10 Real Estate Shockers
Sure, you can find negative news in Houston. The price of oil has been falling fast — always a worrisome omen for the Houston economy. And the inflation boogeymen will prompt the Feds to raise interest rates unnecessarily next year.
Plus, Houston’s mad multifamily construction boom is getting scary. (Does anybody really believe all these high-rise apartments are going to get rented?)
Before the end of the year, a great plan for the Astrodome will be articulated.
But in the spirit of the season, we pause, bow our heads, and give thanks for Houston’s kick-butt real estate market.
Here are the top 10 things to be thankful for in Houston real estate this year:
1. The Marriott Marquis : A 1,000-room convention hotel under construction in downtown Houston, the Marriott hotel will pave the way for Houston to get into a higher tier in the convention world. Think Houston’s climate is too bad for a convention city? Think again. Good weather is not necessary for convention greatness. The nation’s top three convention cities are Orlando (Mosquito Mecca), Chicago (Iceland of the Midwest) and Las Vegas (the Devil’s Oven).
2. Record Home Sale: Low mortgage rates and massive job growth took Houston to all-time record home sales in 2013 — over 73,000 single-family dwellings sold. Houston is a slam-dunk to beat that in 2014. Yes, it’s harder to find a decent house. But this sure beats our housing crash of ’87.
3. Ashby High-Rise Developers Kevin Kirton and Matthew Morgan: Never before have Houston developers been demonized like the masterminds of the Ashby high-Rise, which has yet to break ground. The ubiquitous yellow signs, with a drawing of a skyscraper monster with fangs, still beautify the neighborhood even after the developers got whacked in a lawsuit after their seven-year effort to build the residential tower. Developers have to be tenacious by nature. Regardless of the project’s merits, I admire the tenacity of Kirton and Morgan.
4. Hines going spec: Houston’s gold-standard developer is building a one million-square-foot speculative building at the corner of Main Street and Texas Avenue in downtown. This isn’t happening in other cities. Having an influential international developer like Hines endorse downtown Houston and the city’s economy is huge. Hines, founded in Houston in 1957, doesn’t make many mistakes. So the world knows Houston real estate is a good bet.
5. Fracking: Other industries contributed somewhat to the Houston boom, but job growth stemming from fracking innovations really launched Houston realty into high gear, for both commercial and residential real estate. Because of fracking, there’s a labor shortage in shale oilfields of Texas where even teenagers can earn $80,000 annually. Nothing like a labor shortage to defuse wealth inequality.
6. Leading the Nation in Home Building: Last year, Houston recorded more home construction starts than the entire state of California. Houston will remain No. 1 in home building for quite some time to come, says national housing consultant John Burns. New builders are coming to town and land developers are starting new communities. Across the city, the inventory of homes for sale is tight and it will stay that way until home builders catch up.
7. The Astrodome: A pulse thumps in the historic symbol of Houston’s can-do spirit. In the smartest move yet, Harris County Judge Ed Emmett recently enlisted the aid of the Urban Land Institute, an international non-profit group of planners, developers and architects. A ULI panel of experts will evaluate the stadium and find some viable plans for redevelopment. Before the end of the year, a great plan for the Astrodome will be articulated.
8. $15,000 Tax Break: Officially called the Downtown Living Initiative, the city’s program to encourage residential development in downtown has worked. Developers get a $15,000 per unit tax rebate for new projects. More than a dozen apartments and condos are under development in downtown. Having the new residents will provide downtown with more restaurants, retail, safety and support the growth of the aforementioned convention business.
9. Job Growth: A year ago, the economists who get quoted like venerated prophets by the local media predicted Houston job growth would drop off significantly in 2014 to less than 70,000 jobs. They were wrong — big time. Houston has added 120,000 new jobs over the last 12 months. The phenomenal job growth has made Houston the strongest overall real estate market in the nation — for both residential and commercial realty.
10. Optimism: Earlier this year, Houston developers had an amazing 114 proposed office buildings on the drawing boards, according to the CBRE realty firm. That’s in addition to the 50 buildings that are actually being built. A lot of the 114 building proposals will never be more than a twinkle in an architect’s eye. But it says a lot about the potential for Houston real estate.
Sooner or later, Houston will see hard times, foreclosures and bankruptcies. But for now, rest assured, the positive news you’ve heard this year is not Chamber of Commerce hype. So be thankful. Houston is the best real estate market in the nation and 2014 is the best year ever.
Ralph Bivins, editor of Realty News Report, is a past president of the National Association of Real Estate Editors.