I've been trying to make heads or tails out of recent events and how they may affect real estate in Houston.
I had been optimistic that the recent hurricane would drive up housing demand in Houston. So many misplaced residents will need housing and once FEMA and various home owners insurance payments are made, people will feel ready to move forward. Some will want to stay near the water, others will decide not to risk another storm. At any rate, I've anticipated an increase in demand for housing near Houston.
Baton Rouge couldn't hold on to their inventory shortly after Katrina hit. Bidding wars were commonplace.
Now, we have this new turn of events with our Financial industry. I see two ways this is going to impact the market.
The first impact is consumer confidence. These are complicated issues and a lot of people don't understand them; that usually leads to fear. Fear paralyzes most people which forces them to hold on tight to their money.
The second impact: ultra-conservative underwriters. I believe this is going to be what ultimately determines home values. I'm seeing it right now with a condo I have available for sale. There were actually two available in the community. Both are nicely priced for the area and both had offers. Even though both condos had offers by well-informed buyers within just days of being listed, the underwriter would not accept the appraisers proposed values. They didn't like the formula he used and forced him to under value the condo. My client wouldn't play, so we lost the contract and the condo is back on the market. I think she's going to sit tight and lease it out. Condos are very tricky animals; only under certain circumstances do I consider them to be good investments.
Ok, so is it a buyer's market or a seller's market? Jury is still out. I do believe that right now, it's a good time to buy. Sellers are worried so they will probably be far more willing to negotiate.
We don't have enough rental property to meet Houston's demand for rental housing. This is and excellent time to be a property investor. Excellent.
I predict that within about 3 - 4 weeks, we'll see an increase in home sales that can be linked to Ike. How strong this impact is going to be will be directly affected by how accessible loans will be after the bail out. I'm most interested in how underwriters are going to impact home prices. Will they allow the market to determine home values?