From Homescape

While the national media continues to sing the blues regarding the housing market, here in Texas, we’re singing to a different tune. The Texas Real Estate Center published an article entitled, “Bubble Watch 2008” by Ali Anari, which lends further credence that not only has there not been a bubble here, there are no signs of one occurring in the future.

It’s all in the numbers
The article references a recent report showing the price-versus-rent ratio in the United States, Texas and all major Texas cities to back the argument. The normal P/R ratio for the U.S. in 2005 was 22.7 percent. The P/R ratio in Texas was 16.2, which was only 71 percent of the national average, according to the data. This suggests that the risk of a Texas home-price bubble is minimal.

The U.S. average home price in relation to rent ratio is 24.3 percent whereas in Texas, the average is 16.8 percent. A normal P/R ratio for the U.S. housing market is the median home price divided by the average (or median) annual rent for the nation. When the local housing market rises above the U.S. average P/R ratio, just like the stock market, levels rise to a point not likely to be sustained by fundamentals, a correction occurs, and the severity of the correction depends on how high the P/R ratios have been.

Quite simply, Texas is below the national average and therefore not in danger of experiencing what many markets have. Home price appreciation is slowing in the state, from 6.1 percent in 2005 to an estimated 2007 appreciation of 3 percent. One could expect 2008 to show similar or lower appreciation rates than found last year. But appreciation is the rule rather than the exception, for the most part.

Now is time to buy
Here in Houston, we are enjoying an economy based on oil, a multimillion dollar expansion of the Texas Medical Center and a port that is vital to the entire southwest region. Home sales year-to-date are down in Houston by 12 percent, but still ahead of 2005 levels.

That is a good market when one considers that 2005 is now considered one of the third-best years in Houston’s residential real estate history. Our P/R ratio is 17.9 percent, which is a little higher than the state average. We could use a little less “doom and gloom” from the national media, but smart people know that this is an opportune time to invest in real estate. Lower interest rates, waning home price appreciation, with the prediction of future growth in the Houston economy, all point to the fact that buying a home today in Houston may result in the best long-term investment available.

Toni Nelson, Prudential Gary Greene Realtors

Last week I made my way down to Dallas for the National Association of Real Estate Editors conference. Between the seminars and panel discussions on the nation’s housing market and real estate trends, I got the opportunity to tour, in a helicopter, new developments in the Dallas-Fort Worth area.

Dallas, Fort Worth and other Texas towns are among the nation’s leaders in job and population growth. Unlike much of the U.S., most Texas housing markets have lost little ground, if any. Commercial and residential real estate development is booming in and around metro areas, while downtown Dallas expects a population of more than 10,000 people in the next two years. More people moved to the Dallas-Fort Worth than to any other metropolitan area in the United States last year, according to a new U.S. Census Bureau report. The report cited that population there increased by 162,250 between July 1, 2006, and July 1, 2007.

Development boom

Driving the development boom in the Fort Worth area is AllianceTexas. Alliance is a 17,000-acre, master-planned industrial, residential and retail development of Ross Perot Jr.’s Hillwood company. The award-winning development is a budding area of commercial, retail, residential and recreational spaces. The Alliance residential sector offers properties in the price range from affordable $150,000 single-family homes to multimillion luxury abodes.

My helicopter tour of the entire development site took off from the 2,500-acre Circle T Ranch. With its lushly green rolling hills, the ranch is home to a herd of buffalo, cows, horses and a lone camel (which reportedly was a gift to the Perot family). As we canvassed over an area of new residential homes, the pilot pointed out to me a sprawling mansion still under construction. The property just happened to belong to Terry Bradshaw, the Hall of Fame football legend and Fox-TV NFL commentator.

Still growing
Flying over this massive 17,000-acre development, was like watching a miniature city blooming. Coming from a developed city like Chicago, it’s fascinating to see what once were stretches of empty ranch land transformed into a bustling metropolis. Today, the development encompasses more than 28 million square feet, 150 corporate residents, 27,000-plus employees and more than 6,200 single-family homes. Because of the continued customer demand for office and residential space at Alliance, Robert Folzenlogen, director of planning and design with Hillwood Properties, said the company plans to continue their expansion and growth of the area.

Got hot local housing tips or a story you want to share? Contact Amy Le at

openingdoorsblog@homescape.com.

While some economists and real estate experts are predicting that many housing markets across the country won’t hit bottom until late 2009 or even 2010, Christmas may come early for some more-fortunate home sellers. Money Magazine recently published their Top 10 list of metro areas that are expected to see price gains over the next year. Texas real estate seems to be leading the charge. To see how home values are appreciating or depreciating in your area, check out market-trend analyses of top metro areas across the country by FiServ Lending Solutions.

Everything is bigger in Texas, including the positive prices on homes in these towns:

McAllen
Median home price: $109,000
12-month price gain projection: 4%
5-year price change: 23.3%
View homes for sale in McAllen

El Paso
Median home price: $134,000
12 month price gain projection: 1.8%
5-year price change: 51.9%
View homes for sale in El Paso

Fort Worth/Arlington
Median home price: $134,000
12-month price gain projection: 1.4%
5-year price change: 17.4%
View homes for sale in Fort Worth

Houston
Median home price: $150,000
12-month price gain projection: 1.2%
5-year price change: 25.1%
View homes for sale in Houston

Dallas
Median home price: $161,000
12-month price gain projection: 1.2%
5-year price change: 15.8%
View homes for sale in Dallas

San Antonio
Median home price: $152,000
12-month price gain projection: 0.8%
5-year price change: 39.6%
View homes for sale in San Antonio

Sources: MetroTex Association of Realtors, city and county assessor’s office in McAllen, First American CoreLogic, FiServ Lending Solutions and LoanPerformance data.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.