By Azar Fisher
As someone who is not a native Houstonian and who is lucky enough to meet a lot of new movers coming into our city, I see many people who come with perspectives about Houston that are not necessarily accurate. Those moving from cooler climates to warm up are sometimes shocked at how warm July or August can be. The good news is that the winters are a lot warmer too. Another difference many find is the housing market in Houston did not experience near the downturn compared to anywhere in the U.S.
Because the downturn was much more moderate here and now prices have started to appreciate, those moving from areas which were hit harder must adjust their perspective on the buying process. When looking to purchase a home, if you are moving to Houston from almost anywhere in the U.S. you must adjust your perspective to the home buying process. Simply put, Houston has not experienced the downturn that other parts of the country have, and a new mover hoping to come in and negotiate as if they are in Florida or California may be surprised by the response they get.
Many communities in Houston have seen less than a 1% drop in value during the worst of the downturn and now are appreciating. So, a home in Detroit or Las Vegas that sold five years ago for $750,000 is listed today at maybe $500,000 or less. In Houston a home that listed five years ago for $750,000 is likely listing for $750,000 or more today.
Here are three different examples of Houston neighborhoods that are geographically apart and whose communities are each unique enough for comparison. I have chosen 2006 because it is prior to the economic downturn, 2007 because it is the beginning of the downturn and compared the price/sq. ft. to 2010 (most recent data from HAR.com):
If we look at the worst of the data, 2007 to 2010, we see that Tanglewood which is an affluent community had a value decrease of only 11%. With Afton Oaks you have a community that decreased in home value by 10% and in Montrose which is close in to the downtown area and is home to many professionals, the value actually increased by 15%. Obviously, Houston has not had the downturn many other areas of the U.S. have experienced.
With that understanding, a home buyer who is new to Houston has to be aware that if you came from a city where it is common practice to offer a huge discount to the asking price (10, 15, or 20%), you will likely not get a response from a seller with that type of offer. In Houston, an offer of $400,000 on a home listed at $550,000 or even $475,000 will most often be seen as a non starter and not taken seriously. Some owners might respond with a reduction of say one to five thousand dollars out of courtesy, but many will not even respond. Not that anyone is being rude, they just know it is not a reasonable offer in this market.
So in coming to Houston and buying a home make sure you have a realtor who provides you sales comparisons on homes in the area you are looking to buy. Armed with this you will be able to come up with a reasonable offer based on what homes are selling for in that neighborhood. Make sure that you set your expectations so that you are a buyer in Houston and not the expectations if you were in a city with a less robust market. If you have questions you may contact Azar Fisher at 713.301.4570 or at 713.561.6612.
One thing for sure is Houston is a great place to live and the economy here is doing well. Take your time, look at the market thoroughly, and…Welcome to Houston – a great place to live.
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