An article In the Monday edition of The Wall Street Journal titled “How to Tell If Your Market Has Hit Bottom” peaked my curiosity about our hometown, The Woodlands. The article mentioned four factors that answer this question. Using the same criteria, here is the answer for The Woodlands.

Home Values
The WSJ article uses 2004 as a base year prior to the real estate bubble. The 25 communities defined as “Hometown Heroes” experienced less than a 10% decline in home values from 2004 to 2010. Using data from Houston Association of Realtors (HAR), The Woodlands experienced a 26.7% increase in home values in the same time period! Our community should have placed number one on the article chart.

Unemployment Rate
March 2011 figures were used by the article for this category. The national unemployment rate for March was 8.7%. Montgomery County was 7.4%, Harris County was 8.2%. To qualify for the “heroes” list, the unemployment rate of the community’s county must be below the national average.

Price-To- Rent Ratio
Local rents are great indicators of real estate values. If home asking prices are above 15 time annual rental rates, the market encourages renters; not a positive for home sales and values. If below 15, the market encourages home ownership. The Woodlands Price-to-Rent ratio is 13.7% for single-family and 8.6% for townhomes and condos. With interest rates below 5%, why would you rent?

Foreclosures
For this category, the article used 2010 as the benchmark. Nationwide 26% of existing homes sold in 2010 were foreclosures. In The Woodlands, 5.6% of homes sold in 2010 were foreclosures ranging in price from $55,000 to $1.8 million.

Footnote
Earlier this week on the national news, it was announced that nationwide sales of existing homes in May 2011 was down 3.8%. In The Woodlands, sales for May were 28% above same month last year. June sales are projected to be 58% above same month last year!

Visit Michele Flory at http://micheleflory.com/Pages/MarketReport/ for more information on The Woodlands real estate market.

Data Sources:
Houston Association of Realtors
RISMedia
Texas Workforce Commission
Federal Reserve – St. Louis