This past weekend and as recently as this morning, September 12, I’ve been reading articles from Realtors and Builders alike, who are saying it’s too early to tell what the long term affects of the storm will be. In the contexts of what they were trying to convey, perhaps they need to be a little more conservative in such remarks.
On the other hand, those who are interviewed as experts but then say It's too early to tell, simply haven't been in Houston long enough! Or they have forgotten the paradigms of the Houston real estate market: it’s all about oil prices and the jobs and roads that come with them.
Unfortunately, you have to throw a hurricane in the mix every few years, sometimes a really bad one.
The Houston real estate market, just like the people who live here, is highly resilient. At the same time, it is “hyper-local”, meaning that parts of town can be affected by forces that don’t necessarily affect other areas. For example, since the north side section of the 99 Freeway opened last year, the entire Spring-Woodlands market is changing, and very rapidly! Alternatively, the 99 has been in place on the Westside for years, so the impact on that side of town has not been so great.
So, to keep that train of thought, with regard to sales prices, the “hyper-local” effect is still there but it is not so long-lived. Let me say this another way: barring extremes (such as a flooded house!), those who did NOT flood can use the old realtors rule of thumb: anything good or bad will have a positive or negative impact of 8% to 12%, as opposed to what is normal and correct for the price of that property.
For example if you have a busy road behind your house, your property is always going to be worth 8% to 12% less than an identical house located further back of the same neighborhood, where it's quiet. At the same time, access road improvements, like the North Kuykendahl thoroughfare, which took years but is now almost complete, add value. When 249 is totally done, the same will immediately apply.
So to reiterate: If you did not flood you will have a positive impact of 8% to 12%…Some sellers will say it’s 20% but the market simply won’t support it.
But here's the difference friends: unlike the affects of roads, the Harvey impact will go away! How soon? In my professional opinion, by next spring. The value-added phenomenon which I am clearly describing will “peak” by the new year, or depending upon oil prices, by the first quarter. By next spring, the positive impact will have been absorbed by the market, and non-flood house values will normalize. Buyers will either consider it and just know they have to buy flood insurance, or they won’t consider it at all.
Here’s the bigger point. Maybe that 8%-12% rule is enough for sellers, who tried to sell this past summer and were unsuccessful, to sell NOW. See? Interest rates, which are unchanged by Harvey, are still arbitrarily low. Call your realtor, or if you don’t have a trusted realtor, I’d like to apply for the job!
If you did flood, you have four options. 1. Keep it and just buy flood insurance for next time. 2. Sell it for less to an investor, either with or without a realtor (obviously I suggest the latter, now if ever, you need the advice of an experienced agent, who has access to experienced CASH investors). 3. Rent it short or medium term, until the end of school to a flood victim whose house was totaled (I’ve been pushing the tax advantages for several days, see my last blog-post, or 4. Some of you with no job, who have been contemplating "walking away" from your house should call your Realtor or me today, and let them chat with you about a “short-sale” with your bank.
Neighbors I hope this helps. I know it’s a tough time for everyone, but many of you have been asking. Also, I’ve been asked my opinioin by numerous rookie Realtors. Well, there you have it.
Cam Collins has been selling the Woodlands since 1986. Former Houston Realtor Board member and Instructor at Lone Star College. Follow Cam on Twitter. @CamCollinsMBA.