HAR's Crazy Right Now-- So many pending (Houston, Sugar Land: real estate, 2015)

[bghouston]

My wife and I have been in market for quite a while looking at new houses, feels like Katy is way too crowded with new home construction and I am **** scared that there will be a massive drop in prices sooner than later. I can give examples, Brighton homes in Silver Ranch, section - 8 have been sitting for quite sometime, David Weekly has not yet bothered to start constructing but guess what, Silver Ranch is not yet done, they have sections 9 & 10 planned for later this year, so they are expanding, Cardiff Ranch is also busy expanding into their last section, Fulshear communities seem to have a 10 year expansion plan. Firethorne has started building in new sections but most of these communities already have houses in their existing sections which have not been sold for a few months laying out some killer deals on inventory home, in some cases even less than the base price after all the upgrades.

Are the builders really overdoing this ? Hard to believe that there are really so many people moving into Katy every year to buy/build a house. Over all this, the builders are happy increasing the prices of the homes every other month. When will all of this get sold ???

[Rip808]

^ really? Brighton homes is out of lots and only has a few homes in inventory (expensive), Meritage has two homes left in inventory to sell (real expensive). They can't build them fast enough. Wait until they open section 9, its going to be even more expensive than it is now. There's only so much more land left in South Katy. There will be no "massive" drop as you predict, these homes in other states would be twice as much. And Houston's growth is for real, with a lot of high paying jobs. Better get in on this before its too late. In Silver Ranch and surrounding areas, the investors from overseas buy 2-5 homes at a time. They are smart...they are not going to invest into something that is going to lose them money .

[usc619]

I wonder how them investors from the last CA bubble are doing?

[TDAlmighty]

In some higher-end neighborhoods, I am seeing more SFH rentals than anytime since I moved to Houston in 2008. The rent prices seem low compared to buying. Not sure what this means...

[cheryjohns]

Originally Posted by TDAlmighty

In some higher-end neighborhoods, I am seeing more SFH rentals than anytime since I moved to Houston in 2008. The rent prices seem low compared to buying. Not sure what this means...

It's percentages.

Buying $150K. Rent will be over 1% of value - and renter pool is huge.

Buying @200K - still good - but percentage less and renter pool a little less.

Buying $275K - even/steven rent and renter pool less.

Buying $350K - maybe less than mortgage (depending on where) and, of course, renter pool less.

More than $400K - re-think.

[julia1999]

Cheryjohns, That is a great post on rental property selection. It is very difficult to find any SFH in south Katy less than 200k, anything at that figure goes very quickly! Although the housing market in Katy cools off in the past three months, low-end properties still go very fast.

A quick update for my own rental property: I finally bought my own rental house at Katy in June, at the price around 200k. It was built in 2008, and still needs some small repairs here and there. I can hardly imagine how much efforts people need to spend to maintain a house built around 1970 at 77077. I have to admit 77077 houses are easier to rent though. But I bought my rental at such a low price, it was rented out quickly.

[TDAlmighty]

Originally Posted by cheryjohns

It's percentages.

Buying $150K. Rent will be over 1% of value - and renter pool is huge.

Buying @200K - still good - but percentage less and renter pool a little less.

Buying $275K - even/steven rent and renter pool less.

Buying $350K - maybe less than mortgage (depending on where) and, of course, renter pool less.

More than $400K - re-think.

I am not finding many places where rent is over 1% of recent sales, even between 100-200k. For the more expensive homes, if the owner is not cash flow positive (or at least close), why would he rent in the first place?

[Htown2013]

Originally Posted by TDAlmighty

I am not finding many places where rent is over 1% of recent sales, even between 100-200k. For the more expensive homes, if the owner is not cash flow positive (or at least close), why would he rent in the first place?

Owner probably bought house for less than today's prices and wants to retain property. Many of the $300-400k+ rentals are O&G professionals on assignments who will come back to Houston, like where they live, and don't want to come home to 25% higher prices, 6-7% interest rates, and low inventory with bidding wars.

Unless we predict housing prices to drop in the good areas when interest rates rise, it makes sense for them to rent out, even if the property takes 3-4 months to lease. This is probably better option than cashing out and putting money in today's overpriced stock market when you'll need it in 3-5 years to reenter the Houston housing market.

[cheryjohns]

Originally Posted by Htown2013

Owner probably bought house for less than today's prices and wants to retain property. Many of the $300-400k+ rentals are O&G professionals on assignments who will come back to Houston, like where they live, and don't want to come home to 25% higher prices, 6-7% interest rates, and low inventory with bidding wars.

Unless we predict housing prices to drop in the good areas when interest rates rise, it makes sense for them to rent out, even if the property takes 3-4 months to lease. This is probably better option than cashing out and putting money in today's overpriced stock market when you'll need it in 3-5 years to reenter the Houston housing market.

This right here.^^^^

As to the 1% and over - yeah, they are there - you have to look for that, plus an area with low days on market, with appreciation in the forecast. The rents will rise every time the lease is up.

[TDAlmighty]

Originally Posted by Htown2013

Owner probably bought house for less than today's prices and wants to retain property. Many of the $300-400k+ rentals are O&G professionals on assignments who will come back to Houston, like where they live, and don't want to come home to 25% higher prices, 6-7% interest rates, and low inventory with bidding wars.

Unless we predict housing prices to drop in the good areas when interest rates rise, it makes sense for them to rent out, even if the property takes 3-4 months to lease. This is probably better option than cashing out and putting money in today's overpriced stock market when you'll need it in 3-5 years to reenter the Houston housing market.

Wow! That completely blows my mind that people would be that confident that prices will continue to rise to go through all that trouble, expense, and take so much risk with renters. Hopefully they are right!