (Riverstone and Telfair). If they do have furniture, a lot of times they are cheap furniture. I mean come on, I would expect a house to be fully furnished if you can afford a $300K+ house. A $500k house without a dinning room table and chairs? LOL

Yeah, I don't think so. We have a 3 car garage and two cars. And we have plenty of good furniture in our home. I am a little slow on the furniture purchasing not because of money, but because I can't decide exactly what I want or I can't find exactly what I am looking for. I don't have any friends in Riverstone where we live that are living with multiple families. We have one income and can afford our home just fine. I don't know what you are talking about.

As to the OP, if you are sure you are coming back, I would rent.